85.Given the risk that maintaining high welfare standards could put UK farmers at a competitive disadvantage post-Brexit, witnesses were keen to discuss the potential need for financial support. Many UK farmers receive financial support through the Common Agricultural Policy (CAP)—which, in some regions, such as Northern Ireland, provides over 80% of farmers’ income. As we noted in our report Brexit: agriculture, the future of funding after the UK withdraws from the CAP is not clear. Yet the British Society of Animal Science cautioned: “Removal or reduction of subsidy post CAP is likely to lead to a real risk of a reduction in welfare standards as producers wrestle with the economic realities of production.”
86.In our report, Brexit: agriculture, we concluded that there was a case for continuing to provide financial support to farmers after Brexit in order to correct market failures and deliver public goods which would not otherwise be paid for. Mr Stevenson, the CIWF and the NPA stated that, in this context, ‘public goods’ should include high farm animal welfare standards. Similarly, Dr Mullan described a “small investigation into market prices and farm gate prices as compared to supermarket shelf prices”, which she believed revealed the suppression of uptake of higher welfare systems and “clear market failure”.
87.The BVA suggested that funding could be provided through a “farm animal welfare stewardship programme”, focusing on animal health and welfare outcomes. The CIWF suggested that funding should be made contingent on membership of assurance schemes and achieving “specified high welfare standards that go beyond those of the scheme”.
88.Although the NSA recognised the value of “some form of welfare leveller”, they cautioned that funding higher welfare “could distort market and production dynamics”. Dr Crayford also advised that any funding system needed to reflect market realities: “If you are talking about incentivising farmers to change to a certain system, if the market is not there for that system or for that type of production, you are effectively just subsidising inefficient farms.” We also note that some largely unsubsidised sectors, notably the pig and egg sectors, have been successful without funding: as Mr Williams noted, “there has been no market failure in the egg sector”.
89.The Minister of State for Agriculture, Fisheries and Food, George Eustice MP, told us in March 2017 that:
“We have a manifesto commitment to put stronger emphasis on animal welfare in the way we design future agriculture policy. We are looking at options of anything from grant support to support the development of units that might be more welfare-friendly, right through to possible incentive payments as well to encourage farmers to adopt approaches to farm husbandry which might be better for welfare and, indeed, better for animal health.”
He added: “If you are supporting [farmers] to improve farm animal welfare standards so that we become the best in the world, you are supporting them to deliver a public good that we should recognise and be willing to reward.”
90.The Conservative Party manifesto stated that “we will continue to commit the same cash total in funds for farm support until the end of the parliament”. It also confirmed that “We will work with farmers, food producers and environmental experts across Britain and with the devolved administrations to devise a new agri-environment system, to be introduced in the following parliament”.
91.We noted in our report Brexit: agriculture that any future policy on funding would have to respect WTO rules. This means that any funding deemed to be ‘green box’ would be permissible while so-called ‘amber box’ policies would be trade-distorting and not permissible. Ms Ravetz believed that “a welfare stewardship scheme would be acceptable under WTO rules because it comes under public morals. As long as it is the welfare that you are incentivising, and the financial incentive is for that, it is acceptable.” Prof Bennett agreed: “I would say that such a programme could fit within the WTO green box of permitted support measures alongside environmental protection.”
92.The Minister acknowledged in March 2017 that the Government would need to be mindful of WTO rules as they draft a future funding policy:
“Ironically, the single farm payment, which is ultimately an area-based, distorting subsidy, technically at the moment qualifies as Green Box, whereas the types of policies that would be more modern, more progressive—payments to get animal welfare outcomes … we understand, at the moment, would probably be deemed under the WTO rules as amber box.”
93.We note the Minister’s stated intention to review options for prioritising farm animal welfare in future agriculture policy, including by means of grant support or incentive payments. Any decision to give financial support to higher welfare standards should be made on the basis of consultation with the industry; deliver public goods where there is market failure; and be targeted to minimise market distortion. Support would need to be justified and, as we noted in our report Brexit: agriculture, to be compatible with WTO rules.
161 European Union Committee, (20th Report, Session 2016–17, HL Paper 169), para 211
162 Written evidence from the BSAS ()
163 European Union Committee, (20th Report, Session 2016–17, HL Paper 169), para 239
164 ; written evidence from the CIWF () and NPA ()
166 Written evidence from the BVA (); see also (Dr Mullan), and (Ms Ravetz and Professor Bennett).
167 Written evidence from CIWF (); see also (Ms Bailey).
168 Written evidence from the NSA ()
170 (Mark Williams and Dr Crayford)
172 Oral evidence taken on 8 March 2017 (Session 2016–17), (George Eustice MP)
173 The Conservative and Unionist Party, The Conservative and Unionist Party Manifesto 2017: Forward, Together: Our Plan for a Stronger Britain and a Prosperous Future, p 26: [accessed 4 July 2017]
174 Under the WTO Agreement on Agriculture WTO members started to move away from giving farmers domestic support that was tied to production, or production subsidies. The types of permitted domestic agricultural support are classified according to which WTO ‘box’ they fall into. Green Box subsidies are permissible under WTO rules and are not subject to spending limits, whereas Amber Box subsidies are severely restricted. For more details, see European Union Committee, (20th Report, Session 2016–17, HL Paper 169), paras 55–69 and 228–233.
176 (Professor Bennett)
177 Oral evidence taken on 8 March 2017 (Session 2016–17), (George Eustice MP)