Common Agricultural Policy

Eilidh Whiteford Excerpts

Thursday 8th March 2012 Westminster Hall

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

I congratulate the Environment, Food and Rural Affairs Committee and its Chair on the report and their important work in scrutinising the CAP reform process.

I want to pick up on a few key issues in the Commission’s proposals that will be of great significance to farmers in Scotland, not least in the parts of Banffshire and Buchan that I represent, where farming has been a way of life for many generations and where food production is still absolutely the mainstay of the local economy.

I suspect that there is a good deal of consensus across the House on a couple of critical issues in today’s debate, the first of which is the need to cut red tape and reduce the administrative burden on farmers. In many respects, that is about fixing a major problem with the current CAP regime and is linked to the need for effective regionalisation and flexibility for member states. I hope that the Minister will consider in his comments at the end how we can start making decisions much closer to home and in the interests of our farming communities.

[Roger Williams (Brecon and Radnorshire) (LD)]

The hon. Lady touches on an important point. A common agricultural policy is needed, but considering the difference between farming in Finland and farming in Greece, we need to ensure that local decisions are taken on local matters within the umbrella of the CAP.

[Dr Whiteford]

I agree entirely with the hon. Gentleman. Clearly, we have different climates and landscapes, diverse methods of farming and different ways of doing business in farming. Without prejudice to the common market, it is important that decisions are made in a practical way by the people best able to make them.

Member states will need flexibility in the process to tailor implementation to their own needs. Within the UK, all three devolved Administrations must be able to work around the challenges that they face in delivering sustainable agricultural development in some least favoured areas. About 85% of Scotland is classified as least favoured areas. That compares with much lower proportions in some other parts of the UK. I hope the Minister will offer assurances that he will press for greater regionalisation as the negotiations intensify and that the issue will not fall off the agenda.

The hon. Member for Thirsk and Malton (Miss McIntosh), the Chair of the Environment, Food and Rural Affairs Committee, quite rightly concentrated on direct payments in her remarks. I welcome the fact that the Government have moved away from the more rigid position of the previous Government, but I am still concerned about their direction of travel. I welcome the Minister’s remarks earlier on clarifying the Government’s position. I hope that he will listen carefully to the Governments of Scotland, Wales and Northern Ireland on direct payments and pursue a negotiating stance in Europe that reflects the needs and wishes of the whole UK.

It is worth remembering, as the hon. Lady pointed out, that direct payments are there primarily to compensate producers for the increased costs of operating in a highly regulated market and to enable them to meet the high animal welfare and food safety standards that we all expect. We need to acknowledge that that does not come for free. We need to accept the reality that, in the past few decades, farming has not been particularly viable as a commercial enterprise. If we did not support agriculture with direct payments, food production and land management simply would not be happening in large areas of the UK. Farming, especially in the least favoured areas, would have ceased a long time ago.

We cannot consider this in purely economic terms. The hon. Lady hit the nail on the head when she put food security at the heart of the debate. Brian Pack’s 2010 report, which was produced for the Scottish Government, highlighted not just the food security challenge, but the challenges of climate change, water supply, energy use and biodiversity as the starting points for CAP reform. In a global context of rapidly increasing demand for food and the need to manage our natural environment much more sustainably, the case for direct support for farmers is actually much stronger now than it ever has been in the past.

We also need to consider the future of direct payments against the historical backdrop of Scottish farmers receiving a disproportionately low share of pillar one support—a pressing issue for those Scottish farmers who want to export their produce. At present, pillar one rates in Scotland are only €130 per hectare, which is less than half the EU average, and well below the UK average of €229 per hectare. The UK needs to argue for its proper share of pillar one, not least so that it can provide a fairer allocation to Scottish farmers.

[Glyn Davies]

I want to return to the point that I made when I intervened earlier. I think that there is general agreement that pillar one is crucial. In Wales, where we have more than 80% of least favoured areas, it is absolutely crucial. Farmers who approach me are concerned that a significant part of pillar one will be subject to greening policies that are so bureaucratic that they will not be able to comply with them. The biggest threat is that the greening proposals on pillar one will probably make that part almost inaccessible.

