Agriculture Bill (Second sitting)

Daniel Zeichner Excerpts

Committee stage & Committee Debate: 2nd sitting: House of Commons
Tuesday 11th February 2020 Public Bill Committees

[George Eustice]

Q You mentioned that the rationale for an area payment might be resilience or as a risk-management tool, but it is ultimately a subsidy on land tenure or land ownership, so is it the best tool to deal with those issues? Or is it a straightforward market intervention—crisis payments when there is a slump in the market or a severe weather event, when you could intervene using the other crisis powers that are in the other part of the schedule?

Ivor Ferguson: If there were vast changes in the market for whatever reason, we would certainly need more support. This resilience payment would be much less than the payment today—perhaps 30%, 40% or at the most 50%. We have not put a figure on that yet; it is something we would have to discuss with our farmers fairly quickly now.

[Daniel Zeichner (Cambridge) (Lab)]

Q Good afternoon, Mr Stringer. In the written evidence supplied, Mr Fulton, you raise a number of issues around divergence, both now and in future. Could you say a bit more about those issues? Could Mr Ferguson also comment on divergence?

Norman Fulton: This is certainly an issue of concern to us. We have to be mindful of the fact that we now have the Ireland/Northern Ireland protocol under the withdrawal agreement, which means we will need to align with the European systems, whereas those in the rest of the UK could diverge. Therefore, we would be concerned that, within what will be the single UK market, there could be different approaches to marketing standards, for example. Obviously, that is something that we will all need to be mindful of. I suppose it will be managed through common frameworks across the UK. A lot of work needs to go into thinking through how we will operate across the UK, to ensure that the UK market is not distorted in any way and there is a level playing field for all players in that market.

[Daniel Zeichner]

Q That is extremely diplomatic but I am not sure how that works. You are in either one system or another, are you not? Where is the halfway house?

Norman Fulton: Well, we are very clearly in one system, so we do not have the scope to change under the protocol. In the schedule, you will see that on marketing standards, for example, we have taken the ability to set standards, but that was drafted in advance of the withdrawal agreement, so it would not be enabled. At some point in the future, if we ever left the protocol, it could be brought into play. For now, our future is pretty much mapped out when it comes to marketing standards, but that is not the case elsewhere in the UK. Although we know what our standards will be, they may change elsewhere. That will create the issue of how we ensure that there is a level playing field within the UK/GB, which remains our biggest market.

Ivor Ferguson: As Norman just said, it is our most important market. At least 50% of what we farmers in Northern Ireland produce goes to the mainland GB market, and in some sectors it is 70% or 80%. If we were to diverge and the standards were to lower in the GB market, lower standards means lower cost of production, and we would be tied to the cost of production within the EU system in Northern Ireland, so it would be very difficult for us to compete in that market. From that point of view, it would be a disaster for us if the standards changed or diverged a great deal away from where we are today.

[Daniel Zeichner]

Q When you say disastrous, what do you mean?

Ivor Ferguson: Take the beef sector in Northern Ireland. All the products that we produce, or 95% of them, are produced to Red Tractor quality-assured standards. A lot of them go to the major retailers in the UK, which support us well with the Red Tractor standards. For beef production in Northern Ireland, the returns to farmers are down in the last 12 months by £36 million, so there is no profit in the job at the present time. We could not accept a lower price for product, so a lot of our farmers at the moment are finding it very difficult to stay in business. If there were a lowering of the price in the marketplace, that would be a disaster for us.

[Fay Jones (Brecon and Radnorshire) (Con)]

Q I repeat my declaration of interest: I was an employee of the National Farmers Union, and indeed of the Ulster Farmers Union when I was working in its office in Brussels a few years ago. I want to pick up on the points that were raised about divergence. On the point you just made about maintaining an area-based payment in case of volatility, what would be the consequence of different agricultural payment schemes operating throughout the UK?

Norman Fulton: Again, this is something that all Administrations need to be very mindful of in the choices they make. Agriculture is a devolved matter, so each of the Administrations can set their own policy direction and agenda. Under the protocol, which we will now be operating under, certain restrictions will apply in the case of Northern Ireland. We will have an overall envelope for state aid cover, but within that a percentage will have to be green box. That will put certain restrictions on the choices we make in future policy. That does not necessarily apply elsewhere in the UK. Scotland, Wales and England will all be able to set their own policy choices.

Again, we need to be careful that we do not start to open up distortions in competition, which could arise from all this. Although these matters are devolved, GB/UK is our domestic market, and we need to make sure we do not end up trying to undercut each other by using our support mechanisms to facilitate that. There is a great deal of responsibility on all the Administrations on this matter.

