Select Committee on European Union Thirteenth Report


16th REPORT, SESSION 1998-99: ORGANIC FARMING AND THE EUROPEAN UNION

Letter from Mark Stickings, Parliamentary Clerk, Ministry of Agriculture, Fisheries and Food to the Clerk to Sub-Committee D

  I am pleased to be able to enclose the Government's response to Sub-Committee D's report on Organic Farming and the European Union which was published on 29 July.

  The Organic Farming Scheme which was introduced on 6 April this year has been taken up with such vigour that the funds which were made available both for this year and for next have already been committed. Ministers announced on 2 August that applications received after that date would be met from next year's budget. Ministers have today closed the scheme to new applications (with one minor and time-limited exception) until new resources can be provided and have announced a review. I attach copies of both announcements.

4 October 1999

Government Response to the House of Lords Select Committee on the European Communities Report on Organic Farming and the European Union

  INTRODUCTION

The Government welcomes this report, which is the outcome of a thorough examination of the issues arising from organic production. The report is timely for a number of reasons. In the UK organic production and the demand for organic produce have expanded considerably over the last eighteen months. European Union standards for organic livestock and livestock products (complementing those already in place for organic crop products) have recently been agreed and Member States will be taking the necessary steps to apply them in the next 12 months. Aid for conversion to organic farming will be a component of the Rural Development Plans which will be submitted shortly for approval under the Rural Development Regulation (Regulation (EC) No. 1257/1999) and the Government has announced a review of the operation of the Scheme in the light of the rapid take-up since April of the funds available for 1999-2000 and the following year. There is a vigorous debate about the interface between organic farming and the planting of GM crops (on which the Committee reported earlier in the year) and MAFF's programme of organic R&D has recently been reviewed.

  The Government particularly welcomes a number of the Committee's recommendations. Support for farmers converting to organic production is an important element in promoting environmentally friendly farming. But it is one element only and it is necessary to allocate the available resources to provide a balanced package of funding for a range of environmental actions. The Government agrees that organic aid should be concentrated on conversion and that support should not be extended to provide ongoing payments to organic farmers, for whose produce the market provides a premium.

  The Government welcomes the Committee's conclusion that a modus vivendi needs to be reached which will accommodate the legitimate interests of both organic farmers and farmers who wish to plant GM crops. It will play a full part in seeking to achieve this outcome.

  Consumer confidence is of paragraphmount importance if the expansion of the organic sector in the UK is to be sustained. A number of factors identified by the Committee influence consumer perceptions, including the need for confidence in organic standards. The Committee's views on these standards are a welcome reinforcement of the Government's own position in respect of the future development of European Union standards.

  The Government shares the Committee's concern at the pace of reform of the Common Agricultural Policy.

SPECIFIC RECOMMENDATIONS

  The recommendations in italics refer to Part 5 of the Select Committee's 16th report in the 1998-99 session and are referred to by paragraph number.

BENEFITS AND DISADVANTAGES

  108.   From the evidence that we have received, the claims for certain benefits of organic farming appear to be valid. This would be so for biodiversity, soil structure, water quality, most aspects of animal health and welfare, and some aspects of food quality. (paragraph 65)

  The Government agrees with the Committee's conclusion that organic systems can be expected to provide a number of environmental benefits. New R&D is being commissioned to evaluate further the benefits which typical organic systems provide.

  109.   It is accepted that other consequences of organic farming are yield reductions of crops, lower production from animals, and, because of lower stocking rates, lower output per unit of land. This means higher cost per unit of food, but given the lower input costs of organic farming and the possibility of higher prices for organic products it does not necessarily mean lower profitability for the producer. (paragraph 68)

  The Government agrees that organic systems generally produce yields lower than those produced by conventional systems but that the net revenue loss through lower yields is compensated by the market premium for organic produce. The effect of conversion on returns will depend on the individual enterprise, the system in place before conversion to organic farming and market circumstances, including the level of the organic premium. Yields per animal are not always significantly reduced; for example, an organic dairy herd can achieve yields similar to conventional herds.

