Common Agricultural Policy

Debate between Baroness McIntosh of Pickering and Paul Flynn

Thursday 8th March 2012 Westminster Hall

[Paul Flynn (Newport West) (Lab)]

In view of the change in farmers’ prosperity—there have been better times recently, particularly in the value of agricultural land—does the hon. Lady think it might be a good time to call on the farming community to take their share of the cutbacks suffered by the rest of the country? Would she suggest that a cap of £26,000 be placed on subsidies?

[Miss McIntosh]

I am sure the Minister will have heard that. That proposition was not put before the Committee and we have not reached a conclusion on that. The farmers are making a huge effort—unpaid—in areas such as retaining and storing water, for which it may be possible to use funds from the CAP in future.

The CAP needs to provide a clear plan for growth and sustainability. As a Committee, we were not convinced that either the European Commission or indeed the Department have faced up to the challenges ahead. In our approach in the report before us this afternoon, we are perhaps less reformist than DEFRA. We express some reservations about the prospect of capping. The hon. Member for Newport West made an interesting intervention, but we will resist any attempt—it would not be the first attempt—to seek to discriminate against some of the larger units that we have. Farming units tend to be larger in the UK. That is partly historic and partly because they are more productive. We would resist any attempt to discriminate on the grounds of size, and we would also resist the greening of pillar one through compulsory measures.

We recognise that our farmers are already subscribing in larger part to agri-environmental measures than many other farmers in the EU. We believe that successive Governments have done absolutely the right thing in pursuing that policy. We do not want to see our farmers, who are in agri-environmental agreements, discriminated against by having to go possibly at short notice down a different path, or be discriminated against by facing a penalty when they leave agri-environmental agreements to look at new agreements. We want reassurance on that from the Minister today.

--- Later in debate ---

[Miss McIntosh]

I am grateful for that clarification because the Committee was led to believe that that was the desire of the Department and the Minister. Certainly, that was the understanding of the witnesses—both the witness statements—from the farming community as well. I am sure that hon. Members will want to return to that matter.

We have already moved away from the historic basis of payments, and it would be anachronistic to continue to pay farmers on the basis of what they produced a decade ago. However, a flat rate per area would result in considerable redistribution within the UK, suggesting that national flexibility will be needed.

Turning to greening the CAP, the Committee agrees with the principle that the future CAP should reward and encourage sustainable farming. The Foresight report, “The Future of Food and Farming: Challenges and choices for global sustainability”, says that we will need to produce more food but use fewer inputs. We conclude that greening measures should not come at the expense of productive successful agriculture, but we need to find win-wins for sustainability and competitiveness. I repeat: we applaud the fact that, in this country, our farmers are already greening through agri-environmental schemes to a much greater extent than elsewhere in the European Union.

[Paul Flynn]

Moving away from the principle of subsidising food production to subsidising the ownership of land, a recent claim was made that nearly 1,000 landowners in this country, some of whom are not farming their land at all, receive very large grants of more than £250,000. Does the hon. Lady think that the pubic will accept not only that such farmers should receive those large amounts, but that those large amounts should increase at a time when cuts are being made everywhere else in the economy?

[Miss McIntosh]

With the greatest respect, I have addressed capping, having a CAP and the historic reasons why we are more productive and have larger units. I personally oppose any move to discriminate against our productive farmers on those bases.

The European Commission seems to be proposing a return to compulsory set-aside. We on the Committee think that that runs counter to the prevailing message that we should produce more food. The Commission needs to focus on ways to help farmers to produce more using fewer inputs for the reasons that I have given.

The Commission’s proposals to add more conditions into pillar one would tie farmers up in environmental red tape without delivering tangible environmental benefits. The Committee was persuaded that we need more simplification and less complication, which is why we are hesitant about the proposals. Also, farmers need to be involved in the process, so voluntary measures and incentives are preferable to more regulation.

The evidence that we have received shows that UK agri-environmental schemes are a European success story. CAP reform should build on that success by encouraging a broader uptake of agri-environmental schemes across Europe, not by creating a whole new system that requires more auditing and more expensive computer systems.