Ivor Ferguson: I fully agree with Norman. If we take Northern Ireland at the moment, we would like to think that we will have the same level of support. We will certainly need the same level of support. The fact that it is paid in a different way should not distort our market all that much, if there is the same level of money that comes in. We have to be mindful that our farming colleagues in southern Ireland will have a basic payment too, so we need a level playing field. We have to be very mindful of that going forward.

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[George Eustice]

Q Has the NFU done any work on what a sustainable land rent is for different land types without the land tenure subsidy that we have through direct payments?

Nick von Westenholz: I am not aware that we have looked at that sort of detail on where land rents might sit. It is an interesting question and one we probably ought to look at.

[Daniel Zeichner]

Q Good afternoon. It is probably no surprise to you that my opening question will refer to the letter to the Prime Minister that the NFU and over 60 other organisations have written, expressing concern about the potential risks caused by imported food produced to lower environmental animal welfare or food quality standards. What needs to be done to this Bill to resolve that problem?

Nick von Westenholz: The obvious omission from the Bill, in our view, is anything around import standards. It is absolutely right that that should be in the Bill, because if the Government are trying to promote, which we would support, more sustainable production and food systems domestically in the future, which is the core aim of the Bill—to provide a support framework for farming in a high welfare, environmentally sustainable way—they will be fundamentally undermined in that objective if there is not a concurrent trade policy that prevents farm businesses from being undercut by substandard imports. A two-pronged approach in policy terms—trade policy and domestic policy—is needed to prevent undermining that sort of farming, in which UK farmers excel.

The detail of how the Bill is amended or of the terms of the legislation that can achieve that may be quite complicated and something that the Committee needs to consider as it goes through the Bill line by line, but at the core there must be a requirement that if the UK is going to import food, that imported food meets the same standards of environmental protection, animal welfare and food safety as UK producers are required to meet. Of course, the Government have been very reassuring on that point in recent weeks and have given some guarantees in that regard, but we feel that that needs to be underpinned by legislation, because there are real technical challenges in doing this that any Government, whether this Government or a future Government, are going to come up against as they negotiate trade deals and as they pursue a new role for us as an independent member of the WTO.

[Fay Jones]

Q My question is to Mr Goodwin. Are there any other means that you think should be included in the Bill that might give your members access to land—means that might increase the opportunities for young farmers and perhaps even new entrants into farming?

David Goodwin: There has been a lot of talk within our membership about support for schemes whereby we are looking at contract and share farming arrangements, particularly in the livestock sector, to enable young farmers to come on to land alongside an existing farmer who is perhaps getting a bit older and does not want to do it himself. Quite how the framework for those sorts of things fits and how you make them work has always been a challenge. I have just come back from New Zealand, and it is interesting to talk to farmers out there. There is a lot more progression on units and farmers do not seem to be so static. I think that is perhaps the other issue in UK agriculture: it is very parochial—which is traditional. It is difficult to really say how we could break that mould, but certainly from our members’ point of view, any new, innovative ways we can find to get young people on to the land—not necessarily as managers or owners, but also as good skilled workers—would be good.

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[George Eustice]

Q I want to turn to a different part of the Bill, chapter 2, and the provisions on fair dealing and transparency in the supply chain. Can you tell us which sectors suffer the most from a lack of transparency and fairness in the supply chain? Which are most likely to be price takers? What regulations or steps would you like the Government to take, under the powers in this Bill, to ensure that farmers are in a fairer position relative to others in the supply chain?

David Goodwin: I have a very quick point on that, specifically pertaining to the lamb industry. We have had quite a lot of feedback from our members about lack of transparency: under the sheep legislation as it is at the moment, we are forced to electronically tag and identify all the sheep, but currently the abattoirs and processors are not required to pass that information back down the chain or identify those carcases as pertaining to those animals. There is a perceived transparency issue with some processes. It is not that potentially we are not being paid the right amounts, but I think people would like to know what our killing out percentages are, so that we can improve performance and make better informed decisions.

Nick von Westenholz: We are working through our commodity boards, which is the way we cover the different steps in the NFU to address exactly how the powers will be used. We are pleased that those powers are in the Bill, but lots of them rely on secondary legislation to operate, so it seems that potentially there is still quite a job to do once the Bill is enacted to ensure that the powers can be used properly to do what they are supposed to do. We look forward to working with officials to work out exactly how those powers can be deployed once the Bill is enacted—that is a feature of the enabling aspect of the Bill. We certainly think the focus on improving the supply chain is a critical bit of the Bill.

[Daniel Zeichner]

Q Let us turn to the delinking proposals for a moment. There does not seem to be a great deal of detail in there. The intention is to bring in new people, which we would support, but are there dangers of unintended consequences? Would you like to see more detail?

