Agriculture Bill (First sitting)

Kerry McCarthy Excerpts

Tuesday 23rd October 2018 Public Bill Committees

[The Chair]

I have a long list of Members who want to ask questions. Could I ask that both questions and replies are pithy, so we can get as many people in as possible?

[Kerry McCarthy (Bristol East) (Lab)]

Q I have a couple of questions. They are a little complicated but I will try and make them brief. It is difficult to get your head round the economics of it when we do not know how each public good will be rewarded. I know some people have expressed concern that some farmers might cherry-pick one or two of the public goods and do that around the margins of their land, but compensate for the loss of direct payment by becoming more intense and more industrialised—a bit like what happened in New Zealand, where they did not have the compensatory public goods regime. What are your thoughts on that? How would the economics of that work out for farmers and will most of them be persuaded to go down the public goods route and do more on that front?

Martin Lines: There are a number of farms with productive land, especially with the silts in the fens. They may concentrate and be more productive in the middle and just have the stewardship round the outside, but that is fine. There are other areas where it is more about the whole of the landscape. If each farmer has to do an ELM scheme to receive some money, it is about a whole-farm approach—all your soils and all your assets—not just the non-productive and productive bits.

[Kerry McCarthy]

At the moment, it is individual public goods. There is nothing that deals with whole- farm systems, such as organic, pasture-led livestock. Do you think that should be in the Bill?

Martin Lines: It should be a whole-farm approach and a whole-farm plan and it should connect soils, environment, health and everything else with where we get food production. It is not joined up. We have stewardship and production. They have been two separate payments—two separate deals. We need that linked back together and we need to say that from a good environment and from good soils, we will have food security for the lifetimes of generations to come.

Patrick Begg: On that point from Martin about integration, you are right. Dovetailing production and environment is what we are all after; it is at the heart of this. It is encouraging to see the mechanisms for this emerging around land management plans, as the underpinning for delivering finance through the environmental land management scheme. Integrating it feels like the right way to go, as long as the land management plan is not just about the public goods but also about the productivity. They need to sit within that one mechanism in order for them to gear properly against each other. On whether it will be more intensive in the middle of some farms or fields, it might be but that is okay.

This brings to mind my recent visit to the Raveningham estate in Suffolk, which is doing some extraordinarily good stuff delivering the public goods in this Bill brilliantly, with huge dripping hedgerows weeping into the fields, and right in the middle, 12 tonnes a hectare of high quality wheat being produced. They have reconfigured the whole farm to make the movement of machinery more sensible, so that fuel costs are massively down. In that way, they reduce input costs in order to be able to do that kind of farming.

[Kerry McCarthy]

What was the name of the farm?

Patrick Begg: The Raveningham estate, which is the Bacon family. There is a fantastic estate manager there called Jake Fiennes, who has been doing this for 15 years and has produced amazing results. If you want to see an example of what productive farming plus public goods looks like in the lowlands, that is a great example.

Thomas Lancaster: That example points to the idea that you can improve your profitability in some respects by going down the direction of travel the Bill has set out: by removing or reducing spray and drill overlaps, by taking out awkward and unprofitable corners, and receiving public payments on those areas for delivering public goods by creating habitats such as wildflower margins. In turn, the evidence increasingly tells us that they can improve yield and further improve profitability by creating habitats for pollinators and crop pest predators.

A study in 2015 by Pywell et al from the Natural Environment Research Council’s Centre for Ecology and Hydrology highlighted that even when you took 8% of land out of production in an arable system, there was no net loss of yield for cereals such as barley and wheat because you had a lot of crop pest predators in the system, and there was a 25% increase in yield for field beans—a flowering crop—because of the sheer abundance of pollinators.

Martin Lines: We have done the same. We have seen the benefit. We took 12% out of production into environmental measures and squared fields off where the pollinating margins are to see a 20% yield increase. There is a system there but we have not been able to use it. It can be done.

Thomas Lancaster: Even in the uplands, we have been doing some work recently to look at the economics of those systems, and similar work has been done by others. What that is increasingly showing us is that in an inherently uneconomic farming system, where you are losing money per head of livestock, often what you would do through a stewardship scheme is to reduce the number of livestock. You would not remove them—it is still noticeably and obviously a farm—but if you reduce the number of livestock, and maybe look at adding value and supplying into local markets and short supply chains, the profitability of that underlying agricultural operation can be transformed.

What we are increasingly seeing from the top of the hill right down to the bottom of the valley is that it is not either/or. The economics of a farm operation can be massively improved by engaging in and going down the route of focusing on public goods, as well as on good quality food production.

Gilles Deprez: It is not that farmers are cherry-picking just to take the best advantage out of it. In certain areas, it is just not possible. To use the example again of Cornwall, field margins do not make sense for our operation if we are talking about fields of one acre or less. We have a lot of hedges, so we already have a very strong natural environment. Sometimes it does not make sense for a certain environment or a certain type of business to do certain things. That is why you get cherry-picking in certain areas, I assume.