[Dr Whiteford]

The hon. Gentleman raises a valid point. In their current form, the greening proposals are probably unworkable. They are inherently bureaucratic, which is exactly what we should be trying to move away from. I am afraid that they will have unintended consequences and that the one size will simply not fit everyone in exactly the same way as we have seen in previous incarnations.

One priority for farmers in my constituency, as well as other parts of Scotland, is the need to retain the option for coupled support for the beef sector. The hon. Member for Thirsk and Malton mentioned that in relation to upland farmers. The Minister will know that Aberdeenshire is famed for its beef, but we face challenges in least favoured areas. A lot of the land used for livestock grazing in Scotland is not suitable for arable farming. Grazing livestock is the most sustainable and environmentally friendly way to manage that land. I hope that the Minister listened to the concerns of Scottish farmers when he met representatives of the National Farmers Union earlier this week. I am sure they made their views known; I hope that he will take their concerns on board and respond to that issue.

Another issue that relates to the point about greening is the three crop rule, which will not work in those least favoured areas where only grass can grow—a lot of those areas are permanent pasture. I hope that the Minister can find a workable solution to that, too.

CAP reform gives us an opportunity to clear up some of the problems with the current approach, including the opportunity to target support at those who are actively farming the land. There has been recent controversy about so-called slipper farmers. It is worth making the point that, certainly in Scotland, more than 98% of those in receipt of farm subsidies are actively farming. It is important to keep that in proportion, notwithstanding the need to tighten up and close that gap.

This is a time of austerity throughout Europe, and everyone is feeling the spending squeeze. We need to justify the support that we give to farmers through direct payments if we want to keep public confidence in the benefits that they accrue. A very strong case can be made for our food producers and land managers, but it is hard to justify large handouts to those who are not actually involved in farming.

It is important that any active farming test is based on how the land is managed, not on an arbitrary accounting measure, because many small crofters in Scotland are part-time farmers—they either run other businesses or have other employment—and they could be adversely affected. Increasingly, perhaps more in my own area than in some others, farmers are trying to diversify their farm businesses. Renewable energy is probably the most obvious example, but they are moving into areas that are sometimes considerably more lucrative that their farming businesses. Farmers who are actively managing land sustainably should not be penalised because of their other business interests.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

I imagine that the hon. Lady has similar examples to ours in Wales. Farm businesses that have traditionally formed the bulk of a family operation have been overtaken by, for example, a tourism diversification scheme. In our case, that is every bit as important. She makes a good point, but I hope that she recognises that that applies, particularly to coastal areas.

[Dr Whiteford]

The hon. Gentleman makes a good point about his constituency. The picture in Scotland is more mixed. There are some areas with a tourist dimension, but there are other areas where farming and food production is much more the core business. Again, even in the UK, we cannot say that one size fits all. Even within regions in parts of the UK, there is diversity.

[Mr Alan Reid (Argyll and Bute) (LD)]

The hon. Lady rightly said that that direct payment should be linked to active farming. Does she agree that the system needs to be improved, so that new entrants will be attracted into farming? The present system with a fixed point in the past discourages new entrants.

[Dr Whiteford]

Absolutely. That has been an historic problem, and this is an opportunity to address it. The Commission’s proposals to support young farmers are probably a step in the right direction. It has been very difficult in recent decades, as the hon. Gentleman is aware, for new entrants to get a start in farming unless they inherit a family business. I am concerned that the proposed scheme will apply only to those who are already entitled to basic payments. That will not help new entrants aged over 40, or those who enter farming after 2014.

I should like the scheme to be open to all genuine new entrants to farming. I should also like member states to have the option to implement that policy, so that it can be tailored as necessary to address the real issues that we face. Likewise, a simplified scheme for small farmers could be a useful step in Scotland, where 13% of pillar one support is for less than €1,000. Crofters would be prime beneficiaries of such a move, and I hope that we will find a suitable way forward on that proposal.

