Select Committee on Environment, Food and Rural Affairs Minutes of Evidence

Memorandum submitted by the Royal Society for the Protection of Birds (A23)


  1.1  Public policy for the agriculture industry has to meet diverse aims—farming should provide adequate supplies of safe, healthy affordable food, protect and enhance wildlife, support diverse and attractive landscapes, and contribute to a thriving rural economy.

  1.2  The long-term prospect for agricultural production subsidies and quotas is abolition. They will not disappear overnight but rather will be gradually phased out through a series of CAP reforms over the next 10 years, driven by both external (world trade) and internal (EU enlargement, consumer and environmental) concerns.

  1.3  To achieve better stewardship of agricultural land there needs to be (a) a minimum environmental standard for farming and (b) public recognition and support for the wider benefits of the farmed landscape. These objectives can both be delivered through a combination of regulation, incentives, advice and market mechanisms.

  1.4  Reductions in production subsidies will bring farmers closer to the market place. Therefore, alternative income sources will, for some farmers, become increasingly important. Public support for the wider benefits delivered by farming will be needed if these benefits are to continue to be provided and farm businesses remain viable.

  1.5  Overall, the most important recommendations for the Committee to consider are:

    (a)  the Government should continue to press for further reductions in production subsidies and for increases in funding or Rural Development Regulation measures;

    (b)  the Government should press for compulsory modulation at the mid-term review of the CAP in 2003;

    (c)  the UK agriculture authorities should define and enforce a minimum environmental standard for agriculture;

    (d)  the Government should review the provision of existing advisory services for farmers and implement a simple, effective, integrated service to create a one-stop shop;

    (e)  providing the right framework of incentives, advice and training measures will be critical in successfully taking forward the changes demanded of the farming industry; and

    (f)  economic analysis of the impact of reductions in production subsidies (ie the potential winners and losers) would inform policy development and identify problems.


  2.1  The RSPB is Europe's largest wildlife charity with over one million members. We manage one of the largest conservation estates in the UK, covering more than 100,000 hectares. Sixty of our reserves are farmed, with around 170 tenant farmers, 200 employees and a turnover of £4-6 million. In 2000, we acquired a 180-hectare arable farm in Cambridgeshire where we are running a research and development programme.

  2.2  We have a long history of working on agriculture at both UK and EU levels and, more recently, have developed our expertise on global agricultural trade issues. The RSPB is the UK partner of BirdLife International—a global partnership of conservation organisations. BirdLife has identified the impact of agriculture as a high priority environmental issue and seeks fundamental reform of the Common Agricultural Policy.


  3.1  The RSPB sees the long-term prospect for production subsidies and quotas as abolition. We do not believe that production subsidies and quotas will disappear overnight but rather will be gradually phased out through a series of CAP reforms over the next 10 years, driven by both external (world trade) and internal (EU enlargement, consumer and environmental) concerns. The RSPB recommends that:

    1.  The Government should continue to press for further reductions in production subsidies and for recognition of non-trade concerns through domestic support;

    2.  Reductions in production subsidies should be replaced with support for environmental and rural development measures;

    3.  The environmental benefits of set-aside should be captured through agri-environment schemes when set-aside is abolished and specific measures should be considered to help those farmers worst affected by the removal of quotas;

    4.  Emergency aid measures should be available for use during exceptionally adverse market conditions;

    5.  The Government should press for compulsory modulation at the mid-term review of the CAP in 2003; and

    6.  The Government should bid for a greater share of the existing EU budget for the Rural Development Regulation at the mid-term review of the CAP.

  3.2  External pressures for change: the implications of the Doha trade negotiations. At the recent World Trade talks in Doha, the EU agreed to consider the abolition of agricultural export subsidies. The deal commits member countries to negotiate on major reductions in agricultural support and protection as part of a new Trade Round. This is a significant agreement given previous tense negotiations between the EU, US and Cairns Group trading blocs on issues such as export subsidies and market access issues.

