Agriculture Bill (Second sitting)

Kerry McCarthy Excerpts

Tuesday 23rd October 2018 Public Bill Committees

[The Chair]

Thank you, Mr Dunn. I must remember that my job is form filling and not activity.

Christopher Price: I agree with a lot of what has been said. I think that the way the Bill operates will inevitably result in some churn. People will feel inclined to move on at a faster rate than they have. There is no shortage of people coming out of agricultural colleges at the moment. There is a definite desire among a bigger number of young people than has been the case for a while to go into the sector. As George Dunn said, not all of them will be able to become the traditional owner-occupying yeoman farmer of myth, but I think there will be a lot of other opportunities elsewhere in the sector. Again, a lot of this depends on there being sufficient investment for people to get the skills and to be able to do the jobs that will be required in the new sort of farming.

[Kerry McCarthy]

Q 47 (Bristol East) (Lab): Can I turn to rents and economics? You said that at the moment a landowner would be charging £98, or whatever the going market rate is, for the land, but they are also getting direct payments on top of that. Is that right, or would that offset the rent payment?

George Dunn: No. In a landlord-tenant situation, it is the tenant who will apply for the basic payment scheme—

[Kerry McCarthy]

Q 48 Yes, but they may be required to pass it on, and we heard evidence this morning that quite a few have to pass it on—

George Dunn: In a number of cases, there is either a direct transfer of a direct payment, from the tenant to a landlord, or the way that the rent is calculated will take into consideration the fact that the tenant is getting direct payment.

[Kerry McCarthy]

Q 49 My question was this: if the landowner is not then getting those direct payments indirectly, will it still be economically viable for them to rent out the land for farming, or will we find landowners choosing to go into other areas, for example tourism, quad biking and whatever it is they do? Or will they just require more money from the tenant farmers, but the tenant farmers will not be getting any more money, because they will not be getting the direct payments?

Christopher Price: It will be a combination of factors. As already said, we anticipate that rents will go down, at least in the short term, while the industry recalibrates itself. However, most landowners, if not all landowners, are already looking at what other opportunities there may be. Some of that will be to go and see what advantage they can take of the proposed new ELM scheme, see what natural capital they have got and see how they can better—it is a horrible word, but I will use it—exploit it under the new scheme. Others will look at how they can diversify—at whether, for example, the barn can be converted into offices, a wedding venue or what-have-you. People are starting to think in a much more market-facing way than was perhaps the case a few years ago.

[Kerry McCarthy]

Q 50 Presumably, if there is less land available for farmers, that will then push up rent prices?

Christopher Price: I would suggest that, say, on every farm—this is talking in averages—there is 10% to 15% where the input costs are greater than the value that is got out of the process. There is a lot of land that need not be used for farming and that could be used for nature in particular, provided that there are sufficient incentives in place for people to do so.

George Dunn: I also think it is important to appreciate that, in the current economic circumstances, the return on capital that the landlord is getting from a rental payment, even if it is £200 per acre, will only be 2% of the capital value of the land that they are offering to let. The reasons for people owning land and letting it out are simply different to the economic uses they are getting from it. So, it might be because they are looking for development into the long term, or they might be interested in using the reserve rights for minerals, for sporting purposes or for other activities.

Also, the tax system within which land is owned is quite beneficial, in terms of agricultural property relief and the ability to claim other relief. So there are other reasons why landlords will still choose to let land, and we have seen the area of land let in this country remain pretty static for about the past 30 years, at about a third. So I do not suspect that we will see a massive shift from the let market simply because we see rents adjust downwards a little bit.

[Chris Davies]

Q 51 (Brecon and Radnorshire) (Con): We heard from our previous witness that there is not enough agriculture in the Agriculture Bill. Would you both agree with that and, if so, what would your organisations like to see in this Bill that is not already there?

Christopher Price: The headings are there; the issue is very much how those headings are used in practice. There are provisions to reward farmers for many of the public goods they provide, but there could be more explicit commentary on rural vitality and on the importance of preserving rural communities, because often farmers are at the hub of rural communities, particularly in some of the more remote areas of the country.