We reject DEFRA’s alternative proposal, which, as we understand it, would shift most of the CAP budget into pillar two and make it more flexible with fewer controls over how much member states spend on different objectives, because pillar two is co-financed—both the EU and the member state contribute funds. The Committee is concerned that cash-strapped member states, not least our own, will not want to take up more co-financed measures, and UK farmers will end up being disadvantaged. A common approach and common funding are needed across the EU.

The briefing prepared by the National Farmers Union for today’s debate contains a useful graph that shows that we are at the absolute bottom: the UK receives the lowest per hectare allocation of pillar two funds of all member states. That is reflected in the fact that pillar two payments for England are low, owing to the reluctance of successive Governments to draw down discretionary European funds. It would therefore be nonsensical to pile more funds into pillar two away from pillar one.

On the idea of ceilings and capping, the Committee disagrees with a payment ceiling, whereby the maximum direct payment cannot go above a certain level—probably €300,000—irrespective of the size of the farm. Direct payments should mostly reward farmers for their provision of a public good, so larger farmers deserve larger payments. The evidence that we have received suggests that capping direct payments would discourage farm rationalisation and generate more business costs.

Regarding tenants and landowners, we invite DEFRA to ensure that a new definition of an active farmer will not disadvantage UK tenant farmers and commoners, some of whom are found in my constituency. The UK has a unique system of tenanted and common land, of which I am extremely proud. The Commission proposes a new definition for eligible CAP recipients, and it is essential to ensure that tenants and commoners are not left out.

Tenant farmers can currently claim direct payments, provided that they meet the usual scheme rules. We agree that it is important that they continue not only to do so following CAP reform, but to be eligible, where they meet the rules, for agri-environmental schemes. We are working with representative commoners and other interests in the management and protection of common land to identify options for the delivery of direct payments on common land. I warmly welcome the fact that that is the Government’s response, and I pay tribute to the Minister for his personal involvement. We concluded that there is a need to look at European rules to protect tenant farmers, and we urge the Minister to lead, as he is doing, in that regard.

In our view, the CAP should in the future include optional coupled payments within strict limits. The Committee agrees that most payments should be decoupled from production, as with the single farm payment, because that allows farmers to respond to the market, is less distorting to world trade and does not lead to over-production. However, in the uplands, keeping livestock is central to the delivery of other public benefits, such as landscapes, but it is unprofitable. Payments per head within strict limits would be a fair and transparent way to reward farmers for the public benefits that they provide. We recognise that DEFRA opposes such payments, but we hope that the Minister is open to persuasion.

We have not taken a strong position on the budget. We agree that some savings need to be made, but they should be balanced against their effect on farmers’ incomes and the ability to fund agri-environmental schemes. EU money is the main funding for the agricultural environment and the environment in the UK, and the Department should be mindful of the consequences that will follow in stripping it away.

The evidence that we received did not support a return to greater price support, but said that measures such as intervention buying would be needed in the future to prevent a collapse in production if prices fall.

Our bottom line is that simplification of administering the CAP is desirable and that elements of the Commission’s proposals risk making the CAP more complicated—for example, by using a new definition of an active farmer that might have heavy audit requirements, a more complex new system of allocating direct payments or more green conditions.

Today’s debate is timely; the negotiations are at an early stage. We believe that the Commission’s proposals lack both vision and detail on how to increase the competitiveness of UK agriculture. Elements of the Commission’s proposals, such as payment ceilings and additional support for small farmers, risk making UK businesses less supported. The proposals should give greater consideration to rectifying imbalances in the food supply chain and strengthening farm extension services. Any new definition of an eligible recipient of CAP payments must not, as I said earlier, disadvantage the UK’s tenant farmers and commoners. Currently, the CAP is in a fairly good place in this country, but there is some way to go before we can best deliver a food policy that meets all requirements and delivers for the environment in this country and beyond, in the wider European Union.