Nick von Westenholz: Yes, absolutely. We would like more detail. We understand there was an intention to consult on them at some point under the last Bill, so presumably that will still happen. You are absolutely right that there are potential unintended consequences, not least because those aspects of the Bill relate to England, and there could be a very different way forward in other parts of the UK. That would potentially lead to a very different looking system between England and other parts of the UK. We need to understand the details. Some people might be attracted to the implications of delinking, superficially. Once you delink—particularly with the potential to move to lump sum payments, which is one of the reasons for doing so—you are moving away from some of the things I spoke about earlier, such as being able to manage the transition for the next few years, particularly in the volatile circumstances that might arise for farming. So yes, the long-winded answer is that we would like more detail.

David Goodwin: We tend to agree on the whole. There is a feeling of quiet optimism that it might offer opportunities for young people to come into agriculture. Without some detail to see exactly how that might work and whether it is feasible, people are keeping it at arm’s length.

[Daniel Zeichner]

Q Returning to the volatility/stability question, the CAP was much derided in many quarters, but I would say it has delivered some of the goals that it originally set out to achieve, including a measure of stability. Apart from changing “might” to “must”, what other things would you like to see to ensure stability for the future?

Nick von Westenholz: The main parts of the Bill that are relevant are around the transition. Currently, the Bill still has the timetable of beginning to phase out of BPS next year and going over a seven-year period. We have called, as have others, for a delay in that process. That is still absolutely right because we are unlikely to know the trading environment in which farming will operate until potentially very late this year, possibly even into next year, yet the schedule has us beginning to phase out of BPS next year. As David mentioned, agriculture works on very long timeframes.

While we do not know what the future looks like, delaying that is important, not least because this Bill, the previous Bill and the health and harmony consultation that it was predicated on, all took place in a very different political environment where the future relationship with the EU and some other aspects were envisaged very differently. Things have changed, and the Bill and the transition period should also change. We could face some very volatile times ahead and we need to be able to manage that.

[The Chair]

Order. I am afraid that brings us to the end of the time allotted for this session. I thank the two witnesses on behalf of the Committee. We will move on to the next evidence session.

Examination of Witness

Richard Self gave evidence.

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[George Eustice]

Q Coming back to exemptions, I think most are carried forward by the Bill. Specifically on dairy contracts, for example, co-operatives were excluded from the voluntary dairy code, but if we were to introduce a mandatory code under provisions in the Bill, they might not be. Will you explain why co-operatives are a special case that should be exempt from giving farmers clarity about how the milk price is calculated?

Richard Self: It is an interesting area. I am not an expert on the dairy sector, but in milk co-operatives the first-stage processor is owned by the farmers. If that processor takes a high price, farmers will get that back at some stage; in another situation where they do not own the processor, they will not. Therefore, it inhibits them from reacting to the market, because ultimately in a situation where the farmer owns the processor, the benefits will eventually come back to the farmer because they own the business.

[Daniel Zeichner]

Q In general, will the Bill help producer organisations? What more could be done? Why have we not traditionally done better in UK agriculture?

Richard Self: Producer organisations have done a good job, but I think some people would say they could do a better job if they were better organised. I think we could have made better use of them in the past—other countries have made very good use of their POs. One concern we have around POs is that they might be too narrow. We want to ensure that all types of co-operative have the chance to be a PO, and that extra hoops and barriers are not put in the way of existing co-operatives, making it more difficult for them to get to that PO status.

[Daniel Zeichner]

Q Why has the UK experience been different from that of other countries?

Richard Self: Other countries have taken those funds that they get through being a PO, and the help with their technology, productivity and so on, but they have also changed their business models. What is important is to get the right business model in place, where you can add value, capture it and bring it back to the primary producer. I think what we have done is just take the money for the grants, if you like, as opposed to changing the business model and the way that the supply chain works.

[Daniel Zeichner]

Q Will the measures in the Bill make it more likely that we go down that route in future, do you think—or not?

Richard Self: I think it can do. As I said, I think the detail will be in the secondary stage to this, and how that is built up, but the foundations are there. We can make that PO scheme work, as long as we are inclusive of all the different co-operative structures that we have got within that, and do not create extra barriers and hoops for people to jump through to get into the PO scheme.

[Daniel Zeichner]

Q Is there anything you would like to see in the Bill that would help that to happen?

Richard Self: There is nothing specific that I would like to see. At this stage, it is about trying to keep it as wide as possible, so that we keep our options open and look at every stage of making the environment right for co-operatives to thrive and succeed.

The UK is well behind most other developed agricultural systems in its use of farmer co-operatives. France, Germany and the USA are all developing a number of co-operatives, while the number of our co-operatives is reducing. We need to change that balance around. Our market share of co-operatives, based on my most recent figures from a few years ago, is about 6%, compared with Germany’s 17%. I think France has something like 55% and Denmark somewhere over 60%. Their market share is much greater. The value added that those co-operatives bring is returned to the primary producer.

