Environment, Food and Rural Affairs CommitteeWritten evidence submitted by The Country Land and Business Association (CLA)

Fairness

Whether the UK’s implementation of CAP might put English farmers at a competitive disadvantage to their regional and European counterparts.

1. The greening measures have been described as conflicting with businesses. Defra should seek to ensure they do not have a greater adverse effect on agricultural enterprises and particularly those promoting growth, such as those carrying out arable contracts. Defra should carry out an impact assessment of greening implementation ahead of deciding specific measures

2. It is vital that English famers have access to all the measures permitted by the EU in order to ensure a level playing field. This does not close the door to a National Certification Scheme (NCS) which could also contain a wider range of options.

3. If considering the implementation of an NCS all exemptions to greening allowed at a European level must apply in England. Defra must not use a different interpretation of the term “exempt” and what it means for those to whom it applies.

4. Moreover, if the Government makes use of the maximum rate of voluntary modulation (15%) in England, it will have an inevitable detrimental impact on English farmers. This is not just because of the loss of funds itself from Pillar 1 to Pillar 2; other Member States will be given the option to transfer funds from Pillar 2 to Pillar 1—a move that is entirely counterproductive to the aims of the CAP. In addition, other Member States will still be operating under a historic basis of payments, with some average payments well in advance of the EU average. Furthermore, other member states will still maximise their use of coupled support for certain sectors, whilst maximising the Small Farmers Scheme and 54Ha top up scheme.

5. Any funds which are modulated must remain accessible to the farming sector. If they were to leave the industry altogether, the detrimental impact would be all the greater.

What steps the Government might take in implementing CAP to help tenant farmers and farmers in upland areas, and to take account of issues pertaining to common land.

6. Tenants — The function of the CAP is to support agriculture in all its forms (and to provide a range of public goods closely allied to agriculture.) The particular forms that individual farmers chose to adopt are a matter for them, not the CAP. We do not think it appropriate for the CAP to aim to support a particular form of farming. Preference should not be given to the landlord and tenant system in favour of other forms of farming such as owner occupiers, share famers and contract farmers.

7. A significant issue for Defra to consider will be that of “Dual Use” (where one party claims an Agri-Environment Scheme and another party claims the Single Payment Scheme on the same holding). This is because there are clearly issues to be resolved in terms of greening and double funding, and those parties in a dual use situation will need some clarity on what they can expect in relation to their agreements—if any. The CLA welcomes the Government’s approach to Dual Use, and supports its use where possible under the new CAP.

8. Uplands — England has three regions for SPS:

9. Land in non-severely disadvantaged areas (SDAs) land (ie the lowlands outside the SDA);

10. Land in SDAs other than moorland (ie the uplands below the moorland line); and

11. Moorland (land above the moorland line).

12. Under SPS, the proportion of funds allocated to each region is broadly consistent with the historic distribution of payments. This means that, because farming is less productive in upland areas owing to poor climate, soils and terrain, upland farms receive a lower SPS payment per hectare than lowland farms

13. Existing regions and rates:

14. English Region	15. Claimed Area (2010)	16. Current Rate (£)
17. Non SDA	18. 6,717,520	19. 257
20. SDA	21. 503,835	22. 208
23. Moorland	24. 406,443	25. 36

Current figures—Re-modulation

26. Moorland areas have historically received a substantially lower basic payment and as a result have received supplementary payments through the Hill Farm Allowance followed by the Uplands Transitional Payment and most recently Uplands Entry Level Stewardship (UELS) Pillar 2 agri-environment payments. This created a huge reliance and therefore spending of agri-environment funds in the uplands, which could be mitigated through providing a top up under Pillar 1. Through adopting such an approach high priority environmental sites could be managed under the new suite of agri-environment and the lower dependency on UELS by other moorland areas would mean more resource availability elsewhere.

27. Merge SDA and non-SDA but provide an increased payment to Moorland (partial convergence):

English Region	Claimed Area (2010)	Current Rate (£)	2 regions (£)	% Change	Proportion of original rate
Non SDA	6,717,520	257	250	-2.7	0.97
SDA	503,835	208		+16.8	1.20
Moorland	406.443	36	89	+147	2.47

28. It is not realistic to merge to equalize payments across all the regions. An increase of almost 600% in the moorland areas would be too big a change to be acceptable.