There are significant powers in the Bill to invest in improving productivity and that sort of issue. The big frustration is that we have had very little from Government about how they intend to exercise those powers. It is all very well saying that farmers have got to adapt to the new world of delivering public goods, but they have also got to become more efficient at farming, and Government have not given any indication at all really as to how the powers they propose giving themselves in the Bill will be exercised. However, if those powers are exercised in the right way, there is the potential to improve things very much for farmers and the agricultural sector more generally.

George Dunn: It goes back to what I said previously about this Bill being a scaffold, not a building. The issue for us is that we still need to be convinced that we will see the Government use the powers they are making available for themselves in terms of things such as the supply chain issues. The Groceries Code Action Network has put in some evidence to the Bill Committee—we are a member of it—to say how we can beef up some of that section. We are not convinced that the Government are as serious as they say they are if the Rural Payments Agency is going to be the body responsible for overseeing this particular bit of the Bill. The RPA is perhaps not best skilled for this type of work in terms of the supply chain issues.

We also need to be convinced that the productivity measures are going to be used to the full effect. Actually, the measures reserved for Wales in the schedules of the Bill appear to be better than the ones reserved for England, so we would ask for the Welsh ones to be transposed into England.

On the marketing standards issue, it is absolutely correct that we want to protect our production standards, but if we do not protect our trading positions so that we reject stuff from abroad that is not produced to the same standards, we will undermine our production at home, too. There is an awful lot of hope in the Bill, but not yet too much trust.

--- Later in debate ---

[Kerry McCarthy]

Q May I ask about uplands farming and the economic viability regarding the future? I know people have expressed concern about support being withdrawn.

John Davies: It is very important that we recognise the impact on our community, culture and language, because that is something that is very special to upland Wales and all of Wales. That is something that is particularly precious and one of the benefits of a thriving agriculture that can sometimes feel overlooked.

Dr Fenwick: We are concerned that what is proposed would have an adverse impact on all communities depending on their nature and the sector where they are primarily operating. Also, it is a great concern that most upland farms are not the big expansive areas of heathland and common land and moorland that people imagine them to be. Most Welsh upland farms—that is probably about 60% or 70% of Welsh farms—are self-contained units of simply fields. There is a grave concern that a movement to the public goods-type payment would have a huge adverse impact on the farms that cannot cash in on the carbon and the easy wins that you see for some farms that are right up in the mountains. Most hill farms and mountain farms are not the stereotypical type of farm. They are family farms of maybe 100 hectares or so, comprising mainly fields.

John Davies: We have some concerns around the tenanted sector too. Roughly 30% of Wales is in the tenanted sector. Would they be bypassed by the opportunity of public goods? That was highlighted in an earlier answer. We would be deeply concerned about that because young people need support and we would not like to see that taken away from our communities and possibly to other parts of the country or to trust funds or whatever.

[Kerry McCarthy]

Q Changing tack completely, in terms of the trade deal scenario, Welsh lamb is a pretty important product. We have heard noises from Australia and New Zealand in particular about what they would like to see from a future trade deal. I know it is not specifically in the Bill, but is there anything we can do to protect it—the Bill goes to the heart of protecting standards and not allowing imports in. What impact do you think that would have?

John Davies: I think it is broader than lamb, to be honest. It is about not allowing products that have been produced to completely different standards to those that are allowable here. We respect those standards. Obviously, we do not want to start producing hormone treated beef or chlorinated chicken or any of those things. It is really important that the Bill is robust in that way and does not allow that opportunity to be changed.

Huw Thomas: In that regard, the Bill may have missed something. This could have been the vehicle for making a statement about those standards and insisting that imports are produced to the same standards as our domestic products going forward.

[Kerry McCarthy]

Q Something like a non-regression clause in future trade deals?

