Common Agricultural Policy

Jim Sheridan Excerpts

Thursday 8th March 2012 Westminster Hall

[Huw Irranca-Davies (Ogmore) (Lab)]

It is a delight to attend this debate on the reform of the common agricultural policy; only three or four weeks ago, the Minister and I were debating the same subject in a European Committee. This is a welcome opportunity for further debate, and I congratulate the hon. Member for Thirsk and Malton (Miss McIntosh) because we need frequent opportunities such as this in order to keep track on progress and on the European negotiations of the Minister and his team. We must also watch the changes as they take place. This is a live and dynamic issue, and we hope that the leadership on reform that has been shown by the UK, both now and previously, will continue, and that we will push as hard as we can.

I would not go quite as far as my hon. Friend the Member for Luton North (Kelvin Hopkins), although I will return to his points in a moment. I hope, however, that the UK vision for CAP reform will deliver food security and viable farming livelihoods, as well as biodiversity, environmental gains and other public goods. My hon. Friend the Member for Brent North (Barry Gardiner) wisely widened out the debate, and we must also ensure that such benefits are delivered across the EU.

A common theme of this debate has been more regional autonomy and management, and how not to lose gains that the UK has made such as the uplands entry level stewardship scheme and so on. We must also, however, be ardently fixated on the need for environmental and animal welfare standards to be driven up across the EU. As a pro-European, I believe that one benefit of the EU is that it allows us to level the playing field up, rather than down. During negotiations it is important not only to look at ourselves—vital though that is—but also to look externally at the benefits for UK farmers if we level up the playing field. Not only will we have great standards of environmental and animal welfare, but the costs of agricultural food production and farming will be more uniform across the EU.

I genuinely congratulate the hon. Member for Thirsk and Malton and her Committee on initiating this debate and on the report. Early in her contribution, the hon. Lady made a commitment that the Committee will return to consider the topic, and I welcome that. She focused on what can appear to be a dichotomy between food production and food security, and environmental sustainability. That is the greatest challenge that we face, because it concerns not only environmental sustainability and biodiversity in individual fields and regions, but the challenge of climate change, and what that means for food production and the land use that was referred to so well in the Foresight report. How does the Minister square that circle, both in the UK and elsewhere?

To inject a note of optimism, I believe that we can face that challenge with strong leadership and vision, although we must recognise that there will be many a slip. My hon. Friend the Member for Brent North mentioned the previous Government’s “Food 2030” strategy, and I urge the Minister to return to that and perhaps address it in his closing remarks. Perhaps he could take the report off some dusty shelf in his Department and look at it again. One observation that is made frequently, not only by environmental or international development NGOs but by farmers and others in the farming community, is that although the “Food 2030” strategy is integral to CAP reform, it goes beyond that. It sets out a compelling, large-scale narrative, and a coherent vision of what we should be doing across the food chain, in terms of the environment and land management. I know that the Minister has such matters firmly at the front of his mind, but—I hope he will take this as constructive criticism—it does not matter how many narrow, discrete pathways of good work there are in his Department, those outside the political sphere tell me that the overarching, compelling vision is deficient. If we do not have the “Food 2030” programme, we need something that looks very much like it. An enormous amount of work went into that report, and I urge the Minister to look at it again as a basis for the overall framework.

The hon. Member for Thirsk and Malton mentioned the importance of self-sufficiency in food production, not only in the UK but in Europe. That provides a similar paradigm to our experiences of energy markets. We want the UK to be as self-sufficient as possible, but we also want to export as much as we possibly can. On St David’s day, my colleagues from the Welsh Assembly Government were in Brussels lauding the fact that the first 11 months of the past year saw a 22% increase in exports of Welsh lamb and beef. For the UK, the figures were 14% overall—the Minister will correct me if I am wrong. We are doing well across the UK, but Wales is doing exceptionally well. It still trades significantly with the EU as a trading block, but also well beyond Europe with countries such as China, India, Brazil and elsewhere. We must ensure that as well as UK self-sufficiency, we work with European colleagues to ensure a large degree of collaboration on EU sustainability. Britain is an island, although not in every respect, and we need to work together on many issues of food production and food security.