29. Merging SDA and non-SDA payment rates, as per option c, would bring significant benefits to those in the SDA, with a relatively minor impact on those in the non-SDA areas.

30. Subsequently by deducting a small percentage from the amounts payable in the SDA and non-SDA areas would then allow a an increase in the rates payable above the moorland line. This could make up for the impact of the loss of UELS.

31. Commons — The legal rules for direct payments on common land will be set out in EU legislation. It is not possible to determine how payments should be made until that has been published.

32. We are pleased to see that Defra are actively considering the needs of common land and individuals exercising commoners’ rights in England as part of this CAP. These were not given sufficient attention under the current CAP

33. A key concern on the implementation of SPS for common land is that many available entitlements have not been claimed on—simply because some common rights holders do not engage in agricultural activity and therefore see no need to claim SPS. It is appropriate that those available entitlements are directed towards those who do engage in agricultural activity.

Bureaucracy

What steps does the Government need to take to ensure the reformed CAP will be less bureaucratic than its predecessor and what might prevent this ambition from being achieved?

34. The current Single Payment Scheme has seen many difficulties under the interpretation and implementation of “minimum activity” criteria. For many years, the CLA has been working with the RPA to try and provide greater clarity on this.

35. Under this CAP reform period, the CLA believes that the current definition criteria, that uses the “land at disposal” definition remains fit for purpose—and should be continued under the next CAP. It clearly defines to what extent an individual can legitimately claim SPS, by demonstrating their management of land they are keeping in Good Agricultural and Environmental Condition.

36. The CLA believes that if a prescriptive approach to minimum activity criteria is taken, this will only add to the already extensive list of complicated eligibility checks that the RPA will be mandated to undertake. The current definition has taken many years to arrive at, and the industry is now in a position where it is finally clear on its interpretation in England.

37. The CLA would also add that prescriptive definitions of minimum activity (stocking density, crop types grown etc) remain subjective for landowners, farmers and bodies such as the RPA. We do believe that there is scope to focus on certain areas such as salt marshes, grazed woodland and areas of mixed scrub—however these should be taken on a case by case basis with those affected and the RPA.

38. The CLA believes that the Single Payment Scheme is there to encourage and reward the maintenance of the countryside. Any decision made to cultivate or rear animals is a commercial one, and not one that should be set centrally through arbitrary criteria

How might the Government define the minimum activity required for qualification as an “active farmer”?

39. We support the exclusion of waterworks, railway companies and airports. However we are concerned by the references to sports and recreation grounds and more significantly real estate services.

40. If this latter phrase is interpreted as covering landowners who let domestic and non-domestic properties it would apply to tens of thousands of claimants. The bureaucratic burden this could place on both farmers and the RPA would be significant.

41. We also have concerns over the definition of “significant” would be in terms of income from agriculture, it is rather subjective.

Greening

How should the Government ensure that CAP delivers the best environmental benefits while supporting food production?

42. General Considerations — Greening requirements must go beyond current cross compliance if they are to make a difference. Individual measures should be those proven to make a difference to the landscape, habitats and species. They should not stray too far into the types of measures found in current agri-environment schemes because this would go over and above what other member states are doing. Also without funding to carry out such measures it will be less economically viable for farmers to continue to manage other areas on the farm for the environment.

43. Defra should carry out an impact assessment of the extent to which greening would make it unviable to continue with environmental management measures elsewhere on the farm (these may or may not be managed under a scheme), and the level at which certain greening requirements would challenge the viability of the business.

44. In order for implementation to be fair it is important to rank measures, both under EFA and crop diversification measures, according to their environmental output. This will ensure that the level of additional implementation per farm is fair and those who have been carrying out good environmental management to date are not penalised and each farm yields significant environmental results.

