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


Memorandum submitted by the Countryside Agency (A9)

  1.  The Countryside Agency leads with expertise about the rural economy and the place of farming within it, as part of our role as countryside "champion". We commission research, encourage demonstration projects such as "Eat the View", and also draw on the experience of nine wide scale Land Management Initiatives, designed specifically to give pointers to future CAP reform. We welcome this Inquiry.

  2.  UK agriculture is in difficulty. Profits have hit new lows. Over 40,000 jobs have been lost in the last two years alone and the commercial climate remains very difficult. In addition, parts of the country have been ravaged by foot and mouth disease. In some of the worst hit areas it might spell the end of much traditional livestock farming. The switch to more intensive farming on larger units has been associated with environmental damage; but lack of profits may result in further damaging change as farmers do all they can to stay competitive with each other and with overseas production. Confidence in farming as a business is suffering. Forty per cent of farms sold recently were not to people who wanted to farm, but to those looking for a country home with an attractive environment.

  3.  The results threaten the wider rural economy as well as animal welfare and the environment. Foot and mouth disease has shown how much rural tourism depends on the health of agriculture. Many small businesses have suffered losses and may face closure, including many not obviously linked to farming.

  4.  People expect land managers to deliver good quality, safe and reasonably priced food without compromising animal welfare. And they look for food to come from an attractive and accessible countryside with diverse wildlife which can deliver economic benefits for other businesses, especially tourism. They want land managers to play a responsible role in reducing flooding risk...and much more. But land managers cannot deliver against those expectations as matters stand.

  5.  The taxpayer is getting poor value for the £3 billion per annum[4] spent on EU and other agricultural support. Farming remains vital to the livelihood of many rural communities and the conservation of our cultural and environmental heritage, and yet little public money is devoted to securing those goals.

  6.  In short, land managers and farmers cannot deliver against public expectations within the framework of current agricultural policy. Nor will they be able to deliver without fundamental reforms of policy.

  7.  Earlier this year, we published A Strategy for Sustainable Land Management in England as our contribution to fresh thinking about future directions for agriculture, and more recently we submitted evidence to the Policy Commission on the Future of Farming and Food. Copies of both documents are enclosed [not printed]. We draw from them in this evidence.

  8.  In response to the questions posed in this Inquiry, the Countryside Agency supports a progressive reduction in production related subsidies and quotas. We see this as prerequisite for a new financial framework for farmers which would enable them to respond better to new opportunities and to achieve better stewardship of agricultural land.

Our vision for sustainable land management

  9.  Our vision for sustainable land management is one in which a sustainable, competitive and diverse food and farming sector is just one part. We would like to see a countryside where:

    —  prosperous land based industries produce high quality food and other products which people value;

    —  a wide range of rural businesses and services operate on and off the farm;

    —  the workforce is skilled and valued;

    —  the basic resources of soil and water are conserved effectively and degraded elements have been improved;

    —  the character and diversity of the landscape and settlements are valued and protected, and degraded parts are restored;

    —  native wildlife is flourishing;

    —  historic sites are conserved and used sensitively;

    —  local communities are vibrant and socially inclusive;

    —  visitors are encouraged to enjoy the countryside;

    —  society supports public investment in land management.

  10.  The goal is profitable land-based sector which works for the people who are employed in it, the communities in which they live and the people who visit the countryside and support it. It must retain, first and foremost, the responsibility for creating and maintaining the diverse character which is the essence of the English Countryside.

  11.  Food and farming policy has been dominated for half a century by a goal of increased productivity. There were good reasons for this view in the post-war world of rationing, but policy change is now overdue.

  12.  The agricultural industry is an important producer of many products the nation need but it is no longer expected to feed the nation. Global trade, rising living standards, and consumer expectations have led to different priorities, with food being drawn from world suppliers and with our home acres being used for more than agricultural production alone. Public aspirations have become increasingly focused on multifunctional land management rather than farming productivity, where food production remains a primary objective but others are important too.

  13.  Moves towards multifunctional land management and an associated integrated policy framework have already begun through the welcome publication of a Rural White Paper in 2000. We have contributed to the subsequent debate as in our Strategy for sustainable land management in England we seek:

    —  multi-functionality from land management, so that land management delivers a wide range of benefits beyond food and fibre production;

    —  sustainability, in other words management which contributes to economic objectives and to environmental and social objectives too;

    —  integration of land management into the wider rural economy;

    —  subsidiarity, with land management activity reflecting regional and local needs and aspirations.