  The devil is, of course, in the detail and already differences in opinion of what this text actually commits countries to are emerging. However, the agreement does lay the ground for further reductions in production subsidies in future. Talks are due to be concluded in January 2005, although many anticipate they will take longer. This could have some bearing on how quickly the EU moves to pre-empt the outcomes of trade negotiations by reforming its domestic policy. Many commentators, including RSPB, believe that further substantive reforms of the CAP will not take place before 2006.

3.3  Trade liberalisation from an environmental perspective

  Price supports in the EU have encouraged intensive, high input agricultural systems as farmers have striven for higher yields. This has caused huge environmental damage. For example, high yields are closely correlated with farmland bird declines in the EU.

  The RSPB advocates the outright abolition of price supports to align EU prices of agricultural commodities with the world market. This would enable all export subsidies, intervention buying and supply controls to be abolished. Price supports should be phased out by reducing support prices for key commodities towards world market prices over a five-year period, and replaced with a series of non commodity-specific area payments, agri-environment schemes and rural development measures.

  Trade liberalisation in itself will not solve all of the problems caused by the CAP. A move to world market prices would solve some of the problems relating to trade and market management. It may have some environmental benefits (in some instances encouraging extensification, and possibly making environmental schemes more cost effective) but it will also have disadvantages (reducing the profitability and competitiveness of many enterprises, forcing farm amalgamation and reducing spending on environmental management). Therefore, other forms of support that are less trade distorting and less environmentally damaging should replace price supports.

  Quotas and set-aside, while introduced predominantly for supply control reasons, have had environmental and social benefits. These benefits should therefore be captured under a reformed system of support. The environmental benefits of set-aside should be captured by dedicated environmental schemes, while the social impacts of removing quota can be addressed through measures designed to help smaller farms (eg through positive forms of modulation, special schemes targeted at the needs of smaller farms and measures to encourage new entrants to the industry). Well-targeted schemes of this type would be more effective in addressing environmental and social concerns.

  There is a good case for emergency aid measures to support agriculture during exceptionally adverse market conditions. While we reject the idea that the EU should routinely manage market prices to keep them above world market levels, the nature of agricultural commodity markets is such that prices and incomes can crash to very low levels when supply is unusually strong. Such conditions can have significant adverse impacts on the countryside and rural communities by driving farmers out of business. We therefore believe that the EU should retain measures to ameliorate these impacts. These could include emergency state aids, or measures to encourage farmers to take out insurance or trade in derivatives. Alternatively, the EU could maintain an intervention, system to ensure minimum prices for key commodities, but set intervention prices well below the world market, thus becoming a buyer in exceptional circumstances. This area needs further research. The cost of emergency intervention measures of this type would be significantly less than the 11 billion euros the EU currently spends on market support.

  The EU should not be obliged to provide direct compensation for cuts in support prices. However, we do believe that public financial support for agriculture is justified, and we set out proposals below for a reformed system of support. Producers of commodities such as milk and sugar beet, who rely most heavily on price supports at present, will be most affected by price cuts, but will become eligible for new direct payments, which can be phased in as price supports are reduced.

3.4  Mid-term review of the Agenda 2000 reform of the CAP

  We understand that the mid-term review of the Agenda 2000 reform of the CAP in 2003 is likely to result in limited reforms to the CAP. The exact nature of any proposals is likely to be influenced by the political map of the EU and the perceived appetite of key Member States for change. The outcome of the French elections in May 2002 will, for example, have a major bearing on how radical the Commission's proposals will look.

