AGRICULTURE SELECT COMMITTEE: IMPLEMENTATION
OF THE COMMITTEE'S RECOMMENDATIONS
We also express the firmest possible belief that,
whether MAFF continues in its present form or a successor body
is established, the competitiveness of the agriculture, fisheries
and food industries must be a central consideration of government.
We are unconvinced that this has been a sufficiently high priority
of MAFF. This is a matter that we will continue to raise with
the Ministry at every opportunity.
19. The competitiveness of the agriculture, fisheries
and food industries continues to be a central consideration for
MAFF, reflected in the department's Objective 4, "to assist
the development of efficient markets in which internationally
competitive food, fish and agriculture industries can thrive".
MAFF has also published its strategy for delivering this and its
other objectives in the form of its Service Delivery Agreement.
20. The Department continues to promote industry
competitiveness, through Ministerial and official contacts with
businesses, and a range of initiatives tailored to the circumstances
of different sectors.
21. The Department's Agriculture Strategy actively
promotes competitiveness with a number of initiatives. New initiatives
were announced as part of the Action Plan for Farming in March
2000 (including the provision of a small business advice service
to farmers, for example), and the England Rural Development Programme
(ERDP), launched in October 2000. The ERDP includes the introduction
of the Rural Enterprise Scheme, the Energy Crops Scheme and the
Vocational Training Scheme, along with the re-introduction of
Processing and Marketing Grants. The Department also allocated
£5 million this year under the Agriculture Development Scheme
to pump-prime a wide-range of competitiveness initiatives, including
a number which may be taken forward under the ERDP.
22. The commitment was also underlined by the publication
in November 1999 of the Food Chain Group's Report,"Working
Together for the Food Chain". The report pulled together
a wide range of activities by Government and by different parts
of the food chain which contribute to improved working together
and competitiveness. The Minister's foreword to the Report restates
the need to improve the industry's competitiveness, and both MAFF
and the industry have been actively addressing the challenges
set out in the Report.
23. The Department will continue to work in partnership
with the industry to identify ways of promoting industry competitiveness.
The Government has nothing to add to its response
in respect of the following:
Recommendations 3, 7 and 8.
Ministry of Agriculture, Fisheries and Food
(1999-2000 Session) Current Crisis in the Livestock
1. An additional £175 million of aid for livestock
producers was announced in March 2000. This comprised £109
million of aid to hill farmers; a restructuring programme for
the pig industry; deferal of charges for dairy hygiene inspections
and the removal of the Over Thirty Months Scheme weight limit.
£66 million of Agrimonetary compensation was also made available
to livestock producers.
Directing aid to enhance the competitiveness of
the sector (paragraphs 9 and 17)
2. The details of the plans for implementing the
Rural Development Regulation and the monies to be made available
(including monies raised by "modulation") were set out
in separate Rural Development Plans for England, Wales, Scotland
and Northern Ireland. Those for England and Wales were agreed
as Programmes in September 2000 and have now received formal approval
from the Commission. The Plans for Scotland and Northern Ireland
were agreed as Programmes in October and formal approval for these
is currently awaited.
Review of Regulations and Charges (paragraph 11)
3. This supplementary response reports on progress
in relation to what has become known as the Red Tape Review. The
three industry led working groups set up by Nick Brown in September
1999 looked at three major areas of concern identified by industry
themselves; IACS and Inspections; the Intervention system and
Meat Hygiene and Slaughterhouse Rules. The working groups reported
in December 1999. Nick Brown published the Government's response
and action plans for implementing the recommendations made on
1st February 2000. 98 of the 107 recommendations were accepted.
Action on 23 of these has been pursued in Brussels. Further the
Action Plan for Farming launched by the Prime Minister in March
made a commitment to implement the recommendations as quickly
and simply as possible. Work continues. Action plans recording
progress in implementation were published in July to contribute
to the Agricultural Forum.
4. In addition to the three priority areas a number
of other issues were taken forward in bilateral meetings between
MAFF and industry. Action has been taken on a number of these
minor areas including pesticides legislation, producer groups
rules in the horticulture sector and dairy hygiene regulations.