45. The selection of EFA measures should allow choice and flexibility in order to suit different businesses, enterprises, soil types, stocking requirements and farm sizes etc. Farmers should be able to choose from a range of options and which elements of the greening package to carry out, for example it should be possible to provide double EFA in place of crop diversification.

46. Permanent Grassland — The public briefing states that we have the option to designate additional areas of valuable permanent grassland which cannot be ploughed up. Defra have informally noted that they would not make use of this option. We agree; grassland is sufficiently well protected under the EIA Regulations. We agree with Defra that this element should be implemented at a National Level.

47. Crop diversification — Is the option which is likely to cause the most concern to members as the threshold is still low. For example farms of 30ha arable land may have two crops and an abundance of supported wildlife due to environmental features surrounding those crops. As an alternative it could therefore be viable to set a new parameter, for example those with an arable area of 30–50ha carrying 1 or 2 crops receive a choice of whether to implement double EFA or crop diversification. Growing separate crops is after all expensive an arguably goes against the principles of greening.

48. Ecological Focus Areas — All landscape features, such as hedgerows, hedge banks, stone walls and other historically important boundaries, ditches and ponds should all be included in the measurements of the EFA area. Without such features greening measures in England would be gold plated.

49. Small blocks of woodland, such as copses, have traditionally been ineligible for funding under both ES and SPS. They are an integral part of the farm ecosystem, providing valuable habitat and connectivity. It would therefore seem sensible to include a more basic level of woodland management in NELMS than is currently the case in HLS. This does not require a detailed expert driven management plan, but allow small copses and spinneys not included in NELMS to be included in EFA.

50. Given the example of pollen and nectar given under AES is completely shifted to Pillar 1 under EFAs there will be no incentive available to carry out such an option through a scheme. Therefore those farmers exempt from EFA will be much less likely to implement that measure.

51. It would be more useful to allow the individual to decide whether to include an option under the Pillar 1 EFA or under Pillar 2, rather than carrying out an automatic transfer. This means that if it is an option under EFA, it will be unavailable to all under the schemes.

52. Holdings which are more diverse and include areas of permanent pasture, small woodland areas, ponds and other environmentally important areas should have these features taken into account.

53. It is important to note the difference between maintenance and management, for example it may be that EFA requires the farmer to have a hedgerow and ELS requires you to manage it and therefore this would not be classed as double funding.

54. Certification — There is still insufficient information to provide a final decision on certification, as we do not have confirmation on which options would be included as equivalents under a certification scheme.

55. Overall the introduction of a certification scheme would seem to offer a more robust measure of what greening achieves and therefore there would be value in introducing it. It will also provide the necessary flexibility, in particular to the EFA and crop diversification requirements.

56. The Council regulation measures should be included to avoid farmers being further restricted than their EU counterparts. Equivalent options should provide environmental measures which yield significant environmental results, but are ranked according to their environmental gain. This will ensure farmers are able to go a step further for greening if it is viable for their business.

57. Relations with agri environment schemes — We do not believe that if an option goes towards greening, that it should be completely removed from agri-environment schemes, due to the knock on effects of implementation of such an option at landscape scale.

58. We believe that the most straight forward way of allowing a smooth transition into greening where agri-environment schemes are already in place would be to carry out a deduction from the total scheme. Eg 100ha with a 5ha EFA, currently being paid £30/ha would see an annual deduction of £150 (5ha x £30).

59. We agree with the ladder approach to NELMS which would allow farmers to build on their greening requirements through a straight forward approach.

60. There are many factors to take into consideration when designing the new schemes, all of which point towards a reduction in their availability in the future. These factors include existing commitments to carry over from current schemes (in the region of 45,000 agreements), resource constraints on the CAP budget and also Defra itself following the spending review.

61. We do not believe Defra has done enough to make farmers aware of this. The extent to which farmers appreciate the current structure will change is negligible.

62. NELMS must be designed in a way which makes the most of synergies, in order to provide for multiple outcomes at a time when budgets will be restrictive. Strong drivers include Biodiversity 2020, the Water Framework Directive and the Lawton approach, which are compatible for targeting due to their complimentary nature. However we believe other important elements currently covered by agri environment schemes should not be lost, such as permissive and educational access and options for the historic environment.