  14.  The nation still needs to invest in agriculture, but for new purposes. Of these, the most important is the multifunctional management of land. As well as supplying food and non-food products for processing, farming can provide wider public benefits-access, landscape, wildlife, flood control etc. The supply of these benefits underpins an integrated rural economy, directly supporting businesses in the countryside. Such public benefits often lie outside formal market mechanisms but their combined value far exceeds the contribution of agricultural production to the gross domestic product.

  15.  It is these wider benefits flowing from a healthy and prosperous agricultural industry that justify continued intervention (using taxpayers' money) by the EU and the Government in agricultural policy.


  16.  By far the most dominant and influential funding support for land management is through the Common Agricultural Policy (CAP). Reforms of the CAP in 1992 and more recently under Agenda 2000 have reduced markets subsidies for many of the main agricultural commodities in a move to reduce EU prices and bring them closer to world market prices. Farmers receive partial compensation for these changes in the form of increased direct payments. Part of the CAP budget is now used to fund the new Rural Development Regulation (RDR), the so called "second pillar" of the CAP. This includes measures designed to improve environmental management of farm landscapes and habitats, provide support for forestry and hill farming, encourage better marketing and processing of agricultural products, encourage rural enterprise and offer training opportunities.

  17.  The EU budget for the RDR is fixed until 2006 but the Agenda 2000 reforms allow individual Member States to increase their RDR budget by applying "modulation". This means allowing Member States to redirect up to 20 per cent of CAP commodity support payments into the RDR budget. However, such money may only be used on certain of the RDR measures—the agri-environment schemes support in Less Favoured Areas and afforestation of farmland. So far only the UK and France are applying modulation although others such as Germany and Portugal are preparing to. Each country is pursuing a different approach in terms of what is modulated and how it is redistributed. Other countries such as Sweden and Austria see no need to modulate since rural development and agri-environmental measures already apply over most of their farmland areas. In the UK, the money raised by modulation will rise to 4.5 per cent of support payments by 2006 and is matched with new Exchequer money.

  18.  The measures under the Rural Development Regulation have been widely welcomed. However, they represent only the start of the process of reorienting CAP payments away from production related support towards environmental management and rural development.

  19.  Political pressure for further change in the CAP is coming from three main directions:

    —  the World Trade Organisation (WTO)—the removal of barriers of free trade is likely to have a significant impact on agriculture across Europe. The current system of commodity payments is seen as trade distorting, and the EU is under considerable pressure from other WTO members to change. Despite the lack of progress over a new agriculture agreement at the 1999 Seattle Ministerial conference, agricultural negotiations have begun. These are likely to lead to further commitments to improve market access and reduce domestic and export subsidies. The EU has already undertaken to negotiate towards such commitments;

    —  European Commodity enlargement—the future accession countries, from Poland to Romania, have large, relatively undeveloped agricultural sectors. The budgetary consequences of subsidising all the farmers in an enlarged European Community (up to 12 new Member States) in the same way as the EU 15 farmers are currently supported would be very costly;

    —  Changing consumer/public perceptions—there is increasing recognition that public subsidies need to provide demonstrable public benefits. The public value placed on farming, based on historic food security needs and the large numbers employed in the industry no longer carries the same weight it once did. The special status and support given to farming, compared with other industries, is being questioned as is the basis of the support system. Production-related support is costly and contributes to environmental damage, while keeping the costs to European consumers of some products above world prices. The system also lacks transparency.

  20.  The direction of change is clear. Production related support will be reduced over time and there is likely to be an increase in the EU money available for measures under the Rural Development Regulation. The issue is the pace of change and the extent to which the budget for the Rural Development Regulation will be expanded.


  21.  The Rural Development Regulation—translated in England into the England Rural Development Programme (ERDP)—has provided an opportunity to use CAP funds to help bring about beneficial change in rural areas. This is a welcome development but the proportion of total funds allocated to the ERDP is small. We see the need for greater investment in diversification and other rural development activity in agri-environment schemes open to all farmers and land managers across England.[5]

  22.  In the short term (and within the framework of the current regulations), we take the view that the Government should make greater use of its powers to:

    —  appply any modulation to increase the budget (and match-funding) for the ERDP beyond that planned by 2006, by increasing modulation towards the 20 per cent allowed by EU rules; under current plans, modulation rises to 4.5 per cent. by 2004;

    —  expand the range of activity allowed under the ERDP to include, for instance, more support to sustain the environment in Less Favoured Areas and for forestry on farmland.