5. We continue to apply rigorous impact and assessment
appraisal methods for all new policy proposals and pay due regard
to the effects of of regulation on the competitiveness of our
Abattoirs (Paragraph 13)
6. The Government's response to the report of the
Meat Industry Red Tape Working Group (the Pooley Group) was published
on 2 February 2000. 28 out of the 35 recommendations were accepted,
while 4 others required further consideration. Most recommendations
were for the Food Standards Agency (established 1 April 2000)
to take forward. The report's main recommendation, for a radical
change from the current prescriptive meat inspection system to
a risk-based system of checks (HACCP) was accepted. This and 4
other recommendations will require EU negotiations. Work on implementing
the accepted recommendations has either been completed or is underway.
- negotiations on changes to the meat inspection
system have started in Brussels following the publication by the
European Commission in July of its proposals to consolidate and
simplify all EU food safety legislation;
- the Food Standards Agency established the Meat
Inspection Charges Task Force in April to consider alternative
approaches to charging for meat hygiene inspections. The Task
Force's report and recommendations were published in June, and
the Government is currently considering its response;
- the Food Standards Agency has launched a review
of the UK's BSE controls which is due to be completed in November
- the Food Standards Agency has commissioned an
independent efficiency study of the operations of the Meat Hygiene
Service. Part one of the two-part study is due to be completed
by the end of 2000, and part two by March 2001.
7. In addition, the accepted Pooley Group recommendations
were included in the Action Plan for Farming announced by the
Prime Minister on 30 March 2000. Regular reports on progress are
Pigs (paragraph 14)
8. Regarding the Action Plan for Farming announced
on March 30th, the Government is seeking to introduce
the Pig Industry Restructuring Scheme (PIRS). We expect to receive
European Commission clearance of the scheme (necessary before
a state aid can be introduced) shortly, and hope to introduce
the outgoers element in November. This part of the scheme is aimed
at pig breeders throughout the UK who have already left the business,
or intend to do so. In return for agreeing to stay out of pig
breeding for ten years, the Government will pay up to 50% of:
- the replacement value of pig breeding facilities
destroyed (minus wear and tear); and
- the loss in value of the holding due to not being
able to keep pigs for ten years; and
- a bonus of 20% of the sum of those two figures.
9. The Ongoers element of the scheme, which we hope
to introduce early in the new year, will offer an interest rate
rebate to pig producers who wish to make their businesses more
viable by working to an agreed business plan.
The beef ban
10. Following Nick Brown's letter on the use of beef
by Local Education Authorities in October 1999, most have now
removed their bans. At the beginning of October 2000, only 4 Local
Education Authorities still maintain a total ban on the use of
beef and 6 Authorities maintain a ban on the use of beef in primary
The Government has nothing to add to its response
in respect of the following:
The September Aid Package (paragraph 4).
Sheep (paragraph 15).
Ministry of Agriculture, Fisheries and Food
(1999-2000 Session) The Marketing of Milk
1. Since publication of the Government's response
to the Second Report on 11 April, the milk production sector entered
the new milk marketing year with producer prices falling yet again,
in some cases up to 12% on the previous year.
2. Supermarkets and Processors appear to have appreciated
that producer prices have now fallen to levels that are generally
unsustainable in the longer term and negotiated price increases
for Autumn deliveries of up to 2 pence per litre. Buoyant international
commodity prices and demand for dairy products provided strong
signals to the market that a price rise was possible.
3. The Government has taken steps to assist dairy
farmers in recognition of the difficult market conditions they
face. Various measures have been taken under the Action Plan for
Farming announced by the Prime Minister on 30 March.
Recommendation 1: We reiterate our support for
a rapid end to milk quotas which are a constraint on the development
of an efficient, market-focused industry and we urge the Government
to press other EU partners to agree an end to the quota scheme
4. The Commission has announced that it would like
to bring forward the review to 2002. The Government supports this
move. Germany has recently indicated in public statements that
it now supports an orderly phasing out of milk quotas, a view
already held by the UK, Italy, Sweden and Denmark.
Recommendation 5: Whilst we give every encouragement
to the development of small, specialist producers of dairy products,
we recognise the difficulties involved in the establishment of
such businesses. Undeniably, a renaissance of small dairy enterprises
could help individual farmers and contribute to the development
of regional tourism and we recommend that resources from the rural
development fund be applied to support their initial set up. However,
for most farmers there is much greater potential for adding value
through innovation and investment by the existing dairy companies
and, increasingly, the producer co-operatives.
5. The ERDP has now been approved by the European
Commission and the England Regional Development Programme was
launched on 3 October.