The hon. Member for Thirsk and Malton went into forensic detail on many other issues, and I will return to those during my remarks. She rightly pointed out the challenges faced by tenant farmers, and others, due to the current active farmer definition. That point was well made, and I am sure that the Minister will return to it. I agree with many of the hon. Lady’s points, and although I may not agree on some other issues, one benefit of the Committee’s report, and today’s discussion, is that it stimulates intelligent and well-informed debate. I hope that the Minister will accept that the comments that I and other hon. Members make are genuinely intended to help and to engage with him constructively so that he can take those thoughts into his discussions with the Commission, Members of the European Parliament and others.

All today’s contributions have been good in their own ways. The hon. Member for Banff and Buchan (Dr Whiteford) —as a Welshman, I can pronounce Buchan because I suspect that it has similar Gaelic roots—mentioned a theme found in several contributions about the need for an appropriate level of subsidiarity in decision making. There has been much talk about regionalisation and making decisions closer to home. I agree with that in principle although I do not know how far we will get; there is a similar debate on reform of the common fisheries policy. Regionalisation must be balanced against my earlier point about having more informed, intelligent decision making closer to home. We can say that with some confidence in a UK context, because although there is always the criticism that we could do more, our achievements probably set some of the highest standards in the EU. However, that regionalisation must be balanced against ensuring that we can monitor and evaluate what is happening in the rest of the EU. That is where the balance lies. We must ensure that other member states are equally good not only on food security, but on the environmental benefits and public goods.

The hon. Lady raised, as other hon. Members did, the spectre of over-complication in the CAP reform proposals. We, too, have that worry. We do not want to make some construct whereby farmers and their advisers spend inordinate amounts of time working around and through the proposals in order to avoid some of the complexities. That would be a self-defeating proposal. I hope that the Commission is aware of that. Certainly in my discussions with it, it has not wanted that to happen, but I think that it needs to look carefully while it is in these stages of finessing the proposals—this will require the Minister’s engagement as well—to try to strip out some of the complication and not get to the point at which very well paid advisers are advising some of the larger farmers at great expense on how to avoid and work around some of the complexities. The worst situation would be smaller farmers having immense difficulty in doing that.

The hon. Member for Banff and Buchan spoke out on something that has received a fair bit of publicity recently—the concept of slipper farmers. This is an interesting one. Even if they are a marginal element, it is important to deal with the issue. I do recognise the points made by others. Clearly, in terms of units of production, some of the larger farms will be not only highly productive, but highly efficient in terms of the cost of food production; and that rattles through to the supermarket shelves. Let us say, however, that someone does not look anything like an active farmer. We might be talking about an investor community or someone who has no interest whatever in an active role on the farm or in an active role in biodiversity and landscape management.

I would be interested in the Minister’s comments. Some people have argued that we do not need additional rules to deal with it—that each member state already has competences that could tighten up the situation. However, keeping public trust is vital. Even if what I am describing is a marginal issue, there is a danger that it will tear down public trust in where subsidy is going. Even if we make the argument that subsidy is not going simply into traditional food production, but into all those wider public goods, we must ensure that there are not exceptions that tear down public trust. As I said, I would be interested in the Minister’s comments on that, in quite a rational way. Are there examples? What is his assessment of whether agricultural subsidy is being used in a way that was not intended, and what we can do to tighten up the situation before the issue becomes one of wider public concern?

The hon. Member for Camborne and Redruth (George Eustice) recognised the need for a clear and powerful vision as part of negotiating strategy—this is where we are; we are dealing with CAP reform. Regardless of other ways forward, we need that powerful vision underpinning the strategy. The hon. Gentleman pointed out some ideas for greater regional decision making, which he described as ahead of their time. We have no difficulty with that. Those ideas need to be put forward, because eventually their time does come. I apologise for giving him membership of the European Parliament and for raising by accident past membership of other parties. He will not be the only one here today in that position. I am not making a confession of that nature, I hasten to add, in case my constituency Labour party is listening, but I will make my own confession. I have attended a Conservative club in my constituency on a regular basis. [Interruption.] Indeed. It is at the club’s invitation; we hold our branch meetings at a Conservative club.