  23.  In the EU mid-term review of the RDR, we argue that the Government should press for:

    —  changes in the Regulation to allow for more integrated delivery of the full range of measures (for example funding publicly employed facilitators);

    —  changes to the (so called) Horizontal Regulation to allow Member States flexibility in deciding how money generated from modulation can be spent (ie across the full range of RDR measures, not just the "accompanying measures", which is the current position);

    —  a better deal for the UK in the allocation of RDR funds from the EU; our current allocation of 3.5 per cent is based on historically low spending on agri-environment schemes.

  24.  In the longer term (and ideally as part of a radical reform of the CAP in 2006), we argue that the Government should negotiate for fundamental changes to the CAP. The RDR is too expensive to administer and too flexible to form the principle measure through which to achieve multifunctional land management and rural development. It needs to be replaced with a more integrated rural development policy, giving member states much greater freedom to set targets, methods of delivery, and levels of payment.

  25.  The Countryside Agency recognises that there are likely to be winners and losers from cuts in production related support and growth in activity under the Rural Development Regulation, as not all landowners will wish to, or be able to, take advantage of the various schemes under the Rural Development Regulation. The schemes are also competitive. We intend to commission research to explore the effects on farm incomes of increasing the rate of modulation and of applying the money generated in different ways.


  26.  In parallel with policy change, the Countryside Agency is pressing for a range of other measures to help the farmers return to profitability, respond to environmental concerns and to cope with restructuring.

Help farmers capture more of the value contained in the food chain

  27.  The subsidies, price supports and guaranteed markets associated with the CAP have led to a generation of farmers who have few tangible links with their ultimate customers. There is a lengthy food chain between the farm gate and the shopping trolley, with farmers sharing a greater proportion of the profits with food manufacturers, transport fleets and retailers.

  28.  The complexity of the food chain creates difficulties in moving a greater proportion of its value back within the farm gate.[6] In addition, not all farmers will be in a position to add value to their products "down the chain" and may will continue to produce and sell basic commodities. However, many have scope to capture some of that value.

  29.  We wish to see:

    —  a growth in market co-operatives, to help provide a scale of activity that will command greater strength in negotiating prices and a more effective promotion of farm products locally or regionally;

    —  more direct selling to consumers. Many farmers have always sold produce directly to customers but there is scope to increase the volume considerably through farm gate sales, farm shops, food boxes sold in nearby towns, and internet selling—and through the successful farmers' markets[7], where there is potential to increase their number, geographic spread and frequency;

    —  action by the major retailers. Until recently the national and international purchasing policies of the major retailers have had little regard for the importance of buying locally to the surrounding farming businesses and the countryside that supports them. Recent moves to widen the choice of regional and speciality food and drink in supermarkets are welcome—but more are possible.

Seek support—in expanding the market for good quality food from a diverse and rich landscape—from the food processing and catering industries, major retailers and the public

  30.  The food and farming industries would benefit from a greater public understanding of the link between the food they buy and the countryside they value. We are promoting this line in our "Eat the View" programme (Box 1).

  (1).  "Eat the View"

  Under this programme we are working to influence consumers so that they will buy more local products and particularly products that help reinforce the character of the countryside.

  We are supporting the National Association of Farmers' Markets, the regional food groups, the Farm Retail Association and projects to develop local food economies; and we are working to develop links between National Parks and AONBs and products from their areas and to promote local products as part of the tourism experience.

  31.  The growth in farmers' markets, rural tourism, and other forms of direct contact will improve matters but the real challenge is to link the choices made in supermarket shopping or in hurried purchases in a sandwich bar with the future of the English countryside.

  32.  The food processing, hospitality, tourism and catering industries can help address the challenge through their wholesale food orders. Currently, factors like the price, freshness or appearance are specified but rarely provenance. Those industries should make links with a range of different suppliers so that orders specifying a locality or level of quality would become the norm. This would enable access to a more segmented market for producers.[8] There would also be promotional advantages for those hotels, restaurants and other businesses which make such local links. The same principles apply to public procurement practices, although Single Market rules can cause difficulties.

