Common Agricultural Policy Reform

Mark Williams Excerpts

Tuesday 12th February 2013 Commons Chamber

[Roger Williams]

I agree. The direct payment protects the farmer from various things, including volatile commodity prices and poor and problematic weather conditions, which have a huge effect on profitability. Without the direct payment, many farmers would not be able to continue in business.

I, along with organisations such as the Country Land and Business Association, fear that modulation of this kind could undermine the ability of UK farmers to compete. I note the findings of the Environment, Food and Rural Affairs Committee “Greening the CAP” report. It stated:

“The competitiveness of UK farmers will be reduced if they are exposed to higher modulation rates than their European counterparts. We therefore recommend that Defra does not set modulation rates higher than other Member States that receive similar single farm payment rates.”

In terms of rural development, or pillar two, the UK receives the lowest per hectare allocation of funds because of the rebate the Government receive from Europe. A further reduction could turn farmers away from all the good they are doing in developing wildlife under the existing pillar two. The Government must make sure that as much positive management for wildlife as possible continues as we approach the 2020 deadline for improvements in biodiversity. Pillar two has delivered real improvements for the environment; the Royal Society for the Protection of Birds receives £5 million from the CAP, for instance.

For a number of agricultural sectors, direct payments make up the majority of farm income, yet under EU rules farmers cannot receive payments for undertaking environmental work. They can be paid compensation only for the losses and costs incurred as a result of that environmental work. I believe there should be a system that genuinely rewards farmers for undertaking environmental work, and I am sure the Minister agrees. A deal must be done under the Irish presidency, thereby allowing for a period of transition in which farmers can make informed business decisions before the policy takes effect.

The British and European public have great expectations for CAP reform. They expect farmers across Europe to provide quality food and increase food security, and to increase exports within the EU and further afield. They also require our farmers to be sustainable and to deliver public goods such as biodiversity, landscaping, water purity and granting greater access to farmland. These two goals can be achieved only if agriculture is profitable and successful. Farmers cannot, however, be expected to commit their lives to such a role within the sector without receiving sufficient support and investment. It is therefore essential to have a single farm payment that is set at a level that allows farmers to remain profitable and deal with the challenges they face.

Recently, the single farm payment accounted for 80% of the total profitability of English agriculture, and in this financial year it will probably account for even more. The profitability of English agriculture is therefore clearly closely linked to the income from the single farm payment.

The challenges facing farmers vary widely. Globally, prices for commodities remain volatile, and the dairy industry has seen some of the lowest prices for milk in recent times. High input costs such as for fuel, fertiliser, feed and chemicals are hitting farmers across all sectors, too. We also face increasingly inconsistent weather, which has resulted in the lowest wheat yields since the 1980s, while dairy farmers have had to keep cattle indoors and revert to winter feeding early, all at extra cost. These effects are felt globally as well as here in the UK; the United States has experienced its worst drought in 56 years, for instance, leading to poor yields and crop abandonment in some areas.

I also want to make the case for extra support for hill farmers. They find it difficult to compete with people farming more advantageous areas. The CAP does not give specific support for hill farming.

[Mr Mark Williams (Ceredigion) (LD)]

I congratulate my hon. Friend on securing this debate. The point about hill farmers leads me back to one of his original questions about the voice of regional government and national Government in the final regulations. Is he satisfied that the voice of Wales—in particular Welsh hill farmers—is being acknowledged in those negotiations and discussions?

[Roger Williams]

My hon. Friend points to a significant problem and I am not convinced at the moment that the future of hill farmers in Wales, England and the other devolved nations is secure. Will the Minister say what negotiations are taking place on behalf of the hill farming community? I do not seek to maintain the absolute level for CAP expenditure and it is far more important that British farmers are treated fairly and equitably. We operate in a single market in Europe and whatever settlement is finally reached, the terms and conditions applied to our farmers—whether the transfer to pillar two or the greening rules—must not put us at a disadvantage with our major competitors.

English farmers have already undergone substantial and radical reform through the full decoupling of direct support payments, the cutting of farm payments at national level, and the progressive move towards an area-based payments system. The combination of those policy decisions, all taken at national level by previous DEFRA Ministers, means that this year a dairy farmer in the Netherlands will receive a payment that is 91% higher than that received by an English dairy farmer. The reform should seek to narrow the gap in support levels compared with our competitors, and it certainly should not make it any worse.

I thank the Minister for listening and appreciate the size of the challenge faced by him and his ministerial team.