ORGANIC PRODUCTION AND PROCESSING STANDARDS

  

Organic production and processing standards: Regulation 2092/91

110.   The Committee thinks it is important that there should be a clear and intelligible basis for organic standards for both production and processing, and so urges that the standards should be underpinned by detailed scientific research. The establishment of a technical committee in UKROFS is a welcome step in this direction, and we hope that the recently increased funding for organic research and development will also be of assistance. (paragraph 73)

  The Government is pleased to note the Committee's welcome for the UKROFS Technical Committee and for the greatly increased MAFF spend on organic R&D. However, it should be noted that organic standards reflect a sectoral consensus based on established methods and developing perceptions of what is consistent with the principles of organic farming, including judgements on standards of animal welfare and such issues as the acceptability of using genetically modified organisms. It follows that they are not and cannot be entirely science based, although where regulated substances are used in organic farming they are subject to the same controls as when they are used elsewhere.

  111.   Any attempts to dilute standards [further] should be resisted, and for this reason it is important that the sector bodies remain closely involved in standard setting. The standards are essential to retain consumer confidence, and while we note that the use of copper-based fungicides is due to be phased out, the Committee does not think that consumers would expect such products to be used in the production of organic food. Other anomalous substances were also cited which are not due to have their approvals withdrawn. The Committee recommends that research into the identification of less toxic alternatives should be given priority, and suggests that one of the first tasks of the new UKROFS technical committee should be to review the substances which are currently approved by the European Commission, and then make appropriate recommendations to the article 14 management committee. (paragraph 74)

  The Government agrees that consumer confidence in the integrity of organic standards is of vital importance. It is confident that UKROFS, which is responsible for implementing organic standards in the UK, understands and accepts this. In fulfilling its functions UKROFS pays close attention to the views of the organic sector bodies, of which there are now seven.

  The Government notes the Committee's conclusions on the appropriateness of particular substances for use in organic production and will seek the views of UKROFS and others on the timetable for phasing out copper-based fungicides. Research on alternatives is being considered but the safety of these products is not in doubt, all must meet the usual criteria set for the approval of pesticides

Livestock amendment to Regulation 2092/91

  112.   The Committee welcomes the agreement of the livestock amendment to Regulation 2092/91, if not every detail of it, and now that it has been adopted, the Committee considers that the Government and European Commission should view as a priority the adoption of standards for areas still not adequately covered by Regulation 2092/91, such as fish farming and complex processing. Consumer confidence is vital for the organic sector, and the Committee urges the Government to implement the amendment in a way which does not jeopardise this confidence. (paragraph 80)

  The Government agrees with the Committee that the Community standards for organic livestock and livestock products (adopted in July as Regulation (EC) 1804/1999), although not perfect, are to be welcomed. As noted earlier, the Government accepts entirely the importance of retaining consumer confidence. The confidence of the organic sector in the regulatory system is equally important and, with the Ministry's encouragement, a working group comprising representatives of the organic sector has been considering recommendations on the implementation of the Livestock Standards which the industry might put to the UKROFS Board.

  The Government notes the Committee's proposals on future work in areas such as fish farming and complex processing. Work on the former is under way in an ad hoc working group established by UKROFS. No doubt the European Commission will also have taken note of the Committee's views on work in these areas.

UKROFS

  113.   The Committee hopes that the Minister will bear in mind the need for continuity on the UKROFS Board and notes that some flexibility has been exercised in the recent round of appointments to the Board. In relation to the funding of UKROFS, any permanent increase in workload, particularly including certification of imports should be matched by a proportionate increase in funding. This is important if consumers are to retain their faith that the organic sector is properly regulated and they can trust the authenticity of the organic label. (paragraph 82)

  The Government agrees with the Committee that in making appointments to public bodies due weight must be given to the value of continuity of experience and is pleased to note the Committee's recognition that this was taken into account in recent appointments to the UKROFS Board. It is of course of overriding importance that the principles set out by the Nolan Committee should be observed and that fresh appointments to public bodies should be made from time to time.

  The Government notes the Committee's views in respect of support for UKROFS. In accordance with the rules governing Non-Departmental Public Bodies, UKROFS will be subject to a Review, beginning this autumn, which will consider its performance of the functions it was set up to carry out and how best they might be carried out in future. The Committee's views and those of UKROFS itself will be taken into account in that Review.

