Farming in the United Kingdom is in a state of crisis caused by falling commodity prices, the strength of sterling, and recent outbreaks of infectious animal diseases such as foot and mouth. The Government has sought to address the needs of domestic agriculture through the Policy Commission on the Future of Farming and Food. Internationally, the Mid-term Review of the Common Agricultural Policy, the process of European Union enlargement, and the Doha Round in the World Trade Organisation may lead to significant changes in European agricultural policy, which will obviously affect the United Kingdom. In short, the industry and policy-making are in flux.
Our objective has been to assess the current situation, and to look to the future. It is apparent that financial support to farmers for food production will be reduced over a number of years, a development we welcome. The primary role of farming should be to produce food that consumers want to buy, in an open and competitive marketplace. We believe that any future interventions in the marketplace should be made only when
(a) an assessment has been made of the problem the intervention is addressing, and it has been established whether or not it is a short-term problem or structural issue that is being tackled;
(b) the desired outcome of the intervention has been made known, such as to allow an assessment of the effectiveness of the intervention;
(c) clear indications have been given about the length of time for which any financial support offered will be available;
(d) there is absolute confidence that reform is consistent with our international obligations;
(e) they allow for the international competitive environment within which much of United Kingdom agriculture operates - while it is unrealistic to expect every policy instrument to be mirrored elsewhere in the European Union;
(f) they are, as far as possible, consistent with fostering an entrepreneurial culture - competition for support and rewards for effectiveness are legitimate features of programmes; and
(g) the impact of any intervention on the wider rural economy has been fully taken into account.
Whilst we support payments made on environmental grounds, we express some doubts about agri-environmental schemes, including the 'broad and shallow scheme' espoused by the Policy Commission. They risk distorting the marketplace for farmers as much as the Common Agricultural Policy has in the past. We prefer that environmental benefits be obtained through cross-compliance requirements placed on existing or new payments and, if necessary, regulation, and through financial support for more detailed schemes delivering specific benefits.
Finally, we begin to discuss the proposals for the Mid-Term Review of the Common Agricultural Policy. We will return to them in more detail in an inquiry which we have already begun.