Brexit: Agriculture and Farm Animal Welfare (European Union Committee Report)

Baroness Vere of Norbiton Excerpts

Tuesday 17th October 2017 Lords Chamber

[Lord Teverson (LD)]

My Lords, the common agricultural policy has probably not been one of the most popular policies of the European Union over the past 40 years in the United Kingdom. Successful as it was in its original years in ensuring food security for the European continent after many years of warfare and trial, when we joined in the 1970s it was perhaps seen as the main reason for the large budget contribution that the United Kingdom made to the European Union. I remember all too well in the 1980s the structural problems, with the milk powder mountains and wine lakes. More recently, we have had schemes such as set-aside that were not particularly successful, the issue of the green pound and all the other bits of Eurocrat jargon that surround the CAP.

At the moment, under the most recent form of funding, the new system for landowners means that the more land you own, the more subsidy you get, so the barley barons get most of the cash, our food prices are higher than the world average, small farms are still going out of business and rural biodiversity is still declining. We can look at the common agricultural policy and say that it has not been an overwhelming success for the United Kingdom—and perhaps not for Europe. It still takes 36% of the European budget, although that has hugely declined from more than half the budget over the life cycle of the common agricultural policy.

You could say that if there is one area where Brexit has to work, it must be agriculture. Indeed, we heard much evidence of the various opportunities from our withdrawal under Brexit to move away from the common agricultural policy. The first is cheap food. At the moment, it is true to say that, with external tariffs for food, farmers are relatively protected, and some of our witnesses suggested that if we moved away from the common agricultural policy post Brexit, food prices could reduce by 7% or 10%.

We have an excellent opportunity to save taxpayers’ money. At the moment, under the CAP, our farmers and landowners receive €28 billion per annum in subsidy. It accounts for 40% to 60% of farm income. We could stop that, as the New Zealanders did in the 1980s, take it back into the Treasury and use that money elsewhere.

We could get rid of some of the rules. We found it a little difficult to find too many rules that the agricultural industry wanted to get rid of immediately, but the three-crop rule was one of them and there are others, perhaps more contentious ones such as on pesticides, that could be removed. In terms of animal welfare, we could move the gauge up or down. We could take more opportunities to drive our own welfare standards within agriculture.

Of course, we do not have to give all those funds back to our own taxpayers; we could use them perhaps more intelligently in terms of environmental management, rural development, integrated policies and making sure that agriculture is not an isolated area of policy but that it ties in well with climate change and broader environmental policy.

The United Kingdom is a big food importer. Our trade balance with the European Union is some €18 billion per annum. That surely gives us some leverage to attract free trade agreements from other countries across the world that want access to that market. Clearly, we have access to most of those elsewhere already so that would not change greatly. That is a list of important positives from disengaging from the CAP as part of the Brexit process. We heard a lot of that from many our witnesses.

Of course, there are challenges as well, which are significant. First, regarding trade, some 80% of our exports of agricultural produce go to the European Union. If we add in the food sector and those countries where the EU has free trade agreements from which we benefit, the number goes up to 97%. Part of that is around perishability. It is much easier to export products to geographically close areas and, obviously, it is part of the single market. Indeed, at the moment the EU external tariff is 54% on dairy products and some 22% on cereals. That gives an idea of the sort of level of tariff barriers there could be.

Of course, there will be non-tariff barriers as well. We as a committee are not saying in any way that we would not be able to reach a trade agreement, but if we did not, clearly some of those non-tariff barriers would be even greater. I am sure that the noble Lord, Lord Trees, will tell us about phytosanitary conditions and all of those other non-tariff issues.

We would hope to trade at least on World Trade Organization terms, but I hope there will be much better opportunities with the EU in a future agreement. However, already we have issues with the WTO over tariff rate quotas. This is already a key area. The Government have been successful in finding agreement with the European Union over the splitting of these quotas, but immediately that has caused a reaction in the United States, New Zealand and Brazil objecting to that solution and opening up that whole area of future tariff rate quotas with both the EU and the UK. It gives a taste of future meddling and perhaps vexatious intervention that some of these issues will create.