Encourage new markets that can be supplied from non-food uses of the land

  33.  The increased production by farmers of non-food crops grown for industry and renewable energy has the advantages of expanding the production of commodities not dependant on subsidies, and reducing the nation's dependency on fossil fuels—thereby contributing to Kyoto targets. New markets are the key.

  34.  Demand for non-food crops will emerge when entrepreneurs perceive potential profits in end-products but demand would be enhanced by a national framework for non-food crops, which could guide an otherwise host of individual decisions. This is essentially a task for the Government. National guidance on matters such as non-fossil fuel obligations and sustainable development targets are helpful but come without context.[9] The industry needs broad marketing advice, perhaps backed by incentives, to determine what should be grown and where, in what quantity, to what timescale, and within what level of economic certainty or risk.

Establish new ways of buying public benefits from farmers that will not be funded through the normal market

  35.  Generating public benefits is complex, with support from the public coming through taxes rather than direct payment. Farmers already produce non-market public benefits as part of their land management. Considerable progress has been made in enhancing the landscape and wildlife, protecting historic features, and providing access with public funding. Subsidies, grants and formal agri-environment schemes will still play a big part but other approaches are needed too.

  36.  We propose a quasi-market system, a good example of which can be found in the National Forest, where landowners are invited to tender to create new woodland and other public benefits. Another early candidate might be flood prevention plans for towns which include the creation of flood plain water storage upstream. A similar mechanism could be used for other benefits—for instance, the creation of new wildlife habitats, or new access for recreation.

Strengthen business advice and support in the countryside and focus it on two key audiences: land managers, and those moving into the countryside to set up new businesses

  37.  The countryside is changing quickly and the traditional role of farmers in growing crops and raising stock might not always match the scope and requirements of wider, more integrated rural enterprises. Efficient farming demands many skills but many farmers, while adaptable to a point, would benefit from advice and training to help them run more broadly based enterprises.[10]

  38.  This process would not have to start from scratch. Much is already under way and experience can also be drawn from the Countryside Agency's Land Management Initiatives, which are piloting a range of approaches for the better provision of integrated, whole-farm advice (2).

  (2).  Land Management Initiatives

  Working with farmers, local communities and others, we are developing a series of area based projects to investigate the problems faced by land managers. The aim is to research and demonstrate practical solutions to the challenges of managing land sustainably so that it produces a wide range of economic, environmental and social benefits.

  Nine projects cover arable areas, the uplands and lowland pastoral countryside.

  While the focus of the LMIs is land management, as an integral part of the way forward the projects are assessing the needs of communities beyond the farm gate and are reviewing the policies, mechanisms and structures necessary to help farmers and others satisfy these needs.

  39.  In an industry with an ageing workforce and a crisis of succession, high quality advice and training is essential and demands public investment. We propose that:

    —  farming advice should be based on an extended capacity of farm business advisers, providing assistance on development and diversification in the context of whole farm plans;

    —  formal training in new skills, which is often logistically difficult for farmers, should be delivered through a variety of approaches including flexible programmes, distance learning, on-farm training and best-practice visits.


  40.  Production related subsidies will be reduced over time. The challenge is to ensure that the money saved is retained for the benefit of the countryside through expansion of the resources available for the measures under the Rural Development Regulation; and that other measures are in place to help farmers through what is likely to be a difficult process of adaptation and restructuring.

Countryside Agency

12 December 2001

4   The figure will be much higher in 2001-02 with the addition of foot and mouth disease compensation payments. Back

5   Although small in terms of total CAP spend, agricultural and rural development measures encompassed by the RDR increased from £1.1 million in 1995-96 to £7.7 million in 1998-99. Back

6   The UK food chain accounts for a gross value added of £56 billion but only £8.2 billion is directly returned to farmers and producers. Back

7   There are currently over 300 farmers' markets. Back

8   The Countryside Agency is helping to develop environmental standards that will create a market differentiation and attract a premium in the market place. This work will reflect the needs of the countryside, natural resources and society. Back

9   For example, the non-fossil fuel obligation might encourage a farmer to grow short-rotation coppice, but the Government needs to provide the security that power stations will be built to burn it as fuel. Back

10   Such training might include: how to make connections with the wider local economy; how to diversify on-farm businesses, taking on new roles and adding value to existing products; how to manage a farm as a part time enterprise; how to respond to the demand for wider public benefits from farmland; how to tune business and marketing skills. Back

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