63. The proposed middle tier would be pitched between the current ELS and HLS, which in effect means that certain options would be. The impact of removing specific options should be explored before such decisions are taken in order to avoid an overall reduction in quality environmental land management across the agricultural landscape.

64. Options in NELMS should be directed in a way which makes them most relevant to that particular farm. This should therefore involve an assessment of the relevant issues affecting each individual farm. Features of interest will be found at different scales from county, to catchment, to landscape feature, to farm, and NELMS must make the most of all interacting features. Often a farmer may be encouraged to implement a certain option on their farm as they are told it is a hotspot for that feature/species, knowing that success is unlikely? We would therefore only agree with a directed approach, as long as it was still allowed farms to be considered individually and allows the landowner to add their own knowledge of the farm, landscape and species/habitats which it supports and could potentially encourage.

65. Discussions around targeting can also tend to immediately jump to geographical targeting because this is the way the budget has been managed in the past and it is a straightforward approach. Targeting must deliver the right agreements, in the right places, with the right combination of options, but geographical targeting in blocks causes animosity between farmers and can also mean that valuable farms are overlooked.

66. Voluntary Measures/CFE The CFE can help fill the gap between greening and AES through adding value to both, but that this should not become a reason to allow white space, ie farmers not eligible to carry out any incentivised management.

67. The CFE can add value through proving advice to farmers on which greening measures would be suited to their farm. Ie right measures, right place, in the right way.

68. The Campaign for the Farmed Environment is currently entering a new phase where it will provide advice for all English counties, excluding those which are predominantly upland counties. One of the first tasks for the Local Liaison Groups is to provide a local priority document for each county which draws on information given from Natural England, CSF advisers, EA, RSPB, wildlife trusts etc, in order to make sure advice is as relevant as possible to each county.

69. We believe that this county priority document will help focus targeting of NELMS and that CFE will be promoting the most valuable agri-environment and voluntary measures for that area.

70. As discussed we do not believe that greening should be used as a tool to address a certain issues such as pollinators. This may mean that the option is no longer available in an incentivised manner, which could see an overall reduction. We would therefore prefer a combination/choice approach, which includes incentivised paid alternatives, if the option is not implemented through greening.

71. This approach would also mean that greening is in no way targeting to where the environmental management options will be most effective.

Lessons Learnt

What are the principal lessons the Government should learn from the implementation of the previous CAP?

72. The problems with the introduction of the previous CAP have been much debated and we do not think much is to be gained by setting them out in detail here. The details concerning the complexity of the so called “dynamic hybrid”, the inadequacy of the IT system and the administrative systems, the lack of communication between the RPA and Defra will be well known by everybody with an interest in the issue.

73. A particular concern for us at the time was the lack of any political or managerial will to put things right. The attitude was incredibly defensive. It was not until Jane Kennedy joined Defra in late 2008 that we felt we had a minister who openly accepted things had gone very wrong and who showed a genuine enthusiasm to resolve matters.

74. Moreover, whilst we are sure that within Defra and the RPA there are numerous records of the administrative chaos and the EU disallowances, from our perspective the overriding issues were the human costs. Our Advisory Services Team was almost overwhelmed by farmers distraught at being paid late, sometimes very late which caused immense cash flow problems. There were frequent errors in the amounts paid, both overpayments and underpayments, and it was almost impossible to get through to anyone at the RPA who was able to do anything.

75. We still remain cautious but we are much more confident that things will be considerably better this time. Defra and the RPA are not faced with a challenge of anything like the complexity of last time and have clearly leaned from past mistakes. Officials are much more willing to discuss their intentions and bring stakeholders into the decision making, which we welcome. Determined efforts are being made to ensure that both the IT and the administrative systems will be capable of doing what is required, however Defra must continue to work with stakeholders until the final package is produced.

76. Any new IT operating system must exist to improve the delivery of CAP, rather than stifle it. The new CAP provides many challenges to build into a new system, and the ongoing input from all relevant stakeholders is vital to ensure a successful outcome, and not repeat of the previous implementation programme.

October 2013