What is important is that productivity needs to go up. We need to be more productive. We need to do a lot more with a lot less, but we need innovation for that. For me as a farmer, that is very important. I might be a little scared about it as well. If there is no innovation and we are not going forward and there is no balance in the short and long term, you will lose out on a lot of things. Innovation should be central in everything we are doing to increase yields. Building fertility and soil fertility will help with certain things. Innovation is very important.

[Kerry McCarthy]

Q My second question is whether the Bill is strong enough or gives enough clarity on the regulatory baseline. Public goods should be rewarding going above and beyond what is legally required, but we will lose the cross-compliance element of CAP. How do we ensure that farmers are rewarded for doing the extra things and also enforce the people required to do the standard things, such as ensuring the water supply is not being polluted or whatever? This is your baby, Mr Lancaster, isn’t it?

Thomas Lancaster: For us, that is absolutely essential. At the moment, the Bill is a bit silent on that. We are told by civil servants that that is because there is this ongoing review by Dame Glenys Stacey looking at the future of farm regulation and inspections and that they will look to another Bill in the future to provide the powers necessary to secure that regulatory floor or foundation. We will be looking for assurances from Ministers and the Government about that regulatory baseline, because without that foundation, you do not have anything to build from in terms of your public goods policy.

For the progressive farmers, such as Martin and Gilles, who want to go out and restore natural capital and provide those public goods for society, it is absolutely critical that they are not then undercut by those looking effectively to go for maximum profit, regardless of the societal and environmental cost. We think that there is a really important case to be made for the importance of fair, proportionate, but effective regulation. That is not just about having the right rules in place, but having skilled and knowledgeable staff who then go out and enforce those regulations.

There is a lot of talk about advice-led regulation. That is about not just going out with a stick and applying penalties straight away, but going out and advising farmers and working with them to help them be more compliant in future. We would support that, but that needs investment from Government in the necessary resources. A recent report from World Wide Fund for Nature highlighted the fact that the Environment Agency only has enough capacity to inspect 0.5% of farms in any given year. It has about 40 inspectors who go out and look at how farms are performing on water quality and soils, and that is not enough to secure that regulatory foundation. It is also not enough to ensure a fair and proportionate inspection process for farmers, because those inspectors only ever have enough time to apply a penalty and go, rather than work with the farmer to help them comply with regulation in future.

Gilles Deprez: Knowledge is also very important. My crop is completely different from his crop, so the way we work with land, or the way we prepare our land, is completely different. For example, with my daffodils, the bulb is underneath the ground. I need to make sure that I do proper land preparation, which means soil disturbance. In a certain way, that is not ideal, but it would be a lot worse if I did not do it. Why? Because then I leave your daffodils in, and the moment I harvest the bulbs, I take all the soil out and all the stones away. The preparation for how I do certain things is completely different from what someone else is doing.

Crop rotation is crucial, but every crop has different demands, so knowledge, innovation and looking at new ideas are crucial. There is not one solution. We need to have an holistic view and look at all the different parameters to make sure that it can work, because a potato farmer has completely different demands from those of a daffodil farmer, a vegetable farmer, or a wheat farmer. They use completely different practical elements. The ideas and the principles are probably the same—working with the soil and trying to minimise the damage—but again, that balance of short-term and long-term profitability is important. If we focus too much on the long term in a certain way—and I know it sounds ridiculous—we might become bankrupt tomorrow, and then there is nothing.

Martin Lines: On environmental standard supervision, I cannot see that enforcement. There are base standards already out there, but how are they going to be enforced, and in which Bill? We want some clarity now, not an environment Bill coming later, so we as farmers have a clear understanding of where it lies. We want to keep the land in good heart. Previous Bills have been about keeping our natural assets in good heart for future generations. Where is that?

This goes back to short-term planning. There are a number of farms with short-term tenancies and short-term views: taking as much out of the land as possible today, with consequences for future generations. We need that bigger, long-term planning and a long-term view. It comes back to the landscape plan again: understanding what we have, with local variations of management systems for different parts of the country and the different crops we grow. As our consumers change their buying habits and as the climate changes, we may need to adapt our farming systems to produce different products. We need a land management plan that we can adjust to fit that change of cropping.

Patrick Begg: One thing to add, which we should not forget, is the stimulus that good regulation—and I mean good regulation—means for private sector investment and innovation. There are plenty of examples where regulation provokes quite a lot of clever thinking about what could be done. Someone said to me the other day, “Remember when the car industry was faced with having to put catalytic converters into everything?” There was a huge outcry: “We cannot possibly do that. It is going to put thousands on the cost of cars.” Within five or 10 years, it cost about £20 to put a catalytic converter into a car, and there was an industry around it, so jobs and growth came on the back of it.

There is a comparator with what can be done in agriculture. I see firms such as Nestlé investing premiums in their dairy farmers in Cumbria to meet regulatory baselines around water. There are already upstream supply chain businesses that recognise long-term resilience, but need that nudge of the regulatory baseline for that investment to be freed up. It is good for the farmer, good for the people using the drinking water downstream, and certainly good for Nestlé.

[The Chair]

Before I bring in Simon Hoare, we have eight Members who still want to ask questions, so again, can we keep the questions short? I also respectfully ask the witnesses to keep their replies short and concise. That would be great.