The other advantage with co-operatives is that they make the markets less volatile. That is one of the things we are worried about in the future—volatile markets. A co-operative can help balance out that market to make it work well, so that there is less volatility in the price of goods—the primary produce. It also makes sure that the supply chains are fairer for the farmer because they are working together.

[Mr Goodwill]

Q From what you have just said, it appears that the structure of UK agriculture, with larger units, does not lend itself particularly well to co-operatives; whereas, on the continent, you have lots of small farmers who, for example, never get a fertiliser salesman on their farm for the size of their operation.

Do you think that, under the old system as part of the European Union, we have in many ways been trying to squeeze a square peg into a round hole, and fit what is going on here into the way that we can access funds? How do you think in future we can actually produce a system to encourage co-operatives, of the sort that would maybe work in the UK, rather than trying to emulate those across the water?

Richard Self: Generally, we have some very good co-operatives out there. The governance angle of co-operatives is the key thing. If we get that right, and get them well managed at the leadership level, that will help to address the sort of thing that we have had in the past.

We have large farmers in our country, compared with some of the others, but in fact it is the small farmers who do not tend to collaborate so much. I think the larger farmers tend to be very professional in what they are doing, and they are looking at this as a business arrangement, as opposed to the smaller farmers, who want to do things themselves. The evidence I have seen basically says that we need to target smaller farmers probably more than we do the larger farmers.

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[George Eustice]

Q I suppose the key question is: if the views and interests of a British minority, for instance, were compromised by the majority in a big pan-European cooperative because of a decision taken, should they not be able to exit with a set notice period, for instance, and have a clear mechanism for doing so?

Richard Self: I would hope so, yes. But I am not an expert in the dairy industry, so I would need to investigate that further; we are happy to look into that. I have good contacts with our dairy co-operatives and can help feed that into the system.

[Daniel Zeichner]

Q Earlier, you touched on some of the opportunities around data. Will you amplify on that? What support might be needed to make the most of those opportunities?

Richard Self: Increasingly, farmers will have better data on their anticipated crop yields, milk yields or whatever. They can collect that raw data, and farmers can trust their co-operative to handle it in the right way for them. That data is useful and is worth money to others in the supply chain. It is a question of how they can work together to maximise the use of that data for the benefit of the supply chains they are working in.

[Daniel Zeichner]

Q Is that an issue of scale, or an issue of co-operation?

Richard Self: Obviously, the more data you have across an area—information on yields, or even perhaps on the supply side, on agrochemical use and the anticipated use of crop-protection products—the more it helps you to manage supply and demand going forward, which helps improve efficiency and productivity. Co-operatives are in a really strong place because they are working on behalf of their farmer members, and they can use that data in the right way to help the whole supply chain.

[Fay Jones]

Q I have a question about risk management. I had to step out of the room, so I apologise if this has been covered. Often, farmers are at the very end of the supply chain and bear all the risk. We have a good example with the beef price at the moment, which is down very heavily at farm gate level but not so much at retail level. Could there be more in the Bill to provide more risk management support in the event of market volatility?

Richard Self: On risk management, the problem is that you put your crops in the ground or start to produce your animals well ahead, and you do not know what you will get for them. Mechanisms to control those risks against unforeseen events and so on are really important. If they could be built in, that would be very useful. Again, co-operatives have a role in that: you can pool your crops or your fertiliser payments to average out prices within a co-operative. That is the sort of thing that helps to manage risk. If you have a known price for a thing, or you get an average price over a period, you do not get hit hard if the price suddenly goes up or down.

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[George Eustice]

Yes, in the new scheme.

Jake Fiennes: We have the regulatory payment. I hear of calls for up to 30% of existing payments that farmers receive, which is about £200 per hectare. I am certainly not in favour of that, because it will not encourage stakeholders to go into the middle tier and I think you will see a great uptake in the middle tier. On the final tier, which is landscape restoration, whether it is on a catchment basis, if we are going to have sustainable, functional land use, it has to be at scale and deliver all the climate change issues and soil regeneration. All these processes will go into the final tier and, having listened to some of the comments earlier about the smaller farmers not working well together but the bigger ones working better, we are seeing a great uptake of facilitation funds and cluster groups. This whole movement is happening. I would not encourage the lower payment to be a major factor, because we would basically go back to a reverse BPS system.

Jim Egan: My way of answering that would be to look at the fact that in the majority of lowland England, if you split it that way, you will find farmers taking up more than you think, if it is properly rewarded, if it is linked in by the rest of the industry and it is linked together. You quite commonly talk to farmers now who take out anything between 5% and 15% of their land to manage it “for the environment” and also recognise the real benefits of changing what they do: introducing grass lanes to help with grass weed control and to build soil fertility, which helps with cleaner water and so on.

