Examination of Witnesses (Questions 612
- 619)
WEDNESDAY 5 DECEMBER 2007
Mr Neil Parish
Q612 Chairman: Thank
you very much for finding the time to come and talk to us and
help us with our inquiry. Let me just briefly say formally who
we are and what we are doing. This is a Sub-Committee of our EU
Select Committee, which is a scrutiny committee of the House of
Lords, carrying out an inquiry into the Health Check but really
looking beyond the Health Check as well to see the view of the
Financial Perspective and the future shape of the CAP generally.
It is a formal evidence taking session so that means a transcript
will be prepared and once that is done you will have the opportunity
to look through it and make changes that you feel are necessary.
Would you like to make a brief opening comment or do you want
to go straight into questions and answers?
Mr Parish: I know you would like to question
me more, so let me set out the parameters in as much I would suggest
to you the Health Check is evolutionary rather than revolutionary.
It is really carrying on the Fischler Reform. When Fischer Boel
came to committee last week it was very much making sure that
payments were decoupled away from production across the whole
of Europe, set-aside to actually be abolished rather than be on
zero because, as Lord Plumb and others know, things that remain
at zero here can be resurrected again, so if you want proper reform
they have got to be taken out. On milk quotas, finally an absolutely
clear statement that quotas would be gone by 2015, there will
be an increase in milk quota next year going into services at
we reckon about 2%. I would not have thought it would have hurt
to have gone to a little more than that but I suspect that is
what is going to be there to create the soft landing. You have
modulation of 2% in 2010, 2011, 2012 and 2013 which from our point
of view is very good news because I have never been opposed to
modulation but, as you know, I made a little bit of fuss about
voluntary modulation because I did not particularly like our own
farmers to lose it and not others necessarily. I think if you
are going to have a Common Agricultural Policy there has to be
a commonality to it. The clear point that the Commissioner made
on modulation, and I am sure she made it partly for my benefit,
was that the increase in compulsory modulation will be taken off
voluntary modulation, not added to it, therefore, if you think
we are on about 5% at the moment, another 8% compulsory would
bring you up to 13% and the deal we more or less had in the end
on modulation was about 14/15%, so from my point of view that
would bring us to a much more equal position and I welcome that.
Those are really the bald points. I will answer questions. We
ought to talk a little bit more about where we are going. You
talked to Reimer Boege and Financial Perspectives are important.
If you are going to be serious about reforming CAP you have also
got to be serious about reforming the budget and, dare I say it,
keep quite a strict control on the budget and also co-financing
does need to be introduced so that Member States at least can
then be paying for a lot of their own CAP. We have to be careful
with countries like Poland, Hungary and Lithuania because having
invited them into the club you cannot necessarily say, "Well,
all right, chaps, now you are in we will change your rules and
you can pay for your own CAP". We have got to find ways of
helping them as well and we might be able to do that as we do
with structural funds where if they are receiving structural funds
they are receiving help with CAP payments and if they are not
they are paying quite a lot towards their own CAP. I think the
rule should be compulsory at a European level for the simple reason
that otherwise countries like France will find innovative ways
of helping their farmers and, dare I say it, the UK perhaps with
not quite a generous scheme. Those would be my bullet points at
this stage.
Q613 Chairman:
That is a nice little contemporary survey, thank you very much.
Looking ahead, moving away from the specifics I would invite you
to say what do you see as should be the underlying general principles
as we move beyond the Health Check into further reform?
Mr Parish: You have got 27 countries now and
you are going to have probably 28 at least with Croatia and you
are going to have a tight budget. I do not think we want to necessarily
carry on with a general payment on all land, we have got to start
to look to targeting this. It is difficult to predict the market
but in the market as it looks at the moment, it looks like cereals
are set reasonably fair. The livestock sector is always going
to be under great pressure, especially in areas where land is
more difficult to farm. We are going to have to find ways of targeting
those resources. Because the agriculture policy, technically speaking,
is no longer linked to production you cannot then start saying
that the market price for cereals is higher so we will re-divert
some of that money to the livestock sector. That is where you
can use modulated money to some degree to help with that situation.
Representing the West Country I can probably talk more about these
terrible barley barons in East Anglia and the need to take some
money from them and spread it across to the South West farmers
who are suffering on the hills. You get my meaning. There has
got to be a way of adjustment. Keep the budget tight and then
move into 2013 and beyond. The whole policy now will have to be
much more aligned to environmental policy as well as production
but, of course, we have not to forget production because we are
in a much tighter situation vis-a"-vis the world supply of
food, so food security is becoming an issue. It is a balance between
the two. The livestock sector, the suckler beef in particular
and sheep at the moment, has its problems, all of these animals
are kept mainly in areas of high landscape value, not only good
for agriculture production in some places but also good for tourism,
so the balance has to be met. I would suggest we have got to find
mechanisms of finding and targeting support. I know the Commissioner
is particularly keen on the fact, and I think she is quite right,
and we can argue whether the historic model of payment or the
regional form of payment is right or wrong, that by the time you
get to 2013 you can hardly argue that the payment you are getting
on that farm is related to what you were doing in 2001 or 2002,
there is not a reality to that. That is where we have got to find
our way. In her mid-term review there is not a huge amount on
where it is going afterwards. The gossip on the street is that
Barroso is going for a second term of Presidency and he did not
want anything too revolutionary in the ideas from the Commissioner.