Dr Fenwick: With trade, you have the potential of a double whammy in terms of losing access to EU markets due to the height of the barriers that may come into place plus the potential for more imports of cheap produce. Given such uncertainty—there are dangers for the sheep industry in particular, but also for other industries—we firmly believe that now is absolutely the wrong time to add uncertainty by implementing the biggest changes to the underlying principles of rural payments since the Agriculture Act 1947.

[Kerry McCarthy]

Q One last question. A story broke today about 300 cases of salmonella poisoning in lamb products and the Food Standards Agency warning people to cook their meat more. I did not get a chance to ask the Food Standards Agency witness, but do you think we are doing enough to enforce food safety standards in this country at the moment? One of the concerns that has been expressed about the Bill is that there is no regulatory baseline and there might not be enough enforcement and monitoring. How do you reward people going a bit further, if you are not monitoring whether people are actually adhering to the legal standards?

John Davies: Honestly, I am not the best person to answer that, but I think that consumers take safety as a given. Obviously, we have a great deal of confidence in the Food Standards Agency. Many changes have been made over the last 20 years. I started farming in 1986, which was a major period of change. We are subject to some of the most strict rules and regulations.

[Kerry McCarthy]

Q The number of cases has risen significantly, which is why it has been reported. Do you have a feeling as to why that is?

Dr Fenwick: No, but the detection, containment and restrictions on most farms are testament to the fact that we have a very good system of detecting problems and clamping down on them when they do occur. Going back to your initial question, the concern would be if we opened the floodgates to places where their standards fall well below those that are a legal requirement here, then we open the floodgates to far worse problems than we would ever see in the UK.

[Colin Clark]

Q I am a little bit concerned. We share similar issues in Scotland, where we have a lot of upland farms. If tree planting was too generous, we could lose a lot of upland farms. Also, the measurement of carbon sequestration for grassland and the sheep eating it is a very different thing to measure compared with trees. Are you worried that if the policy is too generous, we could lose land to trees and never get it back? What would you like to see in the Bill? Is there some sort of balancing priority that gives equal status in your mind to food and farming?

Dr Fenwick: I referred earlier to the biggest changes since the Agriculture Act 1947. Those changes are the fact that we are moving away from what we currently have, which is an active farmer rule. Notwithstanding all the different changes that have happened since we went into the EU and moved away from the Agriculture Act and had various different CAP reforms, we have still ended up with an active farmer rule that is underpinned by the principles that were originally in the 1947 Act, were later incorporated into the treaty of Rome and are now in the Lisbon treaty. Those principles are about ensuring that active farmers receive the bulk of payments, which can then be distributed through rural supply chains and more widely.

We are moving from that system to what the Welsh consultation calls an “open to all” approach, under which someone who lives in London and fancies buying a bit of land in Wales to plant trees can claim money for doing so, while making no contribution to the local economy, the local schools or the local community. We saw the same thing happen in a different way, which we hope will not be repeated, when vast areas of Wales were bought up by private forestry back in the ’70s. We also saw it when entire communities, including schools, chapels and hundreds of farms, had their land planted up by the Forestry Commission. That is an acute concern.

Europe is tightening up its active farmer criteria to prevent people outside the industry from accessing money, because it recognises the key part that farms play in distributing money in rural economies. I am afraid to say that it looks as if we are moving in exactly the opposite direction.

John Davies: It is a very fair question. A simple, one-dimensional answer is that, yes, planting trees can mitigate the carbon challenges, but I think we need to be seen as part of the solution. There are many things we can do to improve our carbon footprint, and we are up for engaging with that challenge. In the past year or so, at home we have planted 10,000 trees in corridors for protecting hedges and the like, and it has worked really well.

I farm in partnership with the environment. It is an indivisible part of my business, so it is not a binary choice. My wish, my desire and my raison d’être is to hand on my business in a healthier state than I received it. That is no criticism of past generations; it is just the challenge that we face. We have the opportunity to be carbon free by 2050. We need to ensure that all of those mitigation choices are utilised, rather than taking simple, one-dimensional options.