I agree wholeheartedly with Jake that there is a sea change coming. A lot of people stood back, because of the political uncertainty, but they are ready for that. The higher extremes you referenced, such as peat restoration, will be a focus in an area where it can happen, getting those landowners together and talking about it. It will take time. I do not think they are completely divorced and different.

On woodland, it will fit when people start to see natural capital, particularly the natural capital potential of their land, and they have choices of what to do. Then woodland will start to happen, especially where you can get people working together and you can make the links. I would be positive about that.

[Daniel Zeichner]

Q I want to put to you a question I asked earlier witnesses. I think that the CPRE was one of the signatories to the letter to the Prime Minister expressing concern about the potential problems with importing food with lower environmental, welfare and health standards. Why did you sign that letter and what should be done in the Bill to tackle the issue? That is particularly aimed at Graeme.

Graeme Willis: In terms of maintaining standards, we are very concerned—I know that statements have been made about supporting high standards—that undercutting those standards through imports would undermine farmers’ incomes, as well as their ability to perform environmental management. I know that an amendment previously tabled to the Bill sought to introduce a broad requirement that any international trade agreement that was to be ratified must be compliant with UK standards. We think that is a major omission and one of the major things that needs to be addressed in the legislation. We have a common cause with the whole of the farming sector on that. The whole of the NGO environmental sector takes that view. It is a very important element and condition.

[Daniel Zeichner]

Q Thank you; that is helpful. Jim and Jake, you are very enthusiastic and positive about the change on uptake in stewardship. That has been a long time coming, has it not? What has changed so dramatically, in your view, to make that happen? In the transformation of ELMs, would you agree that it would have been helpful for this discussion and process to have a bit more detail about the Government’s thinking on how it will work?

Jim Egan: Regarding possible current uptake this year, I have always been positive, and I have been proved wrong, year on year, as I am often told by DEFRA’s agri-environment group. This year, in particular, people have heard for a long time that BPS will start going down. They have seen their neighbours’ farms going into the simplified scheme, although not in huge numbers. I work with a company that provides agronomy advice, and the agronomists are starting to understand it.

The weather this year in the east midlands, my patch of the country, has meant that there are farms with no combinable crops in the ground at all—not 5% or 10%, but none. That has made people think. It has made people think about sustainable income streams, support, unproductive areas and what they could do differently. There is a whole raft of different things. There is also a question of who sells it. If you sell it directly and positively, people will do it. If you are negative and you harp on about late payments and so on, the meeting will leave you. I tend to be positive about it. Perhaps that is why I have a long list of people wanting to work with it.

Jake Fiennes: When you put economically sustainable agriculture to a farmer, he may have had 47 years of being paid just to produce food, irrespective of the quality, quantity and yield he produces on his land. They must realign their business. If we see this transition period take place as of next year, some famers will lose anything from 5% to 20% of their support income.

Agri-environment helps them through the transition period financially, but it also gets them to understand. At the moment, farmers lack good agricultural environmental advice. That is what we don’t see enough of: advice on the ground. Farmers are a particularly fickle community. They are wary of individuals they do not know, so the advice has to come from individuals with whom they have had previous relationships, whether through their agronomy, because we are seeing agronomy become more open to environmental delivery, the Farming and Wildlife Advisory Groups throughout the country, or Natural England, which changed the game of agri-environment 20 years ago. The advice on the ground is key.

If farmers are sold an economic reason and then have an ability to deliver the environmental goods, whatever they may be, through sound advice, we will see greater uptake. The reason we had the stop-start scenario with agri-environment was, as Jim referred to, late payments—“Am I going to get paid for it?”—or commodity prices. We have seen the volatility in commodity prices. If I am getting £200 a tonne for my milling wheat, why do I need to go to an agri-environment scheme when I have already invested in the men, the machinery and the infrastructure to deliver that crop? It is an evolving, moving process, but they are definitely coming more on board with it.

[Daniel Zeichner]

Q May I press you on that point? This is a big transition that is envisaged, possibly over a compressed timeframe. Is there the capacity to provide the advice and to do the negotiation? If there is not, what needs to be done to get it in place?

Jim Egan: I think there is underlying capacity out there. There are enough people to do it. There will be a change of mindset in some sectors, but bear in mind that business is seeing some of the opportunities here as well. Jake is right: it needs to be somebody the farmer trusts—there is a wide range of advisers trusted by farmers—and the advisers need to believe in the scheme. Many advisers have not sold environmental work for the past five years, because they do not believe in the scheme; they do not want to put their name on the line when the payments are late, and when the agreement does not turn up for a year after you have entered into it.