Competition Restraints on the New Co-operatives
Recommendation 6: There seems to us no reason
why any regulatory limits should now be placed on the activities
of the successor co-operatives beyond those of complete independence
from one another. The co-operatives are not yet free of the competition
authorities since the restraints on their expansion into processing
will not be lifted until Mr Byers has received the advice of the
DGFT which should be "round about Easter time" this
year. However, a speedy decision in favour of processing, on advice
from the DGFT, would be in everyone's interest. We recommend an
early decision by the Government that will allow the successor
co-operatives to consider processing milk. We note that past references
to the competition authorities have resulted from complaints originating
within the industry. To that extent, freedom from competition
restraints lies in the hands of the industry itself and can be
realised only if the habit of appealing to the outside bodies
for redress of internal grievances is broken.
6. The Secretary of State announced on 2 May that
the successors to Milk Marque are now free to establish or extend
their milk processing activities if they so choose. The announcement
followed advice from the Director General of Fair Trading that
the successors were operating independent arrangements for the
marketing and selling of their members' milk.
The Future for Dairy Farmers
Recommendation 8: There is without a doubt a crisis
in dairy farming and, sadly, there are likely to be more casualties
before any real recovery is felt.
7. Announcements of increases in producer prices
to apply from the Autumn, underpinned by stronger world commodity
markets provide some encouragement for dairy farmers. The Government
announced on 23 November that it would be setting up a Milk Task
Force, drawing members from the various parts of the food chain,
to identify those areas where greater efficiencies in production
and marketing might be obtained and to report on the means to
achieve them. The Task Force is due to report to Ministers by
31 March 2001.
Recommendation 11: Other appropriate vehicles
for supporting small farms could include assistance with collection
charges, which are proportionately higher for small producers,
and Government funding of dairy hygiene inspection charges in
England and Wales as is already the case in Scotland and elsewhere
in the EU.
8. Legislation to remove dairy hygiene inspection
charges came into force in England on 10 May and in Wales on 20
Recommendation 12: It is worth noting that the
review of the Over Thirty Month Scheme (OTMS) will have a material
effect on farm incomes. The removal of the Calf Processing Aid
Scheme (CPAS) has particularly affected dairy farmers, and marketing
assistance to find customers for dairy bull calves would be welcome.
9. As part of the Action Plan for Farming announced
by the Prime Minister on 30 March, the Government successfully
pressed the European Commission to remove the payable weight limit
for OTMS cattle with effect from 5 June. Dairy producers will
benefit from this change, which is expected to increase returns
on sales of cattle into the OTMS by over £20m in a full year.
Recommendation 14: We recommend that the Government
review the school milk subsidy and examine whether a revised scheme,
allied with industry initiatives such as generic marketing, might
boost demand for milk.
10. The Agriculture Council agreed, in July, to moderate
the Commission's planned reduction in the subsidy for the school
milk scheme to 75% of the target price for milk rather than the
proposed 50%. The Government had pressed for no change at all;
this position was supported by a number of other Member States
and helped persuade the Commission firstly of the need to retain
the scheme and, secondly, to moderate the size of reduction. The
Commission was also asked to review the implementation rules with
a view to making scheme administration simpler.
11. The Government announced in the House of Commons
on 16 November that it would be making a contribution towards
the scheme in England. The Ministry of Agriculture, Fisheries
and Food, the Department of Health and the Department for Education
and Employment, will jointly top-up the subsidy to its previous
level based, on current uptake rates. The Government has also
co-operated fully in the Commission review of the scheme's administration
which should lead to some significant improvements.
Recommendation 15: We recommend that the Government
review the amount of organic aid given to dairy farmers and ensure
that the sector as a whole supports the development of organic
12. The review of the Organic Farming Scheme has
now been concluded. It did not suggest that there was a need for
particular emphasis to be given to dairy farmers in the targeting
of conversion aid.
Recommendation 19: MAFF should ensure that the
labelling requirements do not conflict with any form of innovative
13. The Food Standards Agency recently adopted a
wide-ranging action plan on food labelling proposing a mixture
of regulatory changes and diverse voluntary initiatives. The aim
is to provide a high level of consumer protection in law, while
allowing flexibility for the food industry to give clear, consistent
and accurate information about their foods in a practical way
which consumers will also find useful and accessible.
