Common Agricultural Policy

George Eustice Excerpts

Thursday 1st November 2012 Westminster Hall

[Neil Parish]

I understand exactly where the hon. Lady is coming from, but looking at Scotland, dare I question whether the highlands and the bare rocks need the same payment as some land that can be farmed, such as grasslands? Averages of payment throughout Scotland are interesting. How I dare even suggest such things, I do not know—I do not want to get into a war with Scotland—but there are statistics and statistics.

We are at a crossroads, and at a place where Britain is well in advance of others, with regard to environment payments. We need to ensure that we can pay for those payments. I agree with my hon. Friend the Member for Thirsk and Malton that modulation is unfair to British farmers. However, I also know that the Treasury is not noted for its generosity, and if we do not modulate, we will not have enough money to pay for our stewardship schemes. If the Minister and the Secretary of State with responsibility for agriculture went cap in hand to the Treasury, saying, “We already receive £2 billion or £3 billion from the CAP, but we need more money from the Treasury to prop up stewardship schemes,” I suspect that they would be told in good Anglo-Saxon terms to go on their way. As we negotiate the new agricultural policy, we must ensure that those stewardship schemes are funded through it in some shape or form. We must be careful when we say that we will throw the modulation out with the bathwater, because that may not be the right way forward.

This debate is a great opportunity, and I wish Ministers well in their negotiations. The argument in Europe is always that we should have an agricultural policy for the whole of Europe and a budget to fit that policy, but in the real politics of the European Union, there is a budget for agriculture, and agricultural policy is then fitted to that budget. That is exactly what will happen this time.

We must get the best deal for our farmers and the environment. I wish our new Minister and the Secretary of State well in their negotiations with our European partners. We must be tough to ensure that we move our agriculture forward to competitive food production and a green agriculture policy, but we must not lose sight of the fact that in the end, much of the food that our farmers produce is also part of the green environment.

[George Eustice (Camborne and Redruth) (Con)]

Does my hon. Friend agree that a problem with a one-size-fits-all policy such as the CAP is that it is difficult to have policy innovation, because any such innovation is stifled by the need for negotiations between 27 member states? Does he think it might be better gradually to move to a system with a common agricultural policy with common objectives—safeguarding the environment, improving animal welfare, and food security—so that those policies are increasingly delivered on the ground by national Governments from their own budgets, and we do not recycle funds through the EU in the first place?

[Neil Parish]

Yes. My hon. Friend raises a good point. What needs to be brought in is not only a policy, but co-financing, because each member state would then pay for its own agricultural policy, and might not be quite so keen on throwing money away on strange projects, as some countries do. Olive oil is produced in Greece, and reindeer are supported in north Finland and Sweden. Wheat and barley are grown across much of Europe, and rice is grown in parts of Italy and Greece. It is difficult to support a policy and have one aim. It would be much better to ensure that member states had their own money. The downside of that is that we do not want the French throwing all its money into supporting suckler cows and beef production, and that highly subsidised beef then coming across the channel to compete with our beef, which may not be subsidised in the same way.

[George Eustice]

I completely accept that point, but does my hon. Friend agree that for any other goods, and in any other part of the single market, state aid rules, which the European Court of Justice enforces, prevent that from happening? It would be possible to have an agricultural policy with common objectives, but delivered nationally, with those state aid rules to prevent the sort of behaviour he mentioned.

[Neil Parish]

My hon. Friend has heard the phrase, “The law works for the law-abiding,” and we can be certain that the French would find every reason to distort the market in their favour, wait until that was challenged by the European Commission, and drag it through the European courts for years, so I am not as sure as he is that state aid rules will stop the French or anyone else distorting the market. We must be careful if we go down that route. State aid rules are a blunt weapon, and I believe the Anglo-Saxons in Europe conform to them more closely than those in other parts of the European Union. State aid rules alone will not be enough.

We must ensure that CAP reform is done in a way that does not distort the market further. We should green it, but have food production, and ensure that as we deal with farmers in this country, we have food production on the best land and increase it sustainably, but have conservation on our more marginal land. That is the way forward, and that is where we must be careful in our negotiations on the greening of the CAP. I look forward to Ministers doing a good job.

--- Later in debate ---

[George Eustice (Camborne and Redruth) (Con)]

Thank you for allowing me to speak, Mr Chope. I am conscious that I was not here for the opening of the debate. The title of the Select Committee’s report is “Greening the Common Agricultural Policy,” but more specifically the Commission’s proposals are about greening pillar one of the CAP. It is worth noting that supporting the greening of pillar one represents quite a significant departure from the long-standing British foreign policy position, which is that we should gradually phase out pillar one and direct payments all together and put our support into pillar two, so that we can have more tailored local and national support for environmental stewardship schemes.