You should not underestimate the impact that that has, because if your adviser walks up the drive and says, “I can’t put my name to that, because I can’t advise you about that future income and part of your business,” it puts people off. We are starting to get a lot of certainty now about stewardship. I know it will change and evolve, but we need that certainty of scheme and of process. The advice is there; people just need to believe in it.

[Mr Goodwill]

Q Many land managers derive significant income from the sporting potential of their farms or estates—not just from the sale of game, but from the people who pay to stalk or shoot or to catch salmon in their rivers. Indeed, before agri-environmental schemes came in, the farms and estates managed in that way were probably the ones already doing what we want them to do now. How important do you think it is that any new schemes under ELM dovetail in with the way that these estates are being managed? Do we need to take particular account, for example, of grouse moors and the uplands, where we have a fragile environment that, if managed in a different way, could well revert to what some might see as a carbon sink, but others would see as a downgrading of that precious environment?

Graeme Willis: Referring to uplands, we have signed a letter to say that we want peatland burning to end rapidly, and the Committee on Climate Change has taken the same view. I want those landscapes to be managed in a re-wetted form, which might help different forms of game. It might not be the same kinds of game management.

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[Miss Dines]

Q This question is for Mr Egan. I represent Derbyshire Dales, which is a very large constituency. As well as many large estates, there are many small farms. I was interested in your answer to the Minister about the point that you made in your written statement, that funding should be available for professional advice to ensure that we maximise the environmental benefits. How could that realistically be achieved for my small farmers, who, historically, have been reluctant to take advice due to independence, or simply could not afford to? There are a lot of young farmers—between 20 and 30—in my constituency. How could that be achieved, however admirable it is? What is your advice?

Jim Egan: I think it can be achieved. The current example of facilitation funds in cluster groups is an absolute classic for that type of farming. I think that there is a facilitation fund in your constituency; there is certainly one not far away. Those farmers could come together. I am not a believer in “one farm, one advice”. If there are six people who farm together with smaller farming units who want to go into a scheme, and will achieve better environmental outputs if they all work together, we can give one set of advice to all of them.

We need to think really differently about where we are going now. It is not just about one-to-one advice; it is about one-to-six advice. It is about, when you put the scheme together, providing the training to those six to implement the measures. I think that it is completely affordable, and it works. We just need to think differently about how we put these things together.

[Daniel Zeichner]

Q Since the previous Agriculture Bill started, obviously the world has changed in some ways. There is a greater understanding of the climate crisis that we are facing. More work has been done by the Government’s Committee on Climate Change, including very detailed suggestions for land-use management released only a few weeks ago. Would you expect to see some of those proposals begin to make their way into a Bill such as this, and are you surprised, as I am, that there is no aspiration within the Bill to hit a net-zero target at some point?

Graeme Willis: On where those targets are expressed, we know that the Environment Bill has been laid before Parliament. The relationship between the Agriculture Bill, the Environment Bill and all the other policy instruments is very interesting, and remains to be resolved. If you had gone in the right order, it might have been that you had the Environment Bill, then the 25-year environment plan, and then the Agriculture Bill, because the main funding mechanism seems to be environmental land management, which would deliver on the kind of targets that you set through the 25-year plan. That can be established through the legislation in the Environment Bill.

I am not sure whether it is right to put a target in this Bill at the moment—it may be a commitment by the Minister—but I think there is a possibility of introducing further regulation that might address that. Obviously, there is the Environment Bill. One of the complicated issues is whether the Agriculture Bill could reference the Environment Bill, because it has not received Royal Assent. There is a question about how we address targets, and whether that is set out through the Office for Environmental Protection, for example. It is a complicated relationship.

I think that the situation has changed, and therefore what the Agriculture Bill is able to do, and the amount of funding that comes forward to deliver on those targets, is critical. Clarity about the long-term funding arrangements is therefore very important, as well as how those would seek to address the climate change issue.

[Daniel Zeichner]

Q I very much agree with you about the complex interaction between the pieces of legislation, but we know that the sector produces a certain amount. Could there not be a target for the sector?

Graeme Willis: A target for the sector would be very interesting. I know that the NFU has come up with its own leadership statement of a 2040 target. It would be interesting for the sector. I would flag up that when emissions from agriculture are referenced they are land use, land-use change and forestry emissions, which relate to agriculture. Peatland use, particularly, is not mentioned, which is very high indeed—particularly on lowland peat. Those need to be factored in. It is of great concern that those do not get mentioned adequately. I think there are powers within the Bill to address those.

