Memorandum by The Family Farmers' Association
The Family Farmers Association is a self supporting
group of farmers and other people interested in farming and the
countryside. We do not have any resident economists and thus our
opinions are based on common sense and the observations and experience
of practical farmers rather than theoretical economics. Herewith
our comments on the future of the CAP.
1. After the last war the government supported
farmers so that they maintained food production and received a
reasonable reward for so doing. This was the basic objective of
the Common Agricultural Policy when we first joined the EEC, as
it was then. As modern methods developed, farming became both
more productive and more profitable. Taxpayers complained that
too much money was going to farmers, and the CAP started to encompass
other rural activities. In the course of time Governments lost
interest in food production, finding that food could be bought
more cheaply from abroad and a "Pillar 2" of the CAP
gradually claimed an increasing share of available money for various
rural and social objectives. The long term object should be to
support and encourage the type of dual purpose farming which both
produces food and cares for the countryside. If this can
be made profitable again, rural communities will flourish.
2. There have been a series of "reforms"
of the CAP, introducing various new systems for rewarding farmers.
The objectives and logic of the changes were not always entirely
clear. Whatever the intentions, the result has been a diminishing
number of farmers, and apparently no change to the unfortunate
statistic that 20% of farmers receive 80% of the subsidies. Since
the latest "reform", food production receives little
or no direct support and producing food is no longer a profitable
activity. However some of the CAP money has been very useful in
funding, via the ERDP, environmental schemes and providing grants
to entrepreneurial farmers wishing to add value to their products.
3. The Single Farm Payment does not appear
to be a particularly sensible scheme, and it is hard to see the
point of it. It perpetuates the fact that the largest farmers
get the most support. We have long advocated that as Entitlements
(to SPS) become larger, they should be scaled down. How long taxpayers
will be happy that, just because you own 1,000 ha of land you
receive a cheque for something like £225,000 each year is
a moot point. Payments would be more acceptable if Entitlements
of over £25,000 were reduced by a small percentage, which
increased for larger Entitlements. A ceiling at half a million
pounds might be a good idea. (Marian Fisher-Boel has suggested
a ceiling of 300,000 euros, which is a bit drastic, but we think
a sliding scale, starting lower, would be more likely to be accepted.
There must be some means of rewarding farmers for cross compliance.)
The money saved from this reduction should be kept in the agricultural
budget, perhaps used to make more generous environmental payments.
(Just now there is talk about the millions, or even billions,
of pounds, spent on bribes to keep the arms industry alive. Agriculture
is by no means the only recipient of government finance.)
It is very difficult to determine how farming
can best be supported. Environmental schemes seem to be the most
useful approach and there should be a study of what aspects of
the countryside are most valued and worthy of financial encouragement.
Having small fields and small woods or copses should be added
to the list of things to be rewarded. Also maintaining variety
in cropping and stocking. There should be help for young people
starting out in farming, especially if this can somehow be combined
with helping older farmers to retire with dignity.
4. Some market mechanisms can be helpful.
Milk quotas were very helpful in discouraging those with capital
to throw around from expanding their dairies, to the detriment
of those who needed to be able to make a living from smallish
dairy herds. It is acknowledged by "experts" that ending
quotas will reduce the already very low price of milk still further.
It is time the NFU came to grips with reality on this issue. Dairy
UK says British farmers want quota to end, but this is based on
a "survey" of 51 important figures in the milk business.
And they are the ones who admit the price would drop! Set-aside
seems to be pointless now there is a requirement for biofuels.
Quotas on imports, or some means of limiting them, would be very
helpful. If both export refunds and production quotas should end,
what can we do with the resulting surpluses?
5. It is unfortunate that the whole of rural
development has become tied up with the CAP. The CAP should concern
food and farming. This, if profitable, will benefit the whole
rural community. Grants for village halls, for instance, should
not be classed as agricultural expenditure. It gives a false impression.
6. It is wrong that different member states
should be allowed to have different levels of modulation. Those
receiving more subsidy will be able to sell their produce more
cheaply. It is all very well to say that those who lose money
through modulation can regain it through environmental schemes.
But farmers who are already environmentally orientated will already
have money from this source. Also they may well be the farmers
most in need of support.
7. We have always been opposed to the inclusion
of agriculture in the edicts of the WTO. When the WTO started,
as the General Agreement on Tariffs and Trade (GATT), agriculture
was not included. It was later brought in, under an Agreement
on Agriculture (AoA). This seems to serve very little useful purpose,
if any, but benefits the most powerful food exporting nations
and multinational traders. Many people think we would be better
off without the AoA. We believe in food sovereignty, that is the
right of nations to protect their farmers from cheap imports.
It should apply to us and even more strongly to developing countries
which are trying to expand their own food production capability
and are seriously hampered by the WTO.
8. It is too early to tell if cross compliance
has been helpful. It surely must have been, but it will be difficult
to measure to what degree.
9. There is so much argument re climate
change we have not been able to form opinions on it.
10 and 11. The budget was not very adequate
before enlargement, and was mainly settled without reference as
to how much more would be needed after it. It seems the original
sum is now to be spread more thinly over more countries. As, contrary
to government hopes, the Single Farm Payment is probably all that
many farmers will have to live on, smaller farmers will inevitably
not receive enough to support them. Our high rate of modulation
will mean we are worse off than the rest of Europe—but then
we are quite used to that! It would be wonderful if that situation
could be improved!
12. The CAP and the economics of food production
have now become so complicated that it is hard to see how the
present economic structure could become disentangled, especially
if we are expected to conform to the rules of the WTO. Consumers
of our products have become used to buying them at bargain prices,
often below the cost of production. They will complain if they
can no longer. So will the government if consumers have to spend
even a fraction more on food, leaving less to spend on manufactured
goods. (And in the new casinos?)
Certainly the EU seems hell bent on regulating
every detail of life, especially on the farm. Waste regulations,
especially on carcass disposal, are shining examples of pointless
rules causing extra expense. Set-aside should be abandoned now
there is a need for biofuels. The EU should recognise the importance
of food production and base its rules of trade on the fact that
food is a vital product, and to be encouraged, not regulated into
the ground. But food production at home should not be detrimental
to other nations, who also have the right to food sovereignty.
June 2007
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