The hon. Member for North Antrim (Ian Paisley) regularly speaks in debates on this issue. He is no longer in the Chamber, but he talked about the importance of export growth and engagement with the devolved Administrations. The Minister and I have talked about that matter before, and I certainly know that from the Scottish perspective and from the Welsh perspective, there is very strong engagement. The flipside, of course, is that there needs to be one coherent voice speaking on the issue once all the different elements have been pulled together. We need to avoid the dilution of an effective UK voice when three or four different voices are speaking. We must bring in those voices—that engagement is critical—but ensuring that there is one coherent voice at the end is also critical. The hon. Gentleman made powerful points of detail on behalf of his farmers. I know that the Minister will have heard those points and will respond to them.

The hon. Member for Tiverton and Honiton (Neil Parish) talked about the moral duty to produce food. I agree, not least because of the challenges that we face currently. I am thinking not only of food poverty, but of growing populations. It is a moral duty in this country and globally. However, I would argue that we also have a moral duty—to pick up the comments made by my hon. Friend the Member for Brent North—to protect and enhance the environment, to tackle climate change and to improve animal welfare. I know that the hon. Member for Tiverton and Honiton would agree with those as moral duties as well. I made a point to him about good regulation. Mention was made of one of the best examples, although it brought costs with it—the regulation on enriched cages. It is a tremendous tribute to our farming community that it stepped up to the mark and invested heavily in them. It now needs to be rewarded. I have made this point to the Minister before: he, in concert with the Commission, must strongly pursue enforcement action against states that are not complying, because otherwise we are disadvantaged. We have made all the investment and done our moral duty on animal welfare, but others are not doing that. From that moral high ground, we should not hold back in pursuing enforcement action against other countries.

My hon. Friend the Member for Luton North, who has just left his place, introduced a welcome diversity into the ecology of the debate by calling for abolition of the CAP. All contributions are welcome; there are different views on the matter. He also reminded us, not too diplomatically, of the failure of past EU negotiations under former Labour Prime Ministers and called for the Minister to heed his advice. I will move on swiftly at this point.

My hon. Friend the Member for Brent North regularly takes part in these debates, and with a fair degree of expertise. I think that he made the first mention of sustainable intensification today. My apologies to other hon. Members if they used that phrase. My hon. Friend is gesticulating towards the Chairman of the Select Committee, the hon. Member for Thirsk and Malton, so I apologise if she used it too. It is a critical issue. I am referring to challenges of how we raise food productivity—by that, I do not mean production; I mean productivity—while at the same time not damaging the environment, but improving it. That may relate to soil quality, river quality or biodiversity. It is a huge challenge and it means that part of the EU reform needs to involve the driving forward of research and innovation in those areas, so that we have much more productive and much more efficient farming, both in the UK and throughout the EU. In that context, I have mentioned “Food 2030,” which could be a very helpful contributor to that debate.

My hon. Friend the Member for Brent North also raised the spectre of the UK’s isolation. The Minister and I talked about that only a few weeks ago, and he gave me assurances that it had no impacts, or certainly no long-term impacts. I am not making an easy political point on this issue; the matter has been raised by the farming community. It has been raised directly by the National Farmers Union in documents, directly by the Farmers Union of Wales, and by the leader of the Liberal Democrats in Wales. I will not cite what they said, but their clear concern was that the matter could have damaged what was, I think, a good negotiating position on CAP reform and other issues. Today, I again seek the Minister’s assurance that he has bypassed those problems—that the matter is not causing him problems—because we need that reassurance for the farming community. I am sure that he is doing a tremendous job out there of engaging with like-minded countries on various issues, but we need to know that we have not taken a step back because of wider political issues.