I suspect that if you had sector targets for agriculture you would argue for targets for other sectors. I am not sure whether those are in place. In the agriculture sector, I think that there will be ambition, given the right funding, to do a lot more on climate change, certainly in terms of locking carbon up in soils, where it belongs, rather than losing it to the air. There is great potential for that.

[Mr Goodwill]

Q I am trying to get my head around the deal in payments with respect to an early retirement scheme. When answering an earlier question, you talked about the way it could affect the value of the land. Could there be a situation in which a tenant takes the money and runs, and then the landowner is looking for a new tenant but without the agricultural support? It is difficult to attract one. How will the environment be managed if the payments that would have been forthcoming for the environmental land management schemes were not there? What would happen in practice in a situation where a tenant takes early retirement and takes the money, and then expects the landlord to pick up the pieces?

Jake Fiennes: There could be a technical mechanism relating to tenant’s dilapidations from the landlord’s perspective. The landlord could seek to recoup that if he was going to devalue the land by taking those future payments away. There is a technical mechanism that allows that to happen. That strengthens the landlord’s ability to retain that land to rent to others or to new entrants. It is important that there is some kind of mechanism within the Bill for that. Potentially there would be land abandonment because it has no value, or we would see deep intensification of land areas that have no support mechanism. Then we are trying to deliver environmental land management on a landscape scale, and we have these blackspots in between with no support mechanism. That would be my concern.

--- Later in debate ---

[George Eustice]

Q On tenancy issues, your organisations famously do not always agree, but on the future direction of travel for policy, do you both agree that a move from an area-based subsidy to payment for the delivery of public goods is the right way to go for agriculture policy? If you have any concerns about the development of that, what are your key concerns about what might go wrong in that transition?

Judicaelle Hammond: We would totally agree, as the CLA, that this move is the right move. We have been a proponent of moving towards payment for public good for a while now. The Bill is welcome. We also welcome the inclusion of soil quality, for example, and the consideration of sustainable food production and food security in the Bill. The fact that there is now going to be a multi-annual framework for financial assistance is also important, as is assistance for productivity improvement.

Regarding what we would want to see, there are two main aspects, as well as a number of other improvements, which I might talk about later. One is making sure that the transition is right. At the moment, we are missing information, not just about what is going to happen next year, but about residual payments for individual businesses over the rest of the transition years. We are missing the kinds of details about ELMS that will make it possible for those businesses to make decisions about where they want to take their business, and in particular, of course, about payment rates. In the absence of those details, and given the uncertainty in trading conditions, we would like the start of the transition period to be pushed back by one year without moving the start of ELMS.

The other issue that we have is about trade standards, which the NFU and others have spoken about. We certainly share their concerns.

George Dunn: I would take you back a little bit, Minister, and just say that we need to be really careful. Despite the fact that there is a great deal of criticism of the CAP, and the way in which the basic payment scheme operates and its impact on rents, we need to be clear that those payments are being received by individual farms right up and down the country that are doing the right things on the environment, animal welfare, consumer safety and all those issues. If we simply remove the BPS payment without properly thinking through the changes that we need to make, we risk the good work that we are doing. That is why we have been saying that we are making changes for a generation, and they need to be done well rather than quickly, so we support the CLA’s stance on delaying the transition. We think that we have concertinaed the work on ELMS, for example, too much to try to bring that forward into a sensible place.

Also, while we support the general move towards public payments for public goods, we see that move alongside the productivity elements, which we believe are really important as well. The Bill has a couple of lines on productivity, but we want to see much more about how that can work alongside creating resilience within farm businesses. There are also the trading elements and ensuring that we are not undercut by cheap imports from abroad, produced to standards that are illegal here; the fair dealing practices; and the issue of access to the tenanted sector. Schedule 3 goes some way towards addressing that sector, but it needs a little bit of work.

[Daniel Zeichner]

Q Good afternoon. In general, what changes would you like to see that would improve this Bill, from your point of view? I am particularly looking at George.

Judicaelle Hammond: The main one, as I said—I will not labour the point—is the delay in the start of the transition. It also seems to us that a couple of other things would be improved if they were done differently. For example, the multi-annual framework for financial assistance is five years. I can see why it has been done like that, but that means that it is at risk of being entangled with the political and election cycles. As far as I know, farmers in the EU—which is going to be our closest competitor—will still have seven years to plan. That is closer to the business cycle in agriculture, so we would favour lengthening the period covered by the multi-annual financial assistance framework.

The other thing that could be added to the Bill is a provision on rural development and, in particular, socioeconomic funding schemes. In the new world, that is going to be done via the UK shared prosperity fund, but that is not due to arrive until 2022 at the earliest. What would happen if that got delayed, or got into other difficulties? We would like to see some provision to make sure that it is possible for Government to continue socioeconomic schemes.

