Farming

George Eustice Excerpts

Monday 4th March 2024 Commons Chamber

[Steve Reed]

The answer, which is quicker than playing around with the architecture of agencies and national Government, is for the Government to get a grip. These agencies are responsible to national Government and I would like to see much stronger command from national Government to make sure that they do what they were set up and funded to do. They are clearly not doing it to anything like the extent or with the quality that Members from all parts of this House expect of them.

A second point I wish to raise is that Vladimir Putin’s illegal invasion of Ukraine has sent energy prices rocketing. That exposed the Government’s failure to transition to cheaper, home-grown energy. As a result, soaring energy bills have clobbered British farmers and producers. Labour’s approach would be very different. We will switch on GB Energy to cut bills for farmers, households and businesses. That publicly owned company will direct public and private investment to harness the power of wind, wave, solar and nuclear energy, to cut bills, create jobs and secure energy supply chains inside our own country, freeing us from dependence on foreign dictators like Putin. We can also help farmers who want to generate clean energy on their own land. Under this Government, it can take up to 10 years to get planning permission to connect this desperately needed energy into the national grid. Labour will reform our planning laws and cut that wait from years to just months.

The Government’s bungled transition from European Union farming payments has been another source of financial misery for farmers. Far too many have seen incomes plummet as the basic payment scheme is phased out. Tenant farmers, in particular, feel that the new scheme does not work for them. The principles behind environmental land management schemes make sense, but the implementation has been chaotic and bureaucratic. Instead of tackling the weaknesses in ELMS, the Government have instead shuffled their feet and tried to claim the credit for reallocating a £220 million underspend. That money should have been given to farmers in the first place and not returned to the Treasury, but at the core the Government’s failure is to have never developed a clear strategy for land use, including food production.

Our land management scheme should support moves towards regenerative farming and nature recovery, alongside food production. Instead of doing that, the Conservatives are increasingly positioning themselves against nature. Their attempt to trash environmental standards to legalise the further pollution of already polluted rivers and waterways was shocking. We have a limited amount of land for the size of our population in this country. We need a land use framework to make sure that the many competing demands on our land can work in balance. This Government have failed to produce one. In government, Labour will introduce one.

The Conservative Government stubbornly refuse to publish interim data showing what impact ELMS are having. The Guardian has used a freedom of information request to expose how the Government buried an analysis of the dire financial prospects for upland farmers after they realised it was almost entirely bad news. We need to know what is going wrong with ELMS so that we can make them work more effectively. If this Government will not publish that information, an incoming Labour Government will, if we win the next general election. We have to make sure that policy works for food production, as hon. Members have already said, as well as for nature, which means being open and transparent about what is really going on.

Farmers are furious about the Conservative Government’s post-Brexit trade deals. [Interruption.] I see the Minister is shaking her head. The outgoing president of the National Farmers Union—not a Member or supporter of the Labour party—called the Government’s approach “morally bankrupt”. The right hon. Member for North East Somerset (Sir Jacob Rees-Mogg), until recently a senior member of the Cabinet, has called for the import of hormone-injected beef and chlorine-washed chicken. That is not just alarming for British consumers; it would be catastrophic for British farmers. We cannot demand high welfare and environmental standards from our British producers if the Government then undercut them with lower quality imports, yet that is the approach this Conservative Government have taken.

The Government’s own assessments say the Australia and New Zealand trade deal will result in the loss of £48 million from British agriculture and fisheries, so no wonder the former Environment Secretary, the right hon. Member for Camborne and Redruth (George Eustice), attacked the deal as

“not actually a very good deal for the UK”,

because, as he rightly said, it

“gave away far too much for far too little in return”—[Official Report, 14 November 2022; Vol. 722, c. 424.]

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

I am indeed very critical of what was done with the Australia trade deal, but since he is raising this issue, will he at least give credit to the current Government and Prime Minister for the steadfast approach they have taken on deals with Canada and the comprehensive and progressive agreement for trans-Pacific partnership? [Interruption.]