My concern is that by going for the greening of pillar one, we will end up with what is already being called in some circles green taping—rather than red tape, we will have green tape. There will be quite bureaucratic and centralised diktats coming out about what farmers can and cannot do, which invariably will not have been thought through properly. We might lose the opportunity to achieve the more satisfactory long-term objective of removing pillar one altogether and having effective, well thought through countryside stewardship schemes. In recent decades, British Governments of all colours have led the way in developing some of the successful ones. The entry-level and higher-level stewardship schemes are held up as exemplars for others to follow. There is a danger that we will lose that momentum towards a more sensible CAP and end up reverting to and getting bogged down in, again, quite a bureaucratic process.

I shall highlight a few key problems that I see with some of the proposals. There is the idea that we should go back to set-aside. We moved away from set-aside 15 or 20 years ago because it was not working. The point was made by my hon. Friend the Member for Tiverton and Honiton (Neil Parish) that it is not always right to have just 7% of every farmholding set aside and not farmed intensively. The evidence is that if we really want to encourage wildlife, we should have wildlife corridors. Some parts of the country where the agricultural value of the land is lower might opt to do more of these environmental schemes—

[Neil Parish]

My hon. Friend is absolutely right about the set-aside argument. Do we get value for money in greening with set-aside, counterbalancing the fact that we are taking out a lot of land that could be used for food production? There is a moral duty to produce food as well as taking land out for so-called environmental set-aside.

[George Eustice]

That is right. The environmental stewardship schemes in pillar two are much more proactive about encouraging wildlife and improving biodiversity, whereas the problem with set-aside is that it becomes something that has to be done and everyone finds all sorts of ways around the rules so that, for instance, they can graze a particular type of goat on the land and get away with it. There is an issue with the bureaucratic system of set-aside.

My hon. Friend the Member for Tiverton and Honiton also alluded to the crop rotation requirement. Anyone who has been a farmer, as I once was, knows that crop rotation is a good thing. A farmer who farms without rotating their crops, particularly in the arable or vegetable sectors, will soon run into problems, such as crop disease, which causes a great deal more expense than any subsidy would have been worth. I question the value of insisting, in the latest proposals, that each farmholding must grow three crops. It proves that whoever came up with the idea is not a farmer; they are a bureaucrat. One could grow three brassicas—cabbage, oilseed rape and cauliflower—which would satisfy the three-crop rule, but the farmer would have clubroot disease in all those crops within two or three years.

I understand why some would regard the proposal to cap subsidies to individual farmholdings as superficially attractive; they think, “Why should we give a huge amount of money to very large farms?” However, no one has thought through the likely impact. Large farmholdings might break themselves into small farmholdings to get around the rules. There would be all sorts of avoidance problems, which would need a suite of anti-avoidance measures and people to ensure that farmers did not break up their holdings to circumvent the provisions. There would be major problems with that, so one must question what we are trying to achieve. If an objective of the CAP always has been and should be to promote food security and competitive farming, why would we want a policy designed to undermine the most productive and efficient farms in Europe and reward the least efficient? Although I understand why some would find the proposal superficially attractive, it is a mistake.

[Huw Irranca-Davies]

What are the hon. Gentleman’s thoughts on the proposal I floated earlier? Farms receiving the very high CAP payments are on the most productive land, but they need to be more productive because we face food security challenges. The very high CAP level should recognise additional investment in innovation, targeted farming, research and so on, so that it was based not purely on production volume, but on increased production.

[George Eustice]

That is an interesting proposal, which I would like to look at more closely. I have previously argued that we could develop a system in which environmental obligations became transferable in some regards. The lettuce grower on the Cambridgeshire fens, who has a model that getting the single farm payment is irrelevant to, might forgo the payment, which could instead go to a farmer on more marginal land in, let us say, Wales—I do not want to offend anyone with a Welsh background. Such schemes could therefore receive more investment.

A problem that we all recognise in the EU negotiating process, which I alluded to in my question to my hon. Friend the Member for Tiverton and Honiton, is that rather than going into negotiations saying, “What is the best possible agricultural policy we could design?” and “What is the optimum policy we could pursue?” we are always hamstrung by voices in DEFRA and the civil service that say, “You can’t do that because Denmark won’t agree. If you advance this idea France will reject it, and we will lose our allies in Poland and eastern Europe.” Everything about agricultural policy ends up being seen through the prism of an incredibly complicated 27-way negotiation, which frankly leads to a poverty of vision of what our agricultural policy could become. We instead plod along like a blinkered horse, trying to achieve what we can. It is all about the lowest common denominator, rather than genuinely successful and thoughtful policy. Pillar two is a classic case of that.