Those are two important improvements. We would also want to make sure that any moneys that are recouped from direct payment, particularly in the early part of the transitions, are used for productivity and ELMS pilots and do not go back to the Treasury.

George Dunn: We agree on the issue of trade standards. We think we need to nail that wholly into the Bill to ensure that we are not undercutting our high standards here and offshoring our issues abroad.

While there have been some helpful statements from the Government, we are concerned about some of the rhetoric that appears to be emerging, particularly from the Prime Minister’s Greenwich speech, where there was an indication that we would not necessarily insist on our laws being protected in trade deals, which is rather worrying. Of course we were also promised free and frictionless trade with the EU on leaving the European Union, but we hear the Chancellor of the Duchy of Lancaster saying today that we need to prepare for issues at the border when we end our implementation period.

On the fair dealing section of the Bill, we should nail down the fact that that should be regulated by the Groceries Code Adjudicator. The Bill leaves it hanging as to who should be the regulator. There is a suggestion that the Rural Payments Agency has a role to play; I would disagree. As the CLA has said, we need a delay in the transition period by one year, which will give us sufficient time to think about these things more deeply.

The access for tenants to schemes needs to be addressed, because schedule 3 to the Bill provides a provision only on a “may” basis. We want it to be a “must” basis that the authorities come forward with regulations. Currently, that applies only to the 1986 Act tenants, not the 1995 Act tenants. As that is half the tenanted sector in agriculture in England, we think that should be changed.

On the food security section, we want the report to be annual, not five yearly. Finally, in the financial assistance plans, the missing thing is the word “financial”. There is no commitment to say what the finances are going to be in any one year over the five-year period. That needs to be nailed into those plans as well.

[Daniel Zeichner]

Q Do you envisage that measures in the Bill will affect the lengths of tenancies that are negotiated?

George Dunn: There is nothing in the Bill that will affect the lengths of tenancies per se. Obviously there is the welcome inclusion of soil health within the public payments for public goods element of the Bill, which might encourage people to go for longer tenancies, depending on how the ELMS fits into that, but there is nothing specific that will do anything about the lengths of tenancies.

The Tenancy Reform Industry Group made a suggestion, because one of the things that landlords are concerned about is how they get land back if the tenant goes into breach. We are not interested in protecting tenants who are in breach. If we had easier-to-use provisions that allowed landlords to take land back if they had let for a long period of time, that might make them freer to do that.

There is also a need to look at the taxation framework, which goes beyond the Bill, but we hope that the Chancellor might say something about that on 11 March.

Judicaelle Hammond: Interestingly enough, we would support the introduction of provisions that enabled landlords, as you might expect, to get possession of the land in the case of breach. The question for us is whether there should be a threshold on that. Our answer would be that two years or more would be better than any arbitrary longer threshold. That is certainly an additional provision that we could support if there were not an arbitrary threshold.

George Dunn: Our view would be that there would be no public policy use for such a short-term clause. If we are looking at longer tenancies, we need to find a way of encouraging them, so it needs to apply to tenancies that are of 10 years or more.

[Danny Kruger]

Q It is very good to hear that you both support the direction of travel of the Bill. We heard earlier from witnesses who were explaining how, under the direct payments system, it is often possible for the landlord to simply hold the subsidy and for the tenant not to receive the benefit. Do you think that the new system will align your interests? Can you give us an example where, possibly, the landlord and the tenant might disagree about an improvement? Perhaps the tenant wants to gain some support for sequestration or planting trees or whatever, but the landlord is in disagreement. Do you think that we are setting up conflict between landlord and tenant? Perhaps, Ms Hammond, you could imagine a really bad tenant and, Mr Dunn, you could imagine a really bad landlord. What would you be fighting over?

Judicaelle Hammond: It is really important to understand that, in most cases, we would expect agreement to be found. I think the reason why we do not like one of the particular provisions in schedule 3, which has to do with arbitration in case of disputes, is that at the moment it very much looks at the interests of the tenants, who might be gaining financially quite a lot, without necessarily having a balance of the interest of the landlord.

I will give you a few examples of why landlords might withhold consent. It might be about landscape protection. For example, the National Trust will have properties where they want to make sure that the landscape continues to be enjoyed as it is. Or it might be that something does not fit with the business planned for the whole of the holding—in particular, if you are looking at other areas of the holding that are currently in hand or are farmed by somebody else, which might be better suited to planting trees, because trees cannot grow very well in all places. Or it might be about putting buildings on land in order to create new activities.

As drafted, the schedule would mean that, in the case of a dispute, it would go to an arbitrator, and then the decision is binding on the landlord. That means that there could be really long-term and possibly irreversible decisions being imposed on the landlord. We see that as a really fundamental infringement of property rights, and that worries us. It is the absence of balance that worries us.