[Steve Reed]

It does seem a bit late, doesn’t it—the Government having done a deal of the nature the right hon. Gentleman attacks? It seems to depend which of the five families happens to be in charge of the Conservative party at any one time as to what they are going to do on agricultural, trade or any other policy. They are a rudderless Government, but it always seems to be British farmers and producers on the losing end of whatever deals they come up with.

The Government’s broken promises on trade go back much further than the deal the right hon. Gentleman criticised. The Government promised farmers they would keep full access to the European markets for their high-quality British produce after Brexit, but then they threw up trade barriers that blocked them from exporting. Labour’s way forward is to seek a renegotiated veterinary agreement with the EU. We must cut through Tory red tape at our borders to get British food exports moving again.

Our country spends over £1 billion a year buying food for hospitals and prisons. Labour will make sure that at least half of that food is locally produced or certified to higher environmental standards, putting money straight into the pockets of British farmers and producers at a time when so many are struggling just to stay in business. We will devolve more decision making to the nations and regions of the United Kingdom. That will give them more control over skills and training to increase and upskill the farming workforce, and more control over infrastructure investment so that we can extend broadband in rural areas and the use of new technology in farming to boost productivity.

Labour is offering a new deal for farmers: lower bills from harnessing the power of clean energy, generated in our own country; more money in farmers’ pockets through the prioritisation of locally grown and sustainable food for public procurement, and ensuring ELMS work effectively; seeking a veterinary agreement with the EU to tear down the Tory barriers to trade; a flood resilience taskforce to protect farmland from devastating floods; and planning reform to help farmers diversify and plug their clean energy into the national grid.

Farmers do an extraordinary job as producers of our food and stewards of our land, yet they have been betrayed by this Conservative Government. British farmers deserve better. They deserve our thanks, respect and support. We are proud of our farmers—proud of the work they do to feed our nation and steward our beautiful countryside—but they need a Government who are on their side to help them in that vital work. After 14 years of Conservative failure, only Labour can give farmers their future back.

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

I draw the attention of the House to my entry in the Register of Members’ Financial Interests. I am a trustee of a family trust that owns shares in Trevaskis farm—our family farming business—and I am a director of Penbroath, a consultancy in the sector.

I want to start by addressing the current year, because the current year is always at the top of farmers’ minds. As the shadow Secretary of State, the hon. Member for Croydon North (Steve Reed) pointed out, it has undoubtedly been a very difficult year for farmers, principally due to the weather. This has been one of the wettest winters on record. It affects different parts of the country, but it has been more widespread than the bad flooding in 2020 or the more localised but much more severe flooding in 2014. A lot of winter arable crops have struggled to establish. In areas such as my constituency, which is home to most of the UK’s cauliflower production, the producers of cauliflowers in Cornwall have had the most difficult year in living memory. So, it has been a difficult time over the past 12 months, particularly this winter.

It is also true that in recent years a number of global events have led to volatility. In common with many other business sectors, farmers have sometimes found it difficult to plan and budget properly because of volatility in their input costs, although over the past 12 months some sectors have seen commodity prices ease back from the very high levels recorded in recent years. That is particularly pronounced in some areas of cereal production, such as winter wheat.

While acknowledging that it has been a difficult year for farmers and that that is at the top of their minds, it is important to take a step back and look at the wider context and a longer timeframe. DEFRA constantly monitors farm business incomes. Every year, it publishes the “Farm Business Survey”. As the Minister will know, a whole statistics department in DEFRA spends its time understanding global agricultural commodity markets—what is driving prices up or down—and their impact on UK farm enterprises. In recent years, we have to acknowledge that farm incomes have actually risen sharply overall since 2016.