[Mr Dai Havard in the Chair]

In the last Parliament, our Committee, before I was on it, criticised the Labour Government for arguing that we should phase out pillar one and have pillar two only, because it was not achievable and undermined our negotiating position. If we do not even articulate what we believe because we are concerned that doing so will undermine our negotiating position, there is a problem.

I would like a much looser CAP in future: a common policy about common objectives. We could set common objectives for improving animal welfare, safeguarding the environment, enhancing biodiversity and promoting food security. There could be much looser policies and arrangements centrally and much more decision making and responsibility for implementation devolved to national Governments.

[Neil Parish]

This will tempt my hon. Friend further from the topic of debate, but would a looser common agricultural policy, or an agriculture policy, be part of a new relationship that we might negotiate with Europe?

[Mr Dai Havard (in the Chair)]

Do not be tempted too far, Mr Eustice.

[George Eustice]

It might be, if we get to that point, but I do not want to be distracted by that now.

There is potential and it is not unrealistic, because that is the direction of the common fisheries policy. The Commission, under Commissioner Damanaki, is buying into ideas that will effectively lead to a partial repatriation —of sorts—of the management of individual waters and fisheries only to those groups of countries that share that fishing water. That is a sensible plan.

[Huw Irranca-Davies]

The hon. Gentleman has graciously given way. He tempted me in because I was the Minister who oversaw the instigation of that regionalisation of the common fisheries policy. It is a good approach, but it must be balanced against the imperative to achieve sustainability of fisheries in sea areas. In the same way, we are talking about the long-term sustainability of agriculture and getting more out from less in. There cannot simply be devolved management and let-loose chaos; it must be well planned and managed by individuals and organisations on the ground or on the seas.

[George Eustice]

I absolutely agree. In fisheries, the developments and techniques on maximum sustainable yield and how they are calculated and measured, with all their complexities, have come a long way. That should be the guiding philosophy of the common agricultural policy. The US has a statute that states that there cannot be overfishing beyond the maximum sustainable yield, and we could look at something like that at a European level. I accept what the hon. Gentleman says, but I am talking more about the implementation to deliver maximum sustainable yield in fisheries, how we could devolve management of that and how we could do the same for the common agricultural policy. We could set clear objectives to enhance animal welfare, biodiversity and environmental protection, but give individual countries much more scope to work out how best to achieve them.

I am interested in another area that has always struck me as a missed opportunity. The Committee took evidence on the natural environment White Paper proposals, which the Government launched soon after the election. Some of that evidence made it clear that putting a value on biodiversity and the natural environment was a powerful idea that had a great deal of potential. There were interesting proposals in the White Paper, but the big thing that held them back was the lack of funding to make them a reality and to make such a market a reality. A huge amount of money—the best part of 40% of the EU budget—is tied up in the common agricultural policy, but there is no really thoughtful, innovative policy in it. There are interesting ideas in the White Paper, but no money for them. Could we somehow marry the two and use some of that CAP money to make a reality of the natural environment White Paper?

[Miss McIntosh]

Welcome to the proceedings, Mr Havard.

My hon. Friend did not hear my opening remarks when I highlighted the fact that funds under the CAP are going to the projects that he mentioned. Perhaps the Minister will clarify whether those will continue under the revised rural development programme for England and possibly the agricultural environment schemes as well. Does my hon. Friend the Member for Camborne and Redruth (George Eustice) agree that we heard powerful evidence that this could be achieved through private enterprises, such as water companies, which might be a better route and attract more investment?

[George Eustice]

There are a number of routes that we could pursue to bring this forward. My point is that there is a huge amount of money tied up in the CAP. There are funds, as my hon. Friend said, in pillar two. If we are serious about greening pillar one, we could try to transform it into a market, with state funds available to do that, to promote environmental schemes, so it could be almost a transferable obligation. The lettuce grower on the Cambridgeshire fens might choose not to participate. Another farmer might choose to participate in quite a big way, so we would get some critical mass. We would have wildlife corridors and make a genuine difference rather than making token gestures.

A lot of the proposals are probably beyond the scope of the CAP negotiations. It was ever thus. One of the big problems with the CAP is that it always tends to be about 10 years behind where it needs to be. It is now focusing on the environment when it probably ought to be paying, as my hon. Friend the Member for Tiverton and Honiton said, a little more attention to food security. However, I know there is room for negotiation and an understanding that greater flexibility needs to be included in some of the proposals. We should at least be arguing for them, and not be afraid of arguing for them just because we do not think that we have enough allies at this point.