Agricultural Sector (EUC Report)

Baroness Parminter Excerpts

Tuesday 22nd November 2016 Lords Chamber

[Baroness Parminter (LD)]

My Lords, like others, I commend the noble Baroness, Lady Scott of Needham Market, and her committee on this report. Like the noble Baroness, Lady Byford, I was rotated off the committee, but I have benefited from her chairmanship in the past. I thank her for that as I do for the report. There is always a bit of a delay in debating our committee reports. In the case of this one, some rather significant events have taken place in between and a whole new set of challenges has been put on the plate of agriculture that it will have to contend with.

As the committee says, price volatility is an inherent feature of farming and will remain a normal risk to be managed by farmers as part of their business strategy. What is clearly not a normal risk is whether we remain a member of the single market, given that if we leave the EU customs union trade will be subject to tariffs and that, after decades of tariff-free access, prices will inevitably rise.

If we leave the single market, UK farming will be particularly badly hit, given that farmers generally face tariffs that are far higher for agricultural produce than for any other types of goods. Most farms are small businesses operating on tight margins and some, especially in the livestock sector, are dependent on exports. Tariffs can be hefty: 47% on milk, 40% on cheese, 59% on beef and 40% on lamb. Arable producers face levies of 40% on unmilled wheat, and around 10% on fruit and vegetables. It is a huge issue for UK farm businesses, with 82% of our meat exports going at the moment to the EU, as do 75% of our dairy exports and 74% of our cereals.

This is to say nothing of the loss of the protection against cheap foreign imports from which UK agriculture has benefited through high EU tariffs and strict rules, such as those around the use of growth hormones. In particular, the UK beef industry benefits from the protection against imports from countries such as Argentina and Brazil. If we were to sign free trade agreements with other beef-exporting countries, those tariffs and rules would inevitably be in the mix.

Of course, the other major factor—in addition to whether we remain in the single market—that will affect the resilience of our industry in the future is, as other noble Lords have mentioned, the replacement for the CAP. The Government have promised to guarantee spending at current levels until 2020—but, given ministerial views, it seems unlikely that subsidies will be maintained at the same level indefinitely. For those of us who recognise the environmental issues around the common agricultural policy, of course it is time for a change. But for an industry with notoriously low margins—with Defra reporting that 70% of mixed and grazing livestock farms generated incomes below £25,000 in 2014-15—any rapid reduction in agricultural support would have an adverse impact on many farmers’ ability to survive. Moreover, any removal of subsidies would have to take into account the fact that European farmers would still receive generous state support, thereby giving them a competitive advantage.

The report makes some incredibly useful recommendations in the context of where the CAP moves next. This is still very pertinent as we look to what we in the UK determine for our own agricultural policy post-CAP. It highlights the failings of the current subsidies and points the way forward with, as my noble friend Lady Scott of Needham Market said, the payment for provision of public goods. It is an incredibly important recommendation that was prescient when it was made.

The report coherently argues that agriculture has a critical role in the provision of public goods, such as high food safety, animal welfare standards, environmental stewardship, woodland management and footpath management. It contends that this role should be recognised in policy and the funding framework and that the replacement of the common agricultural policy should be based mainly around the provision of public goods.

I say to the noble Baroness, Lady Byford, that I do not necessarily see such a tension between the provision of food security and public goods. If we are providing food for our nation that is healthy, from animals that are not routinely overdosed with antibiotics, and from land that is not subject to the overuse of nitrates, pesticides and other inputs, that is a provision of a public good: public good being healthy food as well as the other public goods around access to land, land management and woodland creation. So I would not say that there is necessarily a tension there, although I recognise that there are competing demands—to which the noble Lord, Lord Trees, rightly referred.

[Baroness Byford]

The reason I mentioned that was because, when the CAP was introduced, it was actually to encourage farmers to produce more food. Then we ended up with food mountains, and that is why the CAP’s direction changed. It really goes back to square one, because there are people who believe that we could produce food without having any subsidy and that all the subsidy, or whatever it might be, should just go for environmental development. That is why I said that, in some ways, there is a slight contretemps between the two. I do not see it as a long-term problem, but it is a real issue.

[Baroness Parminter]

I am very grateful for that response. I absolutely echo the noble Baroness’s understanding of the historical position and where the CAP came from. Equally, I agree that there are some elements in the current debate about the future of the common agricultural policy in the post-Brexit context who think that the money should go just to the environment. My position is that we have to have the provision of healthy food and we have to have environmental protection. It is about producing both healthy food and a healthy environment.

For me, one of the ways that this has to be explained to the public—and, as my noble friend Lord Teverson rightly said, there is not going to be any political will to deliver subsidies because a lot of people see farmers just as an industry in the same way as aerospace or the car industry are industries—is to say that farmers are receiving support for providing a new national health service, which is healthy food, healthy environments and access to the countryside. If we can get to a language that talks about farming support for a national health service, that is a way in which the public might be persuaded and political will might therefore be delivered, in order to guarantee the funding that farmers need to survive. As I mentioned, I absolutely agree that the idea that farming can survive without subsidies, particularly in areas such as the uplands, is cloud-cuckoo-land. As other Members asked, how and when will the Government consult on designing their post-2020 agriculture policy? I know we ask this question at every debate but it is important to keep reiterating it.

Another thing the report is equally clear on—it was just mentioned so eloquently by the noble Lord, Lord Selkirk of Douglas—is the need to integrate the policy with the proposed 25-year environment plan. The report well makes the case that they should dovetail so that the agricultural policy can support the delivery of the 25-year plan and display a much more explicit link between outcomes and the use of public funds. To that end, will the framework for the plan be published this side of Christmas, as has been suggested? Will it contain clear targets that will go on to be enshrined in legislation for improving the quality of our air, water, biodiversity and woodlands so that the public can support the farmers in their role as providers of the healthy food and healthy environment on which we all depend?