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

Annex 2

English Land Management Contracts

  ". . . Agricultural multifunctionality is a reality in any well-managed agricultural enterprise: such an enterprise contributes simultaneously to agricultural production and to the protection and renewal of natural resources, to balanced land use and to employment. It is a vision of agriculture in which the environment, animal welfare and product identification are no longer perceived as burdens on farming, but as advantages enabling value to be added to farm produce in national, Community and world markets . . ."

Jean Glavany, Minister of Agriculture and Fisheries, January 1999


  Multifunctionality has become the agricultural industry's new buzzword, but has, in fact, been a reality in well-managed agricultural enterprises for much longer. A multifunctional enterprise contributes simultaneously to the economic, social and environmental viability of rural Britain. It is a vision of agriculture that recognises the positive externalities of farming; the non-marketable by-products that are so valued by society.

  In the wake of the recent and devastating foot-and-mouth disease epidemic, not to mention a host of other disasters in the industry, the Countryside Alliance welcomed the opportunity to respond to a review of food and farming and its future. Within our report we advocated the use of Land Management Contracts (LMCs) as a mechanism with which to achieve "multifunctional" systems of production. This paper provides further detail and practical recommendations that may be of use.


  The LMC system (based on the experiences of the French) enable farmers to implement systems of production that are for social benefit but which cannot be fully paid for by the market and require financial input from society in recognition of the commitments entered into.

The Producers:

    —  All managers of agricultural holdings have the option of signing an individual, five year contract with their local Rural Economic Development and Support Agency (REDSA)—see below. Preference is given to medium-sized holding whose initiatives are collective in scope; adding value to products, especially with quality labels, protection of natural resources and the environment, water quality, landscape management, rural development and so on.

    —  Farmers still focus on their core activity of food production, but they also meet social expectations on employment, food quality, food safety, environmental protection and balanced regional development.

    —  Farmers complete a sustainable development project encompassing business development, environmental protection and social benefit. Each contract is based on an overall assessment of the farm within a local context and the Government is committed to helping the initiative financially for a period of at least five years.

    —  Within this framework, LMC's enable farmers to innovate—seeking new markets niches, working with others to promote a product, or finding new ways of preserving existing jobs or creating new ones.

Rural Economic Development and Support Agency (REDSA):

    —  Each local REDSA draws up a standard contract but tailored to a specific geographical area and meeting local needs and conditions. The contract would comprise of a coherent set of standardised measures reflecting these. A standard measure is an action or set of actions aimed at achieving the contact's objectives. These actions would be reflected in the contractual requirements of each farmer.

Administration of LMC's

  The Countryside Alliance, in a separate paper, has outlined the need for the "evolution" of DEFRA and the delivery of rural policy. This is fundamental to the LMC approach.

  A single Rural Economic Development and Support Agency (REDSA) would be responsible for the provision of LMC's. It would act as an interface with other regulatory agencies and provide a flexible service that can respond to radical changes in policy (still firmly in the hands of DEFRA). This simplification process would ensure a shift in policy from production and price support to fixed investments in a wide range of rural economic activities. It would also enable rural products, for which there is not a competitive market, to be purchased.

  Individual officers of REDSA would interact (in a holistic way) with a rural business to administer all submissions for assistance, receipt of payments, and interaction with appropriate regulatory bodies. Teams of officers on a regional basis will deal with institutions or communities and will deliver the same support as officers assigned to businesses.

  The new payments agency established by DEFRA will be separate from the local and regional structure of REDSA for audit and fraud avoidance purposes, but its national director would report to the chief executive of REDSA.

Financing of the LMC's

  Experience in France has shown that, on average, a single LMC costs around £13,000 over five years (FRF 135,000). Under the England Rural Development Plan, LMC's would be partly funded by the EU Rural Development Regulation (through a revised England Rural Development Plan). Additional funding would be provided through an increase in modulation payments (gradually increased from 2.5 per cent to 20 per cent over six years) and the associated match funding from the UK Treasury. The Countryside Alliance has provided another paper to detail how this should be achieved with minimal impact on individual farm budgets.

  Other types of financial support can be added, eg from public bodies, and should be defined in each individual contract.

  This funding should provide for two types of payment:

    (i)  Investments or costs entailed by socio-economic, environmental and land use factors—subject to a maximum of around £10,000 over the term of the contract.

    (ii)  Agricultural and environmental commitments requiring improvement or maintenance of "defined" practices. The total amount of this payment is adjusted to the size of the holding, applying a sliding scale favouring small to medium-sized farms. These payments also favour projects providing for net creation of jobs or organised in a collective, co-ordinated manner.


  LMC's often require a diverse range of skills, sometimes new to farmers. For this reason, contract design and application may sometimes include a vocational training component.

Key Recommendations

    —  The use of Land Management Contracts as a tool to enable farmers and rural businesses to implement production systems which are for social benefit but which cannot be fully paid for by the market.

    —  Administration of these contracts relies upon a massive simplification and re-organisation of the Department for Environment, Food and Rural Affairs, including the creation of a single Rural Economic Development and Support Agency (REDSA).

    —  An increase in modulation from the 3-5 per cent currently enforced to 20 per cent over a period of six years.

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