Throughout history, farmgate prices have always been heavily influenced by exchange rates. The sharp devaluation of sterling against the euro after the 2016 referendum result—literally within seconds of it becoming apparent what was likely to happen that evening—meant that anybody who was in a productive sector, whether primary industry or manufacturing, benefited from a slightly softer exchange rate. People who make and produce things tend to do better when there is a weaker exchange rate against the euro and the dollar, and people who import things, or who are in the financial services sector, tend to prefer a stronger exchange rate. Because of that exchange rate change, between 2016 and 2022 profits on the average dairy farm more than doubled to over £200,000 last year. That is more than four times higher than the average dairy farm was getting in 2015 when dairy prices really were on the floor and struggling. It is also true that turbulence following the terrible invasion of Ukraine has led to sharp increases in global cereal prices. For the average cereal farm, gross profit margins per hectare actually trebled in the few years after 2022, although, as I have already acknowledged and for any angry cereal farmers listening, cereal prices have fallen sharply in the current year.

I recognise that it has not been a universally positive picture. Overall, farm incomes were healthy from 2016 to 2022, but the pig sector in particular suffered difficulties in 2021, caused by oversupply in the EU market and problems in the Chinese export market. Our apple industry suffers a long-standing problem of a seeming inability to break through in export markets, leaving an industry which requires investment over many years, if not decades, at the mercy of all-too-powerful retail customers. The potato industry has suffered several years in the doldrums, partly owing to changing consumer tastes and a reduction in demand for potatoes. In the grazing livestock sectors—not just in the more vulnerable upland landscapes, but in lowland areas, too—profits have typically moved sideways; they are not really increasing, and in some years are dipping slightly.

The overall picture for agriculture since 2016 is positive, and it is important to recognise that. Farmers will not always volunteer the fact that they have had a good year, but it is important for those of us in the House who are interested in coherent policymaking at least to understand the data and the statistics, which is why I was so pleased when the Minister for Food, Farming and Fisheries published the data and the trends late last year.

I want to say a little about the agricultural policy that the Government are pursuing. Most of its key tenets were developed between 2017 and 2019, when I was the Minister of State responsible for agriculture, and implemented between 2020 and 2023, when I was the Secretary of State for Environment, Food and Rural Affairs. We applied a number of principles to that policy, as we had a once-in-a-generation opportunity to rethink farming policy from first principles. The first principle was that there was no long-term place for land subsidies.

The single farm payment, area payments, direct payments —whatever we wish to call them—were essentially a subsidy paid to people for owning land. There was no coherence in such a policy, simply because there had never been any shortage of people in this country wanting to buy land, so it made no sense to add a subsidy to it. There is also a great deal of evidence that when that subsidy payment was introduced in 2005, about 50% of it went in inflated rents, so all that happened was that the ultimate owners of the land benefited most. That is why we ended up with the problem that 50% of the entire agriculture budget went to 10% of the wealthiest landowners in the country, while 44,000 farmers—more than half the cohort claiming direct payments—had just 10% of the total between them.

That made no sense, so we introduced a second principle. We decided that as well as paying farmers for what they did, rather than just paying them for happening to own land, we should allow them a profit margin from what we ask them to do. We made a deliberate decision to depart from the backward “income forgone” methodology that was pursued by the European Union and is sometimes advocated by the World Trade Organisation. As we try to modernise farm policy, we must reject some of the anachronistic approaches supported by the WTO, because they have no place in modern policy. If we are going to ask farmers to give up a land subsidy in exchange for being paid for what they do, we should not begrudge them a margin for what they do. There has to be a profit margin; that is the quid pro quo for the removal of anachronistic land subsidies.

We recognised that there was poor profitability in some farming sectors, and that in some areas there was a dependence on the subsidies received, but the third principle that we brought to the design of the policy was that we should try to address the cause of that poor profitability, rather than simply treating the symptoms. That is why, in the Agriculture Act 2020, we legislated for new powers to introduce fairness in the supply chain, and it is why in the years since then there has been a significant expansion in grants to help farmers invest in their businesses, reduce costs and improve their profitability. It is also why we ensured that the schemes we designed, such as the sustainable farming incentive, not only helped the environment, but increased and improved farms’ financial resilience. There is considerable evidence that in some landscapes, a more extensive approach, in which farming has fewer inputs but a higher profit margin, can lead to overall improvement in the profitability and long-term financial resilience of enterprises.