  Modulation provides a key opportunity for the EU. Under current rules, Member States can, on a voluntary basis, opt to reduce production subsidies by up to 20 per cent and use the money saved, match-funded from national budgets, to fund "accompanying measures"[1]. Some Member States, including the UK and France, have adopted modulation but the majority has not. The mid-term review may look at whether modulation should be compulsory for all Member States to adopt. This policy would have a number of benefits including reducing production subsidies, sending a clear statement to trading partners about the EU's intentions, increasing funding for agri-environment schemes and helping to tackle many of the environmental problems associated with current farming systems. However, there are also implications for farm incomes if compulsory modulation is pursued and further economic analysis into its likely effects is required.

  The mid-term review is also an opportunity for the UK to bid for an increased share of the Rural Development Regulation (RDR) budget. Due to historically low spending on rural development measures, the UK was allocated a low share of the RDR budget under Agenda 2000. Securing a greater share of funding would allow the UK to enhance and broaden the scope of the schemes it operates under its Rural Development Plans.


  4.1  Better stewardship of agricultural land will require (a) a minimum environmental standard for farming and (b) public recognition and support for the wider benefits of the farmed landscape. These can be delivered through a combination of regulation, incentives, advice and market mechanisms. The RSPB recommends that:

    (1)  The UK agriculture authorities should define and enforce a minimum environmental standard for agriculture;

    (2)  Every farm should be required to have a farm audit to assess whether this standard is being met or should be a member of a recognised farm assurance scheme;

    (3)  A whole farm business and environmental plan should be the entry point to all environmental and rural development schemes;

    (4)  The range of agri-environment and rural development schemes should be reviewed and expanded to ensure there are options that will be attractive to a range of farmers;

    (5)  The provision of advisory services for farmers should be reviewed and a simple, effective, integrated service put in place;

    (6)  The Government should provide short-term assistance to help farmers develop marketing and processing skills and expand the range of quality, branded foods.

4.2  A minimum environmental standard for farming

  A minimum environmental standard for farming should be established as a priority. This should cover soil, air and water protection (drawing on key elements of the current voluntary Codes of Good Agricultural Practice) and basic protection for biodiversity. Each farm would be required to conduct a farm audit to assess its compliance with the minimum standard. If farm assurance schemes and the farm audit worked to the same standard, membership of an assurance scheme could remove the need for an audit. The standard could be enforced through legislation, by using cross compliance to link it to receipt of direct payments or placing conditions on access to other schemes or grants.

  It is likely that a number of UK farms, as they currently operate, would not meet such an environmental standard. Farmers failing to meet the standard should be given a defined period of time to comply with the standard before action is taken eg legal action or withdrawal of subsidy. It is likely that some initial Government assistance would be needed in the form of capital grants eg for pollution control infrastructure.

4.3  Recognition and support for the wider public benefits of the farmed landscape

  Post-war public policy defined agriculture as a method of producing food and fibre. However, its role has always been much wider than this. Agriculture's other functions, of providing food and habitat for farmland biodiversity, shaping and characterising the landscape, managing the basic resources of soil and water, and providing the basis for rural social infrastructure, have only recently been recognised as major public benefits.

  These public benefits have been delivered as a by-product of farming systems for centuries. In the last 50 years, rapid developments in agriculture have undermined these benefits. Recently, declines in the environmental deliverables of farming have been matched by declines in the relative quality of life for farmers (in terms of income, hours, and social isolation), the number of jobs the industry provides, and in consumer confidence in agricultural products. Delivering public benefits—which the market would not otherwise provide—is a clear case for public intervention. We believe that ongoing public support for farming—delivered through a reformed CAP—is necessary to support the kind of multi-functional farming which society increasingly demands.

4.4  Model for future CAP support

  The RSPB proposes a model for future CAP support arranged in two levels (see Table 1). Level 1 would comprise a basic flat-rate area payment, for which most farms would qualify, subject to meeting a minimum environmental standard and making a basic contribution to rural development. Level 2 would comprise a series of environmental and rural development measures, similar to those available under the current Rural Development Regulation, but with much enhanced levels of funding. Member States would be able to develop and implement their own schemes, in line with criteria set out in EU legislation. Level 2 would reward the positive management and creation of basic farmed features, such as hedges, ditches, walls, ponds and field margins. It would also encourage the management and creation of particular habitats, such as heathland, native woodlands, wetlands, meadows and environmental set-aside of arable land. Rural development support, including processing and marketing schemes, business development grants and training measures would also be available under Level 2.