My hon. Friend the Member for Brent North reminded us of the importance of sound science and the evidence that underpins it. Curiously, as we understandably focus on the farming community and food production in these debates, we sometimes forget that our overall approach to what we are doing—squaring this circle—needs sound evidence at every step of the way. That is probably one of the lessons that we should have learned from past CAP reform and past common fisheries policy negotiations. I am sure that the Minister will have heard my hon. Friend’s powerful contribution.

Let me refer Members to the recent debate that we had in the European Committee if for no other reason than that I am losing my voice and I do not want to repeat everything that I said then. I want to raise a couple of broad points. First, let me make one remark in praise of the CAP. We must remember why it was originally set up as we—the collective we—celebrate its 50th birthday. Over the years, it has been a constant source of controversy, but it has none the less stabilised farm prices so that farmers can innovate, invest and modernise agricultural production. In recent iterations of CAP reform, there has been a move towards recognising public goods, which is a welcome development. We should not forget—I want to put this on record today as I did in the European Committee—that despite the still huge sums of public money going into the CAP and then being returned not just to the farming community but to rural development and so on, European support for farm incomes has fallen markedly over the past 20 years, thanks to a series of reforms. In 1986 to 1988, nearly 40% of farm income was derived from European support, but by 2008 to 2010, that figure was down to 22%. I accept that we need to get to a position where our farming is competitive across the EU and where that support diminishes again, or at least is focused on where the public benefits are clearly seen and evident. At least the trend is going in the right direction. Many people would want it to go faster, but we are going in the right direction.

We must recognise that additional work needs to be done. In the previous European debate, I referred to the OECD report, which considered CAP reform and identified the need to remove the remaining impediments to the functioning of markets, to increase the investment in agricultural innovation and to target more effectively environmental performance of agriculture, including direct payments to farmers for environmental goods and public services.

It is fair to say—the OECD notes this, but so, too, have many others—that the more detailed proposals, which were made late last year, did not receive a universal and magnanimous welcome. Many people in the farming and environmental communities, the Minister and I criticised those proposals as potentially a missed opportunity. I say “potentially” because there is still time to work on them, save them and make them good after negotiations with the European Commission. They are potentially bad because they risk failing not only our farmers but the natural environment as well. I know that the Minister will be working hard to turn the situation around.

Devolved engagement was mentioned by many Members, and it is critical. Rather than repeat the whole of the European debate, let me just touch on the greening proposals which, significantly, are designed to avoid a situation in which we undermine the environmental benefits that we have already created here within the UK. The proposals operate differently within different devolved regions. It is certainly the case that while many called on us to go further and to go faster, we have none the less managed to put in place some very good examples in partnership with farmers, especially compared with other member nations. Schemes such as the entry level stewardship and the uplands ELS were worked on into the midnight hours and beyond on successive nights with large cups of coffee, if not bottles of whisky.

In addition, there is potential for voluntary schemes such as the Campaign for the Farmed Environment. Those are highly innovative ideas and we need to ensure that whatever is introduced, we do not undermine them in any way. The Minister will be acutely aware of the concerns that exist in the run-up to the CAP reform. I am sure that the farming community frequently says to him, “Do we continue with the way we are? Do we continue with reapplying into the existing schemes, or do we drop out and keep our fingers crossed and hope?” I hope that the Minister will give clear guidance to the farming community about what it should be doing. Farmers should not lose out if they continue under the current systems until everything is decided.

The CAP’s well-intentioned greening proposals have received a fair bit of criticism because of some of the apparently negative consequences. We have talked about crop rotation and the rule that stipulates that 7% of land should be set aside for environmental gains. In previous debates, the one thing that we have learned is that when land is set apart, some of it can be of negligible biodiversity value. What we need to look at, based on what we have done in the UK and in other countries, is the best way to identify and manage those corridors or areas of ecology. I say to the Minister that what we do not want is for these well-intentioned greening proposals, which have faced some criticism from the environmental lobby as well, to undermine what is already there. On the flipside, some farmers have said to me, “That’s okay, we’ll find a way to work round it. We’ll identify the land that we can put within that 7%, and it will be no good for biodiversity, but we can do that. Or we can take what we are currently doing.” We do not want people to find ways around the proposal; we want this to be a positive measure in which the Minister can come back and say, “The way I will interpret this in the UK is for us to take this approach.” That will be much more positive, and will lead to the enhancement of our environment.