The fourth principle, which I was very keen to bring to the policy, was that there should be simplicity in the new schemes. Others have commented that we did not take that far enough, and I am open to representations on that, but achieving that is not easy, because the environment is complex. Whenever we try to design a scheme that delivers for the environment, it will always be limited by the extent of human understanding, and the ability to make payments that we can track; we have to be able to validate the fact that they have been delivered. That is not straightforward, as I discovered when I got into this issue.

I campaigned to leave the European Union. I was very hostile to the cross-compliance regime and the way that the EU approached these matters, and I was very keen to ensure simplicity. My message to officials is that when we design policy, if we encounter a dilemma or a difficulty, we should always tack towards simplicity, and accept that although the policy might not be perfect, we need something that works. To be fair to officials, they have generally done that; and to be fair to Ministers, they have maintained that basic principle.

The final principle was that there should be evolution, not revolution. That is why, way back in 2018, when I first tried to take an Agriculture Bill through Parliament— it did not complete its passage, and we had to have a second attempt in the Parliament that followed the 2019 general election—we made it explicit, right from the beginning, that there would be a seven-year transition between 2021 and 2028, and that we would gradually reduce the legacy basic payment scheme land subsidies and expand the roll-out of the new policies. It is sometimes said that there has not been a plan, or that things have not happened as fast as they should have, but all such representations are complete and utter nonsense. We published a document in 2019 that set out the seven-year transition plan, and I pay tribute to all my successors, because every single one of them has continued to roll out the policy programme exactly as we set out in 2019. Indeed, late last year, the Government confirmed that this year, they would de-link the remaining legacy payments from the need to have tenure over land, which is exactly what we planned as long ago as 2019. Every component of the new agriculture policy, from the sustainable farming incentive to the landscape recovery project, has been rolled out exactly as we intended.

I pay tribute to the many officials in the Department for Environment, Food and Rural Affairs who have maintained the trajectory that we outlined in 2019, particularly Janet Hughes, who has led the team in question for a number of years. Having that continuity on the policy programme has been helpful. I also pay tribute to Tim Mordan, a long-standing official in DEFRA who has helped Ministers from different parties over many years, and who I understand will soon be retiring from the Department.

I want to say a little about the challenges that remain; I will wind up soon. When it comes to agriculture, I am afraid to say that most of the challenges that DEFRA faces are from other Government Departments. The first of those is the Home Office. When I was Secretary of State, we put in place the Shropshire review, which concluded that we needed not only a multi-annual visa scheme for seasonal workers in the agriculture sector, but a more progressive approach to having a visa scheme for sectors such as food manufacturing. I regret to say that there has not yet been a response to the Shropshire review. I place no blame at the feet of DEFRA Ministers, because I was a Minister in DEFRA and I know how these things work. Ministers will not be able to say so, but it is pretty obvious that, as usual, the Home Office is the intransigent blockage in this problem. We really need a machinery-of-government change in which the Home Office is stripped of its powers relating to visa policy for seasonal agricultural workers. The policy in its entirety should simply be moved to DEFRA, so that DEFRA Ministers no longer have to waste their time trying to explain things to Home Office Ministers; that is often where the problem lies.

A number of hon. Members have mentioned trade. I would simply say to Ministers that DEFRA understands trade and some of the technical issues around it far better than officials in the Department for Business and Trade. DEFRA Ministers are armed with real intellectual power, and real experience of dealing with trade negotiations. I hope that current and aspiring Ministers in this place will always draw on the power in DEFRA to face down some of the more naive approaches that we have seen in the past from the Department for Business and Trade.

We must also keep payment rates under review. I increased the payment rates for the sustainable farming incentive and countryside stewardship scheme by about 30% in my final year in the role. Ministers recently increased the rates by a further 10%, and it may be that we need to consider going further as we depart from the anachronistic “income forgone” methodology.