4.5  Farm audits and whole-farm plans

  Farm audits and whole-farm plans would be an important part of this system. All farmers would be required to commission a farm audit as a condition for receiving CAP payments. Farmers seeking support under Level 2 would be required to commission a whole-farm conservation and business plan. Ideally, farmers would seek advice and commission a plan before they were able to benefit from new schemes. However, because of the practical difficulties of providing plans for so many farmers, it would be necessary to phase this process in and to prioritise large farms. Farmers applying to enter major new schemes, particularly those that are more specialised or difficult to implement, could be required to commission such a plan before their application was accepted. Financial support would be provided to meet the costs of producing the plan.

Table 1: Proposed System of Agricultural Support in the UK and EU

LevelEligibility Form of PaymentRequirement
1All farmers and farmland eligible, subject to meeting environmental standard Flat rate area paymentMeeting environmental standard—eg codes of good agricultural practice, avoid overgrazing, pollution prevention, no damage to features/habitats, compliance with legislation (eg water framework directive). Farm audit
2Some schemes should be available to all farmers. Some schemes likely to apply to particular areas according to environmental/economic/social criteria Combination of area payments, capital payments, grants Whole farm plan

Positive management of features such as hedges, walls, ditches, field margins, stubbles

Restoration/re-creation of features

Support for training and basic rural development measures

Manage/restore/re-create habitats such as heathland, reedbeds, wetlands, native woodlands, environmental set-aside

Undertake rural development projects (processing/marketing, new business initiatives, tourism projects etc)

Support for farming practices which have environmental benefits eg spring-sown cereals, mixed cropping, extensive grazing, pesticide and fertiliser reductions

Special habitat improvement/management and rural development projects in particular areas

4.6  Role of advice

  There is a need for a simpler, more effective and integrated advisory service for farmers if better stewardship of agricultural land is to be promoted and new support measures are to be delivered successfully. The current problem is not a lack of advisory services for farmers but rather that they are fragmented and present a confusing picture. Farmers are often uncertain as to where to turn for help on environmental or farm business matters. The idea of a "one-stop shop" for advice has been suggested by a number of organisations in the past but has largely not been acted on by government. The best example of this kind of service to date is the Bowland Initiative in Lancashire, funded by MAFF as a pilot project in co-operation with Lancashire County Council. The main criticism of this project has been the high overhead costs of delivering such a service. We accept the Bowland Initiative might represent a "Rolls Royce" service but consider that it is a model from which important lessons can be learned. A more streamlined service based on the existing Rural Development Service, the Farm Business Advisory Service and other advice providers should be considered for the future.

4.7  Role of the market

  The market has a role in helping to encourage and promote countryside stewardship. The best current example is that of organic farming, where premium prices for organic food reward the farmer for environmentally sensitive practices. Conventional farmers who adopt wildlife-friendly farming practices could also benefit through food prices if food were labelled appropriately. For example, 1p on a loaf of bread would add £20 to the price of a tonne of wheat while 1p on a pint of beer would add £60 per tonne of barley. These premiums would, in turn, pay for field margins at £70 per 100m or conservation headlands at £170/ha which would benefit the environment. The extent to which consumers are prepared to pay higher prices for food produced in more sustainable ways is open to question although as demonstrated above, price rises need not be high to benefit farmers and the environment. Meanwhile, the market for organic food continues to grow with retail sales expected to reach £1 billion within a year or two. While the development of such markets for food must be taken forward largely by industry and private enterprise, there is an important pump-priming role for government in helping to provide skills and capital grants for infrastructure.