[Barry Gardiner]

I agree with the hon. Lady on the importance of local understanding in the distribution of funds; they should be managed locally. However, has she considered that perhaps in other parts of the EU—not within the UK—there might be countries that could abuse or rig such a system to ensure more finances for their own farmers? That would not be good for farming in general or for the CAP’s objectives as a whole. Indeed, it would not be good for the environment.

[Dr Whiteford]

The hon. Gentleman makes a valid point, which touches on one of the key struggles that I mentioned at the outset: the problem of regulation and bureaucracy. We need to strike a balance between bureaucracy and regulation, with all the problems of compliance in recent times, and have an effective and workable system. There is no easy solution. Nevertheless, those who comply with the system should not be the ones who are punished by it. I have lost count of the number of farmers in my constituency who have complained about the amount of paperwork that they have to deal with to access CAP funding. Even though that burden of regulation has eased a little in the past few years, the single, biggest complaint that I hear from local farmers is about the very stringent and absolutely bureaucratic compliance rules.

The financial penalties for even a minor infringement or an administrative error can run into thousands of pounds, which is out of all proportion to the seriousness of the infringement. I have raised that with the Minister on more than one occasion, and he is well aware of farmers’ concerns. What prospects are there in this CAP reform round of addressing that serious issue, which has caused more problems than any other?

I hope that the Minister will respond to those concerns and to those that, I am sure, other Members will raise. There is a future for farming. It supports nearly 500,000 jobs in Scotland, either directly through agriculture or indirectly through the food and drink supply chain. Farming is a critical part of our economy and our culture, and the money that we invest in it is repaid many times over through the management of our rural communities.

--- Later in debate ---

[Neil Parish (Tiverton and Honiton) (Con)]

I thank the Chairman of the Select Committee for securing this debate, because it is important that we debate in this Chamber the future of agriculture, farming and the countryside.

I thank the Minister for being here. He has a difficult job ahead of him. I do not blame him for all our ills; the European Commission has got it entirely wrong. I have had some slight experience of the European Commission over 10 years. The Agriculture and Rural Development Commissioner has got it absolutely wrong; we have to move to more competitive agriculture, and we must look after and manage the countryside well, but the policy that he is producing does not go in the right direction on either of those issues. I agree with my hon. Friend the Member for Camborne and Redruth (George Eustice) that one size does not fit all.

Let me provide a brief history of the common agricultural policy. It arrived at the beginning of Europe, when the Common Market was made up of six countries, France and Germany being the dominant ones. This was after the second world war, when food was hugely important. For those five or six countries in the middle of Europe, it was much easier, given the type of crops they grew and their type of farming, to devise some sort of common agricultural policy. However, now there are 27 countries, covering from the north of Finland to the south of Greece, and including Poland, Romania and Bulgaria. There are hugely different types of farms—very small farms and very large state farms left over from previous communist systems, and private farms of various sizes throughout the rest of the European Union. If we also consider the different types of crops grown, and all the complicated subsidies introduced over the years—for cotton, olive oil, sugar and everything else—we begin to see the complexity of the matter. I agree that we need to ensure that we have an agricultural policy that suits this country. I know that the Minister is trying to work on that.

The shadow Minister, the hon. Member for Ogmore (Huw Irranca-Davies), mentioned fisheries, and he has a point. The Commission is offering more regional powers; whether it is giving those powers in reality is a matter for another debate, but it certainly needs to move in that direction.

Let me turn to the need for agriculture. There are now more than 7 billion people in the world. There is a moral duty to produce food, and for this country to do so. As global warming and climate change alter the growth that can take place in many other parts of the world, it becomes up to us to produce good food when we can. Also, we would otherwise have to import food. There is also the issue of the water used to grow food; many countries can ill afford to lose water. Whatever economic difficulties our nation has, we can afford to feed ourselves and buy food, but in many parts of the world, that cannot be done. We need to be conscious of that.