A number of hon. Members mentioned land use, and the shadow Secretary of State, the hon. Member for Croydon North, mentioned the land use framework. I am more optimistic about our ability to both increase agricultural output and make space in our farmed landscape for nature, because we have done the research and we know that there is no direct correlation between food production and the land area used. Some 35% of our agricultural output comes from just 4% of the land, because sectors such as pigs, poultry and horticulture have high-value outputs but do not use a huge amount of land. At the other end of the scale, around 20% of farm land in England produces just 3% or 4% of our total output. It is pretty obvious that we can make space for nature, do some tree planting and restore vulnerable habitats such as peatland, but also invest in new horticulture, glasshouses and crops to expand our domestic food production and enhance our food security.

I regret that the Government decided last year to drop the horticulture strategy. They have reinstated elements of it, which is to be welcomed, but the reason why we committed to a new focus on horticulture—in particular, a new generation of glasshouses for our food production—was this. In my nine years in DEFRA, I spent a lot of time in Cobra meetings dealing with the latest crisis, whether it was a ferry strike in France, covid or preparing for a no-deal Brexit. The issue always came down to how we would get lettuces and tomatoes from Spain into this country through the short straits. If we really want to enhance our food security, we should have a renewed focus on horticulture and try to re-shore some of the glasshouse production that was wrongly exported to the Netherlands when we joined the European Union all those decades ago.

Finally, I would like more done to support new entrants and tenant farmers. The Rock review was an excellent piece of work with many different recommendations, but if there is one recommendation that I hope the Government will consider taking forward, it is the idea of an assignable agreement on countryside stewardship, so that if somebody enters land tenure for two or three years, they can assign their agreement to an incoming tenant, or indeed the landowner. That is the only solution I can see to that problem.

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[Alex Sobel (Leeds North West) (Lab/Co-op)]

My constituency is far more rural than its name suggests, with many farms around the towns of Otley and Yeadon and the villages of Bramhope, Pool and Arthington. I have visited many of those farms and seen a range of practices, as well as many farms in North Yorkshire, over the border, particularly after the pandemic.

Properly supporting our nation’s farmers is essential to meeting our nature and climate targets. The Government must do more to support our farmers to deliver more sustainable food production and implement environmental land management strategies. DEFRA’s agricultural transition plan is a step in the right direction towards a more resilient and prosperous agriculture sector that is capable of delivering sustainable food production while meeting nature and climate targets.

The offer for 2024 includes some welcome components, including an expanded set of actions, an average uplift in payments of 10%, increased payment frequency and a commitment to double the amount of agreements offered for more complex and targeted environmental land management. The review and refresh of payment rates should serve to better reflect the value of the public goods provided by certain types of habitat and management actions. However, there is no publicly available data to demonstrate how these payment rates have been calculated, which is crucial in building transparency, evaluating progress and securing value for money.

DEFRA needs to publish scheme payment methodologies, as well as a clear payment strategy that forecasts expenditure on different scheme actions and the outcomes that are expected as a result. One of the main weaknesses of the farming transition to date has been DEFRA’s reliance on low-ambition, free-choice actions within the broad and shallow elements of environmental land management. The design choice is intended to maintain maximum flexibility, but it risks undermining the environmental effectiveness of the scheme with evidence suggesting that previous similar approaches have not secured their intended objectives. Over time, the sustainable farming incentive needs to evolve to enable the delivery of a whole farm-approach, ensuring that a minimum level of environmental action is delivered as part of a joined-up and cohesive scheme. We need both a degree of flexibility to account for individual circumstances and to maintain a minimum level of ambitious environmental delivery.

For farmers to truly be supported to increase sustainable practices, we urgently need to address the green skills shortage for farming. Successfully integrating environmental actions into the heart of farm-based business decision making will be a new concept for many. With over 300 actions to choose from, many farmers need the right support to deliver the right actions for their farm and the environment. Access to expert, high-quality advice will be critical to delivering higher quality environmental outcomes, business benefits and farmer buy-in. Farmers need access to ecological expertise and support for farmer-to-farmer peer learning and knowledge exchange. There is simply a lack of people and skills to help land managers do the right things in the right places at a pace that meets our climate and biodiversity targets.