Farm Assurance Schemes
Recommendation 20: The proliferation of farm assurance
schemes to differing standards could act as a barrier to competition
as direct suppliers become bound to one dairy company. This is
an issue which the OFT will need to keep under review.
14. Assured Food Standards (AFS) has been established
by the industry to bring together existing assurance schemes and
licence the use of the red tractor British Farm Standard logo.
AFS has been offered grant aid by the Government under the second
round of the Agriculture Development Scheme.
Recommendation 22: We deplore the unimaginative
and damaging prejudice that the very existence of small food producers
such as cheesemakers is inherently a threat to public health and
look to Ministers in MAFF and the Department of Health, and to
the new Food Standards Agency, to combat such attitudes with vigour
and urge the Agency to follow the example of MAFF and appoint
an official to act as liaison with the industry.
15. The Food Standards Agency is currently in discussions
with the Specialist Cheesemakers Association and representatives
of enforcement authorities on the development of the campaign
to increase food safety awareness among small cheesemakers. A
meeting with the SCA and LACOTS was held on 15 November.
Recommendation 24: We look forward to receiving
the views of the Competition Commission on producer co-operation
in its forthcoming report on supermarkets.
16. The Competition Commission monopoly report on
supermarkets was published on 10 October. The Commission found
that the market was broadly competitive, but made adverse findings
against the leading supermarkets in respect of their dealings
with their suppliers. The Secretary of State has accepted the
Commission's recommendations on these issues, including its recommendation
for a Code of Practice. He has asked the DGFT to seek legally
binding undertakings from supermarkets with 8% or more of the
market that they will comply with the remedies. The representatives
of suppliers will have an opportunity to comment on the draft.
Recommendation 25: We hope that the regional development
agencies will keep a close interest in the development within
the dairy industry of supply chain partnerships at regional levels.
17. The National Farmers Union (NFU) is now running
a comprehensive programme of workshops and seminars on the supply
chain, in conjunction with the Institute of Grocery Distribution.
The Regional Supply Offices will, on behalf of the Regional Development
Agencies, continue to liaise with the NFU and offer their support.
Government Support for Adding Value
Recommendation 26: We agree entirely with the
approach of ensuring Government support for small businesses is
more widely available to the agricultural sector. If farmers are
to be treated as small businesses, they should be eligible for
all the general support schemes open to other industries, including
those for research and development.
18. The Ministry of Agriculture, Fisheries and Food,
with the Small Business Service (SBS), launched the Farm Business
Advice Service for farms in England on 10 October. The £20m
scheme will run for the next four years, until March 2004. Over
15,000 farmers and growers are expected to benefit over the life
of the scheme. Farmers and growers will be able to apply for a
diagnostic business health check of their farm business and have
help in drawing up an action plan to refocus their business aims
to develop a more viable business and access other sources of
advice and support.
19. The service is aimed primarily at farmers and
growers with small to medium sized farm businesses which have
not previously received mainstream business support and advice.
The service will be delivered by the SBS through the network of
Business Links. More generally, the SBS is developing a national
information and advice service which businesses and individuals
will be able to access via the telephone or web. MAFF and the
SBS will continue to liaise on the provision of business support
and reducing regulatory burdens on the industry, including by
such electronic means.
Recommendation 27: We recommend that the Government
examine the feasibility of establishing DTI and other relevant
departmental information points at MAFF regional centres, so that
MAFF staff who deal with farmers on a day to day basis are aware
of and can promote the range of non-MAFF schemes open to farmers.
20. The Government is committed to improving the
co-ordination and streamlining of the variety of different funding
streams and initiatives available to farmers and others in the
regions. This is in line with the recommendations of the reports
from the Performance and Innovation Unit, and includes the development
of a stronger role for the Government Offices (GOs) in the regions.
To this end, MAFF is working up detailed proposals for strengthening
its regional strategic activities, including its regional information
activity, through greater integration with the GOs. From 1 April
2001 MAFF will have a Director, supported by a small team in each
GO office. The precise role and responsibilities of the MAFF Director
are currently being worked out in consultation with the Regional
Co-ordination Unit and the GO Regional Directors. The objective
is to contribute effectively to the attainment in the regions
of MAFF's PSA objectives, to strengthen the rural capability of
the GOs, and to foster closer working relationships with rural
stakeholders and environmental interest groups.