We must face up to the reality of where agriculture and farming are going in future; I hope that the Minister agrees with me. I think he does not want to do away with the single farm payment and support for agriculture overnight, but he does want agriculture to be weaned off public support, because we cannot accept, year after year, ever more public support for agriculture. We need competitive agriculture, and we can have it.

The hon. Member for North Antrim (Ian Paisley) talked about the poultry industry; the thing to remember about it is that it is competitive even though it is unsupported. It is not supported by the common agricultural policy, so it competes well. We have a successful poultry industry in this country.

[Dr Whiteford]

In recent months, the poultry industry has had to compete on an unfair basis, thanks to EU rules that have pulled the rug out from under it after it has invested heavily. While we are in the common market, the rules must be the same for everyone.

[Neil Parish]

The hon. Lady is absolutely right. It is a travesty of justice that the rest of Europe has not complied with the requirements for enriched cages for producing eggs, but that is the fault not of this Government but of a weak European Commission that has not taken proper action against those member states that have not complied. No matter what the policy, it must be properly applied across member states, and not just by our country.

--- Later in debate ---

[The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)]

Good afternoon, Mr Sheridan. I thank the hon. Member for Ogmore (Huw Irranca-Davies) for that expression of support. I will start by reminding hon. Members of my own interests, as already declared, and thanking them for the way that they have contributed to this debate on what everyone agrees is an extremely important issue that probably does not get enough debating time in the House when compared with many other issues. That probably reflects people’s concerns and the fact that the country has become more urbanised in the past few decades.

As my agenda for my remarks, I want to use the proposals about CAP reform. As Members will know, although the subject of the debate is the Select Committee’s report and the Government’s response, both documents are basically obsolete, given that the report was produced last summer, since when we have had the Commission’s detailed proposals. Indeed, we have been able to explore those proposals. Negotiations have started and the Government have obviously been able to develop our own ideas. So I think that it will be more helpful to use the Commission’s main proposals, most of which have already been referred to during the debate, as a framework, and in doing so I will try to pick up on all the comments that colleagues have made about the proposals and some issues that arise from them.

First, we need to reflect, as one or two of my hon. Friends and other hon. Members have done, on the background against which—uniquely, or certainly for the first time in many decades—this round of CAP reform is taking place. In my view, which I think is shared by the hon. Member for Ogmore, that background is one of optimism.

As was mentioned right at the start of the debate, also in the background is the Foresight report, which demonstrated that global demand for food will be somewhere between 70% and 100% greater—different figures are used—in the next 40 years than it is today. That rise in demand will be brought about not only by the population increase that Members have referred to, but by the fact that a large part of that population increase will happen in the two most populous countries—India and China—both of which have a rising middle class and a rising demand for higher quality and better diets. That is part and parcel of this change; it is not just about the rising number of people.

It is also worth making the point that 1 billion of those extra people in the years ahead will live in Africa—a continent that has immense potential for agricultural production, but a potential that is woefully underused for a whole raft of reasons, many of which were mentioned by hon. Members.

Furthermore, all of those changes are set against the background of climate change, which will render parts of the world almost impossible to farm but which perversely appears to make northern Europe one of the best places to farm.

The background is crucial in assessing not only the Commission’s proposals, but where we go with agriculture in the coming years. It creates great opportunities, and the Government are disappointed that the Commission’s proposals do not really meet the opportunities that that background provides. At their worst, they could take us backwards—I do not believe that they will, but they could—so I should like to spend some time analysing them. I accept—the hon. Member for Ogmore is right—that some of what I will say is a repetition of what we discussed in a European Committee, but it was so good that I will say it all again.

The most important issue to start with is the future of the single farm payment. I am disappointed with the views of my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) on the single farm payment. I know a lot of farmers—farming has been my life—but I do not know a farmer who would not like to do away with subsidies. Of course, there are issues around that, but they would far rather not have a subsidy and not be dependent on public money. They would prefer not to have to be apologetic sometimes or to justify themselves. That in itself is an important point, and we should therefore set our sights on achieving that.