As the rural economy changes, there is the opportunity to develop more skills in managing natural capital, such as stone walls, hedgerows, natural flood management and habitat areas. It is a great opportunity to support the current and next generation to have the skills to manage a landscape for food, nature and climate. With the focus on managing hedgerows better for carbon capture and biodiversity, new skills will be needed in the management of bigger, bushy hedges. With increased focus on tree planting, there will be a greater need for jobs in managing woodlands and the by-products that will be produced over the next 20 to 30 years before timber is ready to be felled. We need a national nature service for young people to introduce them to these green skills and the job opportunities that follow, as well as working closely with agricultural colleges and universities so they can provide the courses and qualifications for the sustainable farming transition.

I have spoken many times about the essential role of hedgerows and coppicing to our agricultural heritage and the protection of our natural environment and landscape. Hedgerows are essential carbon sinks to help us meet our COP and convention on biological diversity commitments. Research by CPRE, the Countryside Charity, found that expanding the hedgerow network by 40% would create more than 25,000 new jobs over the next three decades, and that for every £1 spent on hedgerows, a return of as much as £3.92 can be expected from the associated ecosystem services. I have heard from farmers that they want more hedgerows on their farms, but the lack of a skilled workforce is a barrier.

I went to see Richard Bramley’s farm near Tadcaster, in the constituency of my hon. Friend the Member for Selby and Ainsty (Keir Mather). Richard is the chair of the National Farmers Union environment forum. He had planted hundreds of metres of hedgerows, and it was great to see the biodiversity increase, with the associated carbon benefits. He said that the lack of a skilled workforce was a barrier to getting more hedgerows. That and other areas of green skills need to be tackled if we are to see an expansion of our hedgerow network.

Richard also highlighted the need for the availability of nursery stocks. Why are there now so few local authority nurseries? In Leeds, the Arium provides plants for the whole city, as well as raising revenue for the council. DEFRA and the Department for Levelling Up, Housing and Communities should offer seed funding for many more such nurseries. Richard also highlighted the need for continuing payments for sensitive maintenance. He rightly pointed out that a good hedge, a store for carbon and a hive of biodiversity, could last centuries. We need to invest in those skills and skills-based activities if we are to see the necessary hedgerow planting and maintenance to meet our existing targets. Hedgerows produce crops and provide food for people and animals.

When I attended the convention on biological diversity at the UN biodiversity conference at COP15, Governments agreed a new set of goals for nature over this decade. Unfortunately, the UK is one of the most severely nature-depleted countries worldwide, as we have heard successive Ministers admit. The Natural History Museum’s biodiversity intactness index, probably the best indicator of global biodiversity, has revealed that the world has crashed through the safe limit for humanity for biodiversity loss, and placed the UK’s 53% score in the bottom 10% of all countries, well below China and last in the G7. That is not a record of which any of us should be proud.

The Conservatives’ Environment Act 2021 target on species abundance, which they were forced to concede because of Opposition amendments, promised only to “halt the decline” in species by 2030. Just halting the decline, or getting a net zero for nature, is not good enough. Our ambition is to be nature positive.

[George Eustice]

The hon. Gentleman will be aware that the Government also set a target to increase species abundance in the period after 2030. It is only through close analysis of the data that we realised that was probably the best that could be achieved, even if we acted immediately.

[Alex Sobel]

I want to agree to disagree with the right hon. Gentleman. The fact that the baseline is so low makes it an easy target, so that shows a lack of ambition. Let us have a general election and we can test that more accurately going forward.

To finish, we need to focus on improving our rewilding, reforesting and biodiversity, and all natural landscapes should be part of that. We need to fully support our farmers to be part of this transition. We will not get there without their support, their hard work, and the land they work on.