People are one big area the industry is concerned about and that is why being able to retain current EU staff and workers in this country, and in this sector in particular, is important. It is well known, and has been said many times, that 90% of our vets in abattoirs, an important part of our animal welfare programme, are non-UK EU nationals. In both food processing and agriculture, we require a large number of workers from the EU. Yes, we could replace them from other parts of the world, but that obviously will depend on our migration policy. Already we have difficulty in attracting and retaining people. An issue that came over very strongly is that agricultural workers in particular are skilled workers. The way in which they are able to harvest is very skilled but not in terms of a Home Office definition. It is an area where automation cannot substitute in the medium or short term. People are a key factor.

The committee welcomes the Government’s response on funding, which is guaranteed at current cash levels up to the next election. In reality, after that—this is not something that we should blame the Government for—the public and taxpayers will find it difficult under continued austerity to justify the amount of money that goes to this sector. So there will be a real issue around selling that deal. Of course, that may be around being able to guarantee better environmental management of all the public services that farming provides.

There is an issue around devolution. One of the things that the CAP provides is a common framework for agricultural policy not just for all member states but within the United Kingdom. Yet, importantly, agriculture is devolved. How do you make sure that there is a continued single market within the United Kingdom? Will we have four different regimes? Indeed, policy stability is one area that I had not thought of but it came through from some of our witnesses. The CAP might be difficult to change, but at least it meant the future could be planned to a large degree. Will that remain? In Ireland, there is an issue not so much of devolution but of cross-border trade and supply chains, so there are particular challenges.

Our report on welfare received a great deal of media attention on, for example, beef hormones and chlorinated chicken, which is not really a welfare issue, but under international pressure for other trade deals will those welfare standards be challenged? Our witnesses, particularly from this sector, were very keen that welfare standards should not decline post Brexit.

Lastly, in terms of the challenges of which there are many more for those who have read the full report, there is Defra itself. We have said many times in our environmental and fisheries reports that the workload on Defra is huge. Apart from being sympathetic to the Minister on the Front Bench, we again ask whether there are sufficient resources for Defra to deliver legal certainty and all those policies in that huge area over the period.

If I may start to conclude my remarks, there is a real dilemma in this area. Two approaches can be taken in terms of benefits and potential positives about Brexit and the negatives. Will we become a low-tariff, competitive New Zealand-style economy, open to free trade, open to those opportunities to bring down food prices and move on those deals where high-quality food and welfare standards will be difficult to enforce, given the sort of negotiations we will have with countries such as Australia, Argentina, Brazil and particularly the United States? Or will we continue to be a country, outside Europe, that demands high welfare standards and high-quality food and that looks to protect our hill farmers? It is absolutely clear that all our livestock farming cannot compete with the economies of scale, and particularly the lower welfare standards, in the large economies of the United States, Australia and New Zealand, perhaps, but also Argentina and Brazil. They can be characterised as the Liam Fox version and the Michael Gove view of Brexit—interesting but the Government will have to resolve that dilemma.

Will the Minister be able to include agriculture more successfully in his 25-year environmental plan? What is going to happen about tariff rate quotas? How does he see the whole WTO negotiations? How can we have a farming Bill when at present we do not know what the end destination is? Will the Minister reconfirm our commitment to high animal welfare standards? How does he see the transition?

Some 71% of land in the UK is devoted to agriculture, which employs 800,000 throughout the food supply chain and is 7% of the economy, worth £100 billion of value added. It is a vital part of our economy and our future. This raises as many challenges as it does opportunities. I beg to move.

[Baroness Vere of Norbiton (Con)]

My Lords, I respectfully remind noble Lords of the advisory speaking time of six minutes. There is another debate after this, and I am sure those noble Lords would be most grateful.