How has the Minister presented these proposals not only to the farming community but to environmental organisations? He needs to work with both groups together rather than separately. Our experience in government was always that the best way forward was to sit everyone down together and get an agreement. Some will want to pull in one direction and others in another direction. I talked about having a common UK position among the devolved Administrations. Equally, it is great to have a common position among green organisations, farmers and the agricultural community.

The proposals around the active farmer concept have received a lot of debate and discussion. I reiterate to the Minister our concerns about the businesses that have diversified—we encouraged diversification over successive decades—so that they do not look like they are spending 100% of their time on food production or farming. They may well be tested by this definition of active farmers, not least when we see the annual amount of direct payment being 5% or more of the total receipts obtained from non-agricultural activities in the most recent financial year.

As I have mentioned to the Minister before, agricultural firms can have very high turnovers but low or negative profit margins, and they can then be excluded from pillar one payments despite the fact that their business provides no real alternative income. I have also mentioned to the Minister large commercial organisations, such as the largest farming organisation that employs tenant farmers in the UK—the Co-operative Group. Co-operative Farms is a separate business, but it is a wholly owned subsidiary of the Co-operative Group, which operates in retail and banking. However, one cannot deny that the Co-operative Group is also farming actively in the UK, so we need to be very careful about how the EU proposals affect those companies and others.

The Chair of the Select Committee, the hon. Member for Thirsk and Malton and other hon. Members have asked how the concept of the active farmer affects organisations such as the Royal Society for the Protection of Birds, the National Trust and others that farm but do so in order to deliver environmental benefits. Very often, they provide good lessons in how to take the environmental agenda forward, but they are membership-based organisations and they have a wider core business than just farming. We need to ensure that the proposals do not impact on them.

There has been much debate about capping. Many financial analysts, including analysts outside farming, argue that because the proposed 30% environmental element of the single payment will be excluded anyway and because farm labour costs can be extracted under these proposals, the impact of the capping element could actually be negligible, with virtually no risk of subsidy capping or reduction in practice. However, to get to that point there will be Houdini-style contortions by many farmers and that is what we need to avoid. If it is simply an exercise in avoiding the impact of the capping element, perhaps we should argue to the Commission that it ought to just streamline or simplify it, and allow member nations subsidiarity to deal with how it works on the ground.

I just want to make a few more points to the Minister. The Commission’s CAP reform proposals allow a transfer of up to 10% of a member state’s pillar one national envelope to pillar two from 2014. However, I understand that there is no provision available for 2013, which will leave the UK with a significant gap in funding from 2013 to 2014. Perhaps the Minister could confirm that and, if it is the case, say what the Government intend to do about it. Will the Minister comment on the views of the RSPB and other NGOs that feel quite strongly that the agri-environment schemes should receive a larger share of the rural development budget in pillar two. How does he respond to that view? What are his thoughts?

The sugar industry in the UK has been in the press a lot recently because of its difficulties. What consideration has the Minister given to ending, within CAP reform, the sugar import barriers, so that British farmers such as Tate & Lyle, which rely on cane sugar supplies, can compete on an equal footing? What efforts is the Minister making to help young farmers to overcome the problems with the profitability of farming, and the problems of gaining access to capital? Gaining access to capital is not directly addressed in the CAP reform proposals, although there are some good proposals on young farmers. On a UK basis, however, I am repeatedly told about the difficulty that farmers experience in accessing capital, especially new entrants into farming.

I shall make two final points. First, will the Minister explain why these proposed reforms will continue to provide export refunds? That is a concern, not least because the EU itself made a commitment at the World Trade Organisation ministerial meeting in 2005 to phase out all those export subsidies by 2013. Secondly, as the Minister is aware, to improve farmers’ negotiating position in the food chain, producer organisations—the POs—and inter-branch organisations will now be expanded to cover all sectors. That is the trend, but the proposals do not appear in my reading of them to offer significant incentives for people to form those POs. Perhaps the Minister will explain how the proposals will work and how they can be improved, so that we get those incentives in place.