While I support very much what she is doing up until 2013, I think
we do have to start looking. We have got to find ways of targeting
the money better. We can hope that by then China, India and Vietnam
will increase their production and economies and poor people will
be getting richer and wanting more food, which is the first thing
they spend their money on, and then milk powder and the dairy
side will be better. I am hoping the whole thing will be better
from an economic point of view so we can then balance the books.
Q614 Lord Cameron of Dillington:
We have heard what Neil Parish thinks, which is very interesting,
but I just wonder what support you might be getting from your
committee on co-financing and decoupling?
Mr Parish: Not as much actually.
Q615 Lord Cameron of Dillington:
You did not mention capping but I suspect I know where you come
from on that.
Mr Parish: Probably not quite where you think.
Q616 Lord Cameron of Dillington:
How does your committee line up on all of this?
Mr Parish: They are very conservative with a
small "c". They really do not want any form of change.
We are awaiting a report from Lutz Goepel, who is the German rapporteur
and is dealing with the Health Check, and his proposals are going
to be much more moderate, shall we say, than even the Commission's
proposals. It is going to be less modulation and less of everything
basically except payment. It is difficult for me because when
you sit in the chair you have your own personal views, and I am
sure Lord Plumb knows this, but you also have to put your European
hat on on occasions and take an overall view. I will take some
of the committee with me, but not all. It will be conservative.
I think there is beginning to be much more of an acceptance of
co-financing, but not by all countries by any means. They can
see that the ceiling of spending of the 1% club is probably not
going to shift very much so they see co-financing, dare I say
it, as a way around that 1% ceiling. I suspect co-financing is
going to find support eventually, certainly among the bigger Member
States and probably amongst Germany as well which, let us face
it, is a big contributor to the European budget.
Q617 Lord Cameron of Dillington:
Where would they stand on quotas?
Mr Parish: As we stand today, I understand they
are in favour of quotas going. In a way they are almost key to
the whole argument. Again, the Commissioner and all of us in a
way are starting to be helped by the market because we finally
see an increase in dairy prices and an increase of 4% in dairy
trade and milk powder is the most valuable it has been for years,
so that is helping. Quotas will be increased. She is very keen
to get the value. Although the value in the UK has gone from the
milk quota, in the Netherlands and Denmark it is still quite valuable,
so that needs to be got out of the system. Not that the Commission
is that worried about it, to be honest with you, because they
never created it with a value so as far as they are concerned
they are inclined to say it is an artificial value anyway. In
the UK it is not such a problem. If quotas do remain in until
2015 I am prepared to wager you a small bet that quotas will have
some value before we get to 2015 because farmers are very good
at producing milk if the price is right. This year it is difficult
because of high cereal prices and low quality of feed, silage
and the like. It will be interesting, I think. It will not get
a high value because quotas are going to be gone but if you are
producing quite a lot of milk and you are going over quota and
the country goes over quota then it will be an interesting position.
She will try and increase quota to absorb that if she can, I think.
Q618 Lord Cameron of Dillington:
You were going to touch on your committee's views on capping.
Mr Parish: Yes. Certainly Lutz Goepel is very
conservative on that because he is East German and there, of course,
you have got the very big farms, the privatised estate farms basically.
My view, for what it is worth, is that a little bit of capping
may not be adverse as long as the money is kept within the Member
State. If you started capping the very large farms by 25% you
would just get them to split and you would lose the lawyers and
the accountants and it would create inefficient farming for the
sake of it. To play devil's advocate, if you took 5% away from
the largest farms because, let us face it, there is an economy
of scale, it would not make those farms split. If you could spread
that money back in Member States and not send it back to the centre
then there could be an argument, but it has got to be carefully
handled. My one worry about accepting capping is a bit like taxation
really, once you start it where does the level go thereafter.
It is one of those interesting points. There will be a split in
the committee on that because basically it is Germany, ourselves
and Spain—Spain has got quite large farms as well—who
are most interested in capping. In some ways, although it would
create perhaps a—
Q619 Lord Cameron of Dillington:
Denmark too.
Mr Parish: Denmark, yes. What I have said to
the Commissioner, although it would make for perhaps a little
re-nationalisation of agricultural policy, is in some respects
if you set a maximum level of capping that any country could go
to then you could almost hand it back to the Member State and
say, "If you are keeping the money it is up to you how far
you go up to a certain level". It is an interesting idea
and I do not know whether she will take me up on it. Then it throws
it back to Member State governments and gives them the grief and
not the Commission. Whether she will do that or not, I do not
know.
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