Enforcement of standards and imports

  114.   Given the increasing likelihood that producers and processors will be attracted to the organic sector by the available profits, and the current impossibility of testing produce to prove its authenticity, we do not think it is sufficient to rely on a paper-based system for organic imports. For produce entering the EU we recommend that the Commission works closely with IFOAM to develop a system which includes on-the-spot checks by inspectors working for the EU. In the longer term globally recognised standards should be established and observed. (paragraph 85)

  The Government notes the Committee's views and agrees on the need for more work to be undertaken by the Commission on the equivalence of third country and Community standards, work which at present is largely left to Member States. As to the vehicle for achieving greater confidence in third country systems, greater involvement of IFOAM may prove to be a way forward if consensus on this can be achieved between Member States.

Genetically Modified Organisms

  115.   The Committee considers that the Government must help the organic movement and conventional farmers who intend to use GM crops to reach some kind of modus vivendi, respecting as far as possible the wishes of both sides. Both UKROFS and the new Agriculture and Environment Biotechnology Commission should have central roles in this process. It will be vital to find an acceptable compromise over minimum set distances between organic and GM crops, similar to the rules for preserving seed purity, which specify required distances between crops grown for seed production and all other crops that could result in cross pollination. (paragraph 86)

  The Government agrees that the interface between organic farming and the planting of GM crops requires urgent attention. The Government agrees with the Committee's view on the need for compromise and is working to facilitate this. Discussions between the interests concerned and the relevant Government Departments have been set in hand and are continuing.

SUPPORT FOR ORGANIC FARMING

  

Should the Government set a target

116.   The Committee does not think that it makes sense to set an arbitrary target the achievement of which will be dependent on factors outside the Government's control—such as the state of the conventional farming sector and the strength of demand for organic food. Having said that the Government should not be tied to an arbitrary target, the Committee does consider that organic farming brings benefits, and that Government support is justified. (paragraph 89)

  The Government is pleased to note the Committee's welcome for support for organic farming from public funds and endorsement of the Government's conclusion that setting a target for organic production is not appropriate.

Ongoing subsidy

  117.   We do not think that the Government should introduce a new scheme which provides ongoing subsidies exclusively for organic farmers. The Committee is not convinced that organic farming is the only way to achieve environmental and other benefits; there is a large amount of evidence that it is possible to produce similar outcomes using different farming systems. Organic farmers will of course always be strong candidates to be accepted onto existing agri-environment schemes, such as Countryside Stewardship and the Environmentally Sensitive Areas. An excessive targeting of funds towards organic farmers can only reduce the amount of money available for the achievement of environmental and other goals in the farming community in general. (paragraphs 91 and 92)

  The Government is pleased to note the Committee's endorsement of the view that environmental objectives need to be addressed by a variety of means and agrees that it would not be appropriate to rely on on-going support for organic systems alone to achieve these objectives.

Conversion subsidy

  118.   The Committee does, however, think that there is a strong case for continuing to provide support for farmers converting to organic methods. If there were no support during conversion farmers might be prevented from converting by the temporary extra costs involved. Once through the conversion period, organic farmers should expect to rely on the prices they receive through the market, and any extra payments through general agri-environment schemes. (paragraph 93)

  The Government welcomes the Committee's endorsement of its conclusion that, whilst support over a limited period for conversion to organic farming can be justified, long term support is not required for holdings which have converted to organic farming and that organic farmers should look to the market for the returns needed to sustain organic systems.

Organic Farming Scheme

  119.   Although the Committee did not examine the subject of double funding in depth, we are concerned that the rules could result in disproportionate, even unfair, reductions in payments to some farmers, and we ask the Government to seek ways to avoid this happening in future. (paragraph 96)

  120.   The Committee welcomes the new Organic Farming Scheme but regrets the confused circumstances of its launch, and hopes that appropriate lessons are learnt for the future. In particular, potential applicants need to have sufficient information about when money will be available and what other grants they may lose, well in advance of the need to make a decision to apply. (paragraph 97)

  The Government notes the Committee's comments about the launch of the OFS and about dual funding. The rates of aid for the scheme and the need to deal with dual funding were considered in the report of the Review of the Organic Aid Scheme, published in April 1998, a year before the Scheme was launched. The Committee's views on double funding and the need to learn lessons from experience will be taken into account in the review of the operation of the Scheme. The availability of funding will be a material consideration in determining future priorities.

