Select Committee on Environment, Food and Rural Affairs Ninth Report


241. Reform of the CAP, and moving towards a more market-orientated system, will expose farmers much more to the ever-changing demands of consumers. This suggests opportunities, as well as threats, for United Kingdom agriculture in general and individual farmers in particular. We believe that both can flourish. However, as with any market there will be no future for those who cannot provide consumers with what they want at the price they want it. So the structure of a flourishing United Kingdom agricultural industry could be very different from the structure of today's industry.

242. The United Kingdom has an ideal climate for grass growth and, we have been repeatedly told, it could become a major producer of milk products and beef in a liberalised market. It is also a competitive wheat producer, amongst other crops. There will also be opportunities for fast-moving, market-orientated farmers seeking to exploit niches in the marketplace at local, regional, national and international level. It is a mistake to argue that the United Kingdom can never compete in a free marketplace with North American producers: Kansas cannot feed the world, and there is room for efficient European producers in the world market - although the success of British farmers will be affected by the regulatory regime in which they operate, and their adoption of new technologies in an increasingly competitive market success requires innovation, flexibility and fleetness of foot, not the inertias and rigidities of a production system distorted by subsidies.

243. In order to harness the opportunities that are undoubtedly in the marketplace, British farmers and all the other participants in the food chain will need to change. The conflict and 'blame' culture that is so apparent in the food chain, particularly in the milk supply chain at present,[465] must be replaced by a culture of openness and trust. This is likely to involve significant change in the personnel and training of those involved in United Kingdom agriculture. A flaw in the Policy Commission's report is its relative silence on this issue. Land cost and family history does not facilitate change and market forces often remove the youngest farmers who have borrowed most, not the older generation with their own capital.

244. A lot has been said about the need for farmers to reconnect with consumers. In some ways this is an oversimplification. The changes in both agriculture and consumer behaviour mean that farmers and consumers can easily become disconnected as more and more of what we eat is in prepared or processed form, yet they are linked through a greater number of channels. There is certainly an argument for farmers gaining a better understanding of those channels, but in many cases relationships with consumers will continue to be conducted through intermediaries. We believe it is essential that links and trust between farmers and those intermediaries, particularly retailers, are restored and reinforced . Messages to farmers are delivered mainly by the supermarket chains which need to respond rapidly to the preferences of consumers. We saw for ourselves, both in New Zealand and more importantly in East Anglia, that even though it is not possible for farmers to control the market for food it is possible for them to gain a good understanding of what consumers want, to respond to that and be rewarded for it, although this necessarily involves taking risks.

245. There has been much talk of the impact that the development of 'local foods' can have. Selling local products either to retailers or directly at farmers' markets will benefit farmers. But local food initiatives are not a universal panacea. In order to have a sustainable future, most farmers will need to produce in bulk, rather than addressing only small niches. There may also be considerable merit in building up regional or even national brands. Doing so may allow more value to be passed to the farmer. Such projects are likely to be easier to pursue if a more sensible attitude is taken to collaboration and co-operation between farmers. Too often a regional product is defined as one with a purely local circulation. The real meaning should be a product on national (or international) sale which has a clear regional identity which earns a premium - a high proportion of home-produced foodstuffs in fact have a national sale on the basis of a strong regional identity, including many cheeses, and some meat. Money spent on branding and marketing regional identity products, whether diverted from CAP subsidies or coming from Regional Development Agencies can make a greater contribution to the development of markets for farmers than subsidy or grant flowing into individual farm accounts.

246. In the agricultural sector the existence of the CAP and the European single market mean that decisions about competition issues should take account of the wider European market rather than just the domestic market. There is obviously a balance to be struck between equipping 'national champions' with the muscle to compete effectively abroad and maintaining competition in the domestic market. This is undoubtedly an easier matter for countries with very small home markets but we are not convinced that the balance of priorities in the United Kingdom is yet the right one. Moreover, if United Kingdom agriculture is to compete on the world stage it is worth noting that it will do so against very large companies - we cite the example of the New Zealand dairy company Fonterra. The Government should clarify what it considers to be the marketplace for British farmers. It must then address the nervousness felt by farmers about the attitude of the competition authorities towards co-operative enterprises, making clear that it looks at farming co-operatives in the light of global rather than domestic circumstances.

247. The speed with which the farming industry has responded to the recommendation to take forward the English Collaborative Board is commendable. It is crucial that the industry has ownership of the solutions to its problems and believe that the positive but very limited involvement of the Government in this initiative is helpful. If, as the result of the activities of the Board, co-operatives or new collaborative arrangements are taken forward in response to market developments and then remain focussed on the market in which they operate, we believe that they will have more chance of success. It is very important that the industry as a whole can shed the image described to us of many farmers waving goodbye to their produce once it leaves the farmyard.[466]

248. Another way of adding value is by creating brands which tell consumers that a product is safer than others, produced in a more environmentally friendly way, or according to higher standards of animal welfare. Assurance schemes allow farmers to do so. However, although different assurance standards may appeal to different market niches, the confusion caused by the large number of different quality assurance schemes is a concern. Some rationalisation of the number of farm assurance schemes would be welcome. Farmers themselves will need to reach decisions on how many and which assurance schemes they want to participate in, but to do so they will need adequate information about the costs and benefits and consumer perceptions of such schemes. We believe the provision of such information is something that either the Food Chain Centre or the English Collaborative Board could undertake and suggest that the whole food chain initiates such a study.

465   Evidence taken on 27 February 2002, Ev 97, QQ.439-441. Back

466   Evidence taken on 8 May 2002, Ev 303, Q.1026. Back

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