This has been a very good debate and a very good chance for many Members to air their thoughts to the Minister in a very constructive way. There have been lots of different ideas. We have time to improve these CAP proposals, but not a lot. I assure the Minister, as I have done before, that he will have Labour’s support to drive forward the right changes within the CAP proposals, so that they are good for the UK in so many ways—good for UK farmers, good for the sustainability of their livelihoods, good for food production and good for the environment—as well as being good for the EU as a whole and good in relation to our international obligations, not only in terms of food security but in terms of biodiversity, the environment and climate change. The Minister will have our support in that process, and once again I wish him the very best in his continuing negotiations.

[Jim Sheridan (in the Chair)]

I think the hon. Gentleman’s voice held out well there. In fact, it got stronger as he went on.

--- Later in debate ---

[Jim Sheridan (in the Chair)]

Before I call the Minister, may I remind hon. Members that I wish to leave five minutes for the Chair of the Select Committee to conclude?

[Mr Paice]

Thank you for reminding me, Mr Sheridan.

I will not say that we have developed a rigid blueprint system, but if the hon. Gentleman reads the response to the MacDonald report, it is clear that we understand fully the point he rightly makes; indeed, it is a point that I made when I was in his shoes in opposition. We need that early warning. The general thrust is that the whole industry—DEFRA officials, and other Departments’ officials for that matter, which is something that we are discussing in government, or other arms of the industry, all of whom who have their Brussels people working out there—feeds this back and knows, together, the moment that some official has what they think is a bright idea.

The hon. Gentleman and others mentioned Food 2030. It is fine—a good document. However, I think he would be honest and agree that it was pretty vague on how to deliver. That is why we have set up the green food project, which we announced in the “Natural Environment” White Paper last year. The green food project is bringing together all the different interests to try to see how we meet that big challenge of increasing food production and productivity, while doing so sustainably. It is about producing more and impacting less, and sustainable intensification. Whatever phrases we have been using, the green food project will produce its first report in the middle of this year. It has set up a number of working parties and is working through different themes and food products. I am hopeful that we can build on the Food 2030 document.

The hon. Gentleman asked about moving from pillar one to pillar two. For the life of me, I cannot remember why he asked me that. However, it is currently 10% in the proposals. He asked why export refunds are still there. I agree with him. As he rightly said, the EU had agreed to phase out refunds as part of the offer on the table for the Doha talks. We agree with that, which brings me on to sugar, an issue he also raised. We have made it clear that, while we support the Commission’s proposals to do away with sugar quotas, we do not agree with its idea that we should retain all the barriers around the EU. The issue of Tate & Lyle and raw cane sugar imports is very important for the whole country, not just for the 1,000-odd people who work in the refinery. We are determined to continue to press forward on that.

The hon. Gentleman’s final point was about producer organisations. He is entirely right. There is a great deal of noise about their importance, and we share that view. We would like to see many more farmers working together in producer organisations. Britain has a chequered history of producer organisations, co-operatives, farmer-controlled businesses, or whatever we call them. The only carrot being held out by the Commission is that of being exempt from competition law. That prompts two questions. Is it a carrot? For most producer organisations, it is not. The idea of having 20% of their market—where most competition law clicks in, or even higher—is pie-in-the-sky wishful thinking. It also prompts the question: is it actually right to exempt farmers, co-operatives or producer organisations from competition law? The most reasonable answer to that is no. Why should they be any more exempt than any other? Why should they not comply with competition law?

The EU’s proposals have a long way to go. We think that it will be at least a year, probably more, before we secure a final outcome. As several hon. Members have said, there will be a lot more discussion. The proposals will evolve through the European Parliament and the European Council. We have already made our commitment to keep the House informed as much as possible as that goes forward. I, for one, foolishly—I will regret saying this—will welcome further debates, as we go forward, to keep the House informed and to help the Government decide on new positions. I hope that is helpful.