  5.1  Reductions in production subsidies will bring UK farmers closer to the market place and make them much more dependent on the price they receive for the food they produce. This will present both opportunities and threats. Alternative income sources will, for some farmers, become increasingly important. Public support for the wider benefits delivered by farming will be needed if these benefits are to continue to be provided and farm businesses remain viable. The RSPB recommends that:

    (1)  the Government should recognise that a period of adjustment is needed by the farming industry if opportunities are to be grasped and difficulties overcome;

    (2)  providing the right framework of incentives, advice and training measures will be critical in successfully taking forward the changes demanded of the farming industry;

    (3)  economic analysis of the impact of reductions in production subsidies ie the potential winners and losers should be undertaken to help inform policy development and identify areas where problems are likely to arise;

    (4)  the Government should consider the need for an exit strategy for those farmers who wish to leave the industry but are unable to for financial reasons and consider the need for special measures for new entrants.

5.2  Opportunities

  In 1999-2000, subsidies for all farm types exceeded net farm incomes, except in the case of dairy farms in England, where most subsidies come through price supports. Reductions in these subsidies will expose farmers to the marketplace and make farm income much more dependent on the price received for the food or other goods produced. Production subsidies have largely divorced farmers from the marketplace and encouraged the majority to focus more on quantity than quality. Given reductions in production subsidies and the removal of price support—bringing EU commodity prices in line with world markets—farmers are likely to pursue a number of strategies.

  Alternative strategies include farmers becoming:

    —  specialist producers of bulk commodities;

    —  specialist producers who strive for high quality and seek to add value to their produce, primarily food but also other rural products eg timber;

    —  alternative land users eg energy crops, alternative crops, flood alleviation; and

    —  countryside managers.

  All of these functions are important and need to be retained. Ideally, most farms will combine some or all of these options. The extent to which these options are pursued will depend on a number of factors, from the level of public support for activities such as countryside management, the willingness of consumers to buy high quality, specialist foods, the farmers' interests and abilities, land capability, advice provision and so on.

  Reductions in production subsidies will force change in an industry which has become heavily dependent on one single income stream. While that change will be painful for some, it will also create new opportunities and could, if handled carefully and with a period of adjustment, help to revitalise an industry which has become stuck in a rut. Some farmers will undoubtedly leave the industry but, with the right framework of incentives and advice, new entrants could also be attracted by the broader range of opportunities on offer. The range of businesses and activities within rural areas is likely to widen, which could lead to rural employment and boost the rural economy. Overall, there could be a significant number of benefits for agriculture and rural areas from reductions in production subsidies.

5.3  Difficulties

  While reductions in production subsidies should open up many new opportunities, it will also present significant difficulties in the short to medium term. Not least of these will be the impact on individual farm incomes, given that they are already at perilously low levels. Cuts in production subsidies, on which farm incomes are currently heavily dependent, will force some farmers out of business unless they can quickly develop new income streams. Gradually phasing in cuts in production subsidies at the same time as increasing funding for and developing new schemes (eg agri-environment and rural development programmes) will be critical factors in assisting the adjustment process.

  Clearly, it is not in the public interest to replace one kind of subsidy dependence with another. The RSPB therefore advocates the need for farming to become much more responsive to consumer demands. However, the current farming industry is the product of the past 30 to 40 years of farming policy (to which farmers responded highly effectively) and while change is needed, it will not happen overnight. Many farmers are simply not used to making the kind of choices and business decisions which will be required of them in future. Providing farm business advice and training for farmers and equipping them with new skills will be essential for many farmers if they are to survive. There will also be those farmers, often tenant farmers, who wish to leave the industry but are unable to for financial reasons. The Government should therefore consider an exit strategy for such farmers whilst also considering how to encourage new entrants.

14 December 2001

1   The "accompanying measures" include: agri-environment schemes, Less Favoured Areas, Forestry measures and Early Retirement Scheme. Back

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