  121.   The Committee recommends that when MAFF next review the scheme the organic sector should be consulted to determine whether there has been a failure to attract certain types of farmland into the scheme, resulting in under-supply of the market in certain products. The payment rates for different kinds of land or types of farming could be adjusted to take account of any discrepancies. For example, it might well prove necessary to offer a higher rate for fruit and vegetable producers, as much of the land now entering conversion is grassland. (paragraph 98)

  The proposed review of the Organic Farming Scheme will be undertaken in close consultation with the organic sector. The review will look at the aid structure to consider whether the rates have unduly skewed aid to particular types of land or enterprise. The review will also need to consider the implications of seeking to attract enterprises, particularly those in the horticulture sector, for which especially high rates of conversion aid are likely to be necessary.

Common Agricultural Policy

  122.   We look forward to the day when EU agricultural policy is not so blatantly contradictory, and the inefficiencies of the production subsidy system are removed. In general, the direction in which the CAP is (very slowly) moving, with the redirection of support towards environmentally beneficial practices, should benefit organic farming. (paragraph 99)

  The recent Agenda 2000 deal did represent a significant step towards securing an industry which could be both competitive and sustainable. The Rural Development Regulation, in particular, provides a sound, though far from perfect, basis for member states to select and target measures which suit their particular circumstances. However, the Government agrees that it would have liked more radical changes in the policy and a more rapid shift in emphasis away from production support to rural development and environmental measures. To achieve that end we have to carry other Member States with us and many of them have been less enthusiastic for reform than the UK. Both enlargement and the WTO negotiations are likely to produce pressure for further reform.

Research and development

  123.   The organic research and development budget should be steadily increased. Given the relative youth of the sector, its recent growth, and the potential for organic research to cross-over into the conventional sector, we think that the proportion of the overall research budget devoted to organic farming should be increased until some, at least, of the evident gaps in current scientific knowledge have been filled. (paragraph 100)

  The organic R&D budget has been doubled over the last three years and aspects of most of the high priority topics identified in last year's review of the organic R&D programme are now being addressed. It will be necessary to consider the results of this work before developing it further. The Government agrees that there are potential cross linkages between research on organic and conventional agriculture and these will be kept in mind in commissioning future work both in the organic programme and in other parts of the research programme.

  124.   In order to ensure that the available funds are spent in the best possible way, the Committee recommends that well in advance of any funding decisions MAFF should consult the UKROFS research committee on what projects should be supported. (paragraph 102)

  The Government notes the Committee's conclusion. The organic R&D programme is established following consultation with UKROFS and more widely with the organic sector and other interests and reviews of the R&D programmes are undertaken with the participation of these and other interests.

Provision of information advice and training

  125.   Farmers considering whether to convert to organic farming seem to receive a good service from the OCIS and its Scottish, Welsh and Northern Irish counterparts, and also from the sector bodies, and we hope that MAFF will match any long-term increase in demand for the information services with an increase in funding. There is, however, a gap in the provision of information, advice and training for farmers and their farmworkers once they have converted, and the Government and the organic sector should consider how that gap can be filled. One solution would be the establishment of appropriate training courses for those in the organic sector which could be part funded by the EU, under the new Rural Development Regulation. (paragraph 105)

  The Government is pleased to note the Committee's view of the work of OCIS, for which additional funding was made available in the CSR. The Committee will wish to know that the OCIS service is to be reviewed, with other free advisory services, in the Autumn. The Government notes too the Committee's view that wider support for advice and training on organic farming is required; this must be seen in the context of the Government's view that, as a general principle, it is for farming businesses to seek and pay for the advice they require and for the market to provide such advice, drawing on the results of relevant R&D. The Government will consider with the organic sector and others whether new provisions should be made through the mechanism of the Rural Development Regulation.