I want to put the record straight on the issue that we touched on earlier and say exactly what the Government’s position is. When I gave evidence to the Environment, Food and Rural Affairs Committee, I said:

“I have always believed…that direct payment support…will end eventually… We are not going to see it happen in this financial perspective, but I think it will happen and I think the challenge is to help the farming industry face up to that day whenever it comes.”

That was my view, and it remains my view. It has been my view for the 25 years that I have been a Member. To confirm the official position, as opposed to merely what I have said, I refer hon. Members to the official Government response to the report. It states:

“we have made it clear that phasing out such payments”—

single farm payments—

“by 2020 is unrealistic, in both practical and negotiating terms.”

That is, as the hon. Member for Banff and Buchan (Dr Whiteford) said, a significant change from the previous Government’s position. I therefore hope that there can be no debate about what we are suggesting.

The hon. Member for Brent North (Barry Gardiner) said that a date needs to be fixed. In an ideal world, one would be, but the first argument to win is that we should set a trajectory. It is clear that the Select Committee does not agree. It is perfectly true that many member states and the commissioner do not believe that we should be ending, or even considering ending, single payments. We should recognise what I think will be an inevitable event at some time in the not-too-distant future but beyond this financial perspective.

We can look at what is going to happen, even though the crystal ball is extremely murky about the outcome of the negotiations. Even if the Commission’s own budget proposals for the CAP go through, that will mean a reduction in the single farm payment. That is clear. There is a cash freeze over the whole financial perspective for the CAP. Excluding one or two movements such as convergence between the highest and lowest paid member states, the single farm payment will reduce, certainly in the UK, so let us not pretend that we can somehow protect it and live on it for ever. That is not going to happen, so it is important that we spend a lot of our time and effort focusing on the CAP and trying to ensure that the industry can accommodate that and, as has been said, become more competitive.

[Dr Whiteford]

Will the Minister press for a fairer deal for Scottish farmers in the pillar one support, because we are currently well below the average in the UK and less than half the average in the EU?

[Mr Paice]

I was going to come to that point. The hon. Lady referred in her speech to the fact that I was in Scotland yesterday. I met the Scottish NFU, and I gave evidence to the Rural Affairs, Climate Change and Environment Committee in the Scottish Parliament. I was asked the same question. I cannot give clear commitments, because we do not know what the outcome will be. We do not know what the total CAP budget will be. We know what the Commission is proposing. We certainly do not know how much there will be in pillar one or pillar two. We do not know what the convergence debate will lead to and whether that will be reflected in how we divide up the UK’s share of the cake, whatever it may be.

I will make the point that I made yesterday. It is a blunt instrument simply to take the total payment—to Scotland in this case—and divide it by the number of acres, because the acres are not all equal. As the hon. Lady rightly said, 85% of Scotland is in less favoured areas. Some of the land in the highlands is of little, if any, agricultural use. That bald statistic is a blunt way to compare resources. In any case, as she will be aware, the resources are simply based on the historical payments before the advent of the single farm payment. That is fact. As for the future, I made it clear yesterday that we will sit down with all the devolved legislatures to consider how to split the cake once we know how it has been arrived at and how big it is. We cannot prejudge the outcome.

I will say, because the hon. Lady intervened, that the point about the less favoured areas is crucial. The British Government fully support the need for Scotland, Wales, Northern Ireland and England to target support at such areas, which will be renamed under the CAP. I have forgotten the phrase, but it will come back to me. Those areas will get a new title, but little else will change. I am told that they will be called areas of natural constraint. In an ideal world—I will come back to the wider aspects—the targeted payment is best made from pillar two. The hon. Member for Ogmore referred to the uplands entry level scheme, which is what we have in England. Pillar two targeted payments for those areas with natural constraints could be just as effective as a blanket per acre, or per hectare, payment.