Marketing and infrastructure

  126.   The Committee considers that the Government should do all in its power to alleviate the pressure on small abattoirs. For organic producers, the formation of co-operatives with specific brand names will help to build consumer loyalty and reduce packaging and distribution costs and the Committee hopes that the Government will assist their development. (paragraph 106)

  The Government recognises the importance of small abattoirs for the organic sector. Whilst no new hygiene regulations have been introduced recently, we are aware that the prospect of increased charges for veterinary inspections in abattoirs is causing deep concern, particularly to smaller operators. As Nick Brown announced on 20 September, in the light of fresh advice we have obtained from the European Commission, low throughput slaughterhouses will not be required to have full-time supervision by a vet during post-mortem inspection (although it will be required for ante-mortem inspection). The Meat Hygiene Service is now reviewing its levels of inspection in individual low throughput premises. Moreover, the Government has launched, with the National Farmers' Union, a joint review of the regulatory burdens on the slaughtering industry and this will include the impact of charges on the industry. We wish to ensure that these charges are as low as possible while being consistent with public safety and EU legislation. Nevertheless, our primary concern remains that meat should be produced hygienically in all abattoirs.

  The Government agrees that greater collaboration amongst producers, whether through formal co-operatives or other forms of grouping, can result in marketing advantage. The benefits of collaboration include increased scale, access to professional marketing, technical and administrative support, cohesive negotiating ability, improved supply chain communication, and the many other benefits that come through bigger businesses. MAFF joined with the NFU in November 1998 to launch "Building Business Advantage", an initiative to encourage primary producers (including organic producers) to consider membership of a collaborative marketing group. This initiative was a major feature of the MAFF exhibit at this year's Royal Show, and a programme of follow-up events is under development.

  127.   The Committee agrees that farmers' markets, box schemes and other direct links with the consumer are useful ways of selling organic products and should be supported. But it is also inevitable that some, perhaps most, organic farmers will have to deal with the major retailers, and the formation of co-operatives should enable them to obtain better deals by being able, for example, to ensure continuity of supply. (paragraph 107)

  The Government notes the Committee's view of the value for organic farmers of establishing co-operatives to market their produce (see also the response to paragraph 126, above). It should be possible to explore this further in regional discussions on the development of the Rural Development Plan. The organic sector will need to consider what contribution it should make to this process.

Review of support to organic farmers MAFF Press Release

  A review of the support for farmers converting to the expanding organic sector is to be undertaken by the Government. This follows the allocation of more than £16 million of aid to the sector in the last six months.

  More than 700 farmers have now been accepted into the new Organic Farming Scheme (OFS), which doubled the rate of aid offered to farmers wishing to go organic. The Scheme has brought nearly 60,000 hectares into organic farming contributing to a five-fold increase in the amount of organic land in the country over the last year.

  Speaking today Countryside Minister Elliot Morley said:

    "We believe that consumers should be able to have the choice of whether to buy conventional or organically-produced food. The scheme has helped many farmers take up the opportunity of producing organic food to meet the burgeoning demand.

    "I am delighted the scheme has been so enthusiastically taken up by farmers. There will be more money available, but before we decide how it should be allocated, it makes sense to take stock. The sector is evolving rapidly and we need to be sure that the money we have available is being put to best possible use."

  The expectation is that a new organic aid scheme will open in 2001-02, under the Rural Development Programme (RDP) to be put in place next year until the review is concluded applications for aid under the Organic Farming Scheme will cease to be accepted. Applications received after 4 October will be returned.

NOTES TO EDITORS

  1.  Aid on valid OFS applications received by 2 August this year is being paid in the current financial year. Applications received after 2 August are being funded from the budget for 2000-01. However it is likely that formal approval for the most recent applications (and consequently payments) will need to be deferred until 2001-02. Where that is the case the first three years' payments would be paid together. However, any of the farmers concerned who wishes to withdraw an application because of the timescale for payment will be allowed to do so without penalty.

  2.  Any application under the OFS deferred until 2001-02 would attract aid at the rates provided for in the OFS rather than any subsequent scheme made under the RDP.

  3.  The Organic Farming Scheme was opened by Nick Brown on April 6. Parallel schemes run in Scotland, Wales and Northern Ireland.

  4.  In April 1998, there were around 55,000 hectares being farmed organically. By April 1999 around 100,00 hectares were fully organic and 175,000 hectares were in conversion.

  5.  Organic rates:

£ per hectare
Year 1Year 2 Year 3Year 4 Year 5Total
AAPS eligible land and land in permanent crops 22513550 2020450
Other improved land175 1054015 15350
Unimproved land2510 555 50
(AAPS=Arable Area Payment Scheme)

  In addition, participants in the scheme receive a lump sum of £300 in the first year, £200 in the second year and £100 in the third.

Organic Growth: Ministry Scheme Uptake 1999: MAFF Press Release

  The amount of farmland in organic production in the UK has increased five-fold over the last year, Countryside Minister Elliot Morley announced today.

  The boom is being spurred on by the Ministry's new Organic Farming Scheme (OFS) which opened in April.

  More than 450 farmers in England have applied to join the scheme since April and a further 53 applications have been made to transfer from the old to the new scheme. Applications to date will add a further 42,000 hectares to the land already in organic production.

  The Scheme is aimed at encouraging farmers to convert from conventional to organic production. Aid rates for better land under the scheme have been almost doubled and spending on the scheme increased from around £1 million in 1998-99 to £6 million this year. There will be a further increase to £8.5 million next year.

  Mr Morley said:

    "I am delighted that this Scheme has been so enthusiastically received by farmers and that it is helping to kick-start the organic sector.

    "The sector is expanding rapidly and both retailers and consumers are taking an increasing interest. We are determined that consumers should be able to buy organic produce if they want to so that they can exercise a fair choice.

    "Of course I wish there was enough money to satisfy all applicants straight away. It is a fact that we haven't enough money to do all the things we would like to, not just in the organic sector, but also for our other agri-environment schemes.

    "However, the Scheme has made a strong start and I look forward to the Ministry being able to make more money available next financial year."

  The budget for this year is now fully committed. Further applications will continue to be processed and, if eligible, approved in principle on a first come, first served basis with a view to payment being made in the next financial year.

  Farmers who have recently completed registration with one of the organic sector bodies but who have not yet applied to join the OFS will need to do so within the required three months of registration with a sector body. Farmers who have not yet completed registration will wish to consider whether to carry on with that process and submit an OFS application or to delay it to enable them to apply when further funding for the OFS becomes available. Subject to Parliamentary approval this is expected to be on 1 April 2000. Year two payments on application already receiving funding and applications approved in principle will have first call on this funding.

 NOTES FOR EDITORS

  1.  The Organic Farming Scheme applies only in England. Parallel schemes run in Scotland, Wales and Northern Ireland.

  2.  In April 1998, there were 54,834 hectares being farmed organically. This had increased to 274,519 by April 1999.

  3.  The Organic Farming Regulations 1999 (SI 1999 No 590) allow the Minister to suspend the payment of aid under the Scheme should the financial provision become exhausted. The budget for the 1999-2000 financial year is £6.2 million and this has now been committed. About £8.5 million is available for 2000-01. Year two payments on applications already receiving funding will have first call on this but the balance will be available for applications approved in principle. Payments to farmers whose applications are approved in principle for funding from the 2000-01 budget will be subject to the usual Parliamentary approval of the budget.

  4.  An explanatory booklet on the Organic Farming Scheme and application forms can be obtained from the Ministry's Regional Service Centres.

(1)  ORGANIC AID SCHEME
YearApplications Applications (ha)Approvals Approvals (ha)
1994-95723,439.81 372,118.43
1995-96643,002.99 642,554.66
1996-971173,685.63 571,456.60
1997-982168,249.12 1334,553.37
1998-9922213,112.01 1185,412.20
1999-20003438.33 161,410.21

(2)  ORGANIC FARMING SCHEME
YearApplications Applications (ha)Approvals Approvals (ha)
1999-200050442,000 No data at presentNo data at present




 
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