Agriculture Bill (Second sitting)

Robert Goodwill Excerpts

Tuesday 23rd October 2018 Public Bill Committees

[Dr Drew]

Q Just a very quick rejoinder. If the Bill goes through unamended, what type of farmers are most at risk from the changes?

Andrew Clark: The economic modelling that has been done suggests that it is the livestock sector—particularly beef and sheep, and especially in the lowlands. A lot of focus is given to upland farming—I have great interest in that myself, having worked on conservation and environmental schemes for most of my career at the NFU—but lowland livestock farms in marginal situations in the west of the country have few choices other than grazing land. They are particularly vulnerable communities. Very often, they are communities; they are not just isolated farms. They form a network and the backbone of both the landscape and the farming community.

[Mr Robert Goodwill (Scarborough and Whitby) (Con)]

Q In this morning’s evidence session, we had two farmers from different parts of the country, representing different types of farms. One was from Cambridgeshire, where the fields have been amalgamated and production is very intensive, and the other was from the south-west, and he said, for example, that the field margins around hedges discriminated against him because he has small fields. On my farm, I have very small fields, compared with my next-door neighbour, and I always feel that we are being picked on.

As we go forward, how can we manage to have a system that works for the farmers who have intensified their farms and are going to green them up while not being unfair to the ones who are already very green? How do we reward progress and, at the same time, reward the people who have always been doing the right thing?

Andrew Clark: This is one thing I wanted to pick up in evidence to the Committee. The legislation that we are looking at is only half of the formula that needs to be delivered in order for farms to be profitable, sustainable and productive in future. It is the policy that goes alongside that legislation that is important. That policy needs to be one of opportunity, that creates opportunities for farms to follow the approach, whether it is public good provision, or becoming more productive or, hopefully, doing both those things together.

Looking at that policy and the measures that are available, it is important that the Agriculture Bill ensures, in fact, almost places a duty on Ministers, to deliver schemes that help farms to be both more productive and more sustainable in future. Those two themes would apply both to the farmer in the west country and the farmer in East Anglia. There are great opportunities for both of them to manage soils better or protect waters and thereby manage their farms in a more profitable and productive way in future—for instance, by nutrient management and introducing some of the approaches in terms of minimum till agriculture. That would apply to both farming situations.

[Martin Whitfield (East Lothian) (Lab)]

Q This a very straightforward question, but I am not sure you are the person to comment on it. Do you think in this primary legislation an opportunity could be taken to resolve the red meat levy discrepancy between Scotland, Wales, Northern Ireland and England?

Andrew Clark: For fear of breaking into devolved discussions, I suspect that the Agriculture Bill is not the right place. I suspect that the reform of the Natural Environment and Rural Communities Act 2006 that set up the Agriculture and Horticulture Development Board in the first place, might be the appropriate place. Whether legislation is the way to sort that out or having the parties sit round the table and come to agreement, it is part of a wider issue, which again is perhaps not covered in the Agriculture Bill as much as it should be.

Scotland is absent, as we know, from the schedules, which from a UK farming perspective is concerning. We would like to see a common framework in agreed areas across the whole country, because that benefits every farm business and allows the free flow of goods and services and agricultural activity across the whole UK economic area.

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[Chris Davies]

Q 52 If a Minister may interpret this set of rules in one way, how concerned are you that, in the devolved nations, there will be different processes going on right around the country?

Christopher Price: Perhaps this is one thing that the Bill lacks: the important thing is to have a UK-wide framework that allows four national agricultural policies underneath it, so that everyone is operating to a high-level set of common rules, but each country has the power to go and decide what it thinks best for its own circumstances.

George Dunn: Obviously, in a devolved world there is great scope for the four countries of the United Kingdom to take a different view of different aspects of this policy. But, fundamentally, we must remember that we are an economic union of four nations, and we need to preserve that for the benefit of the populations of all four countries of the United Kingdom. That will be the key issue—to ensure that we do not impact the ability to trade with one another in a free and open manner.

[Mr Goodwill]

Q 53 Included in clause 7 of the Bill is a provision to allow de-linking of the payments. The example I was given was where a tenant farmer who wishes to retire could take three years’ worth of payments, which, together with his live and deadstock sale, would allow him perhaps to clear his overdraft and retire. However, if he hands that tenancy back to the landlord, he is left with land that will not attract any payments for two or three years and the difficulty of attracting another tenant. How would that work in practice?

George Dunn: I am not sure there is a problem in what you suggest. It is not just the tenant’s ability to roll up the direct payment with the live and deadstock; the landlord themselves may be willing to give a payment for the early surrender of the tenancy, in order to get vacant possession or to offer the tenancy to a new entrant on a farm business tenancy basis, as opposed to an old-style agricultural holding tenancy. There may be some benefits for the landlord.

[Mr Goodwill]

We have already heard that a major element of the rent that is paid relates to the amount of direct payments that the tenant—

George Dunn: But we know within the landlord-tenant community that many landlords would like tenants who are operating under the old-style secure tenancies to go, so that they get vacant possession of the land back. If they offer it on the open market, plenty of people will queue up to take that land, even in the new environment, because to date, lots of those individuals have felt it appropriate to factor the direct payments into the rent that they pay. If they no longer have to do that, the rents will adjust in the new world. We think that the de-linking and consolidation element is a massive benefit to restructuring the industry.

Christopher Price: We were concerned about the proposal to de-link, on the basis that it could de-legitimise the payments. If we are saying that the reason why farmers are given quite large amounts of money is to provide public goods, this takes away that justification. If you are going to do it, it has to be for a very good reason. We suspect that, in many cases, the amount of money that will be freed up will not be sufficient to enable the tenant without more to move on—the amounts of money involved will not be sufficient for that. If the landlord is keen for the tenant to move on, the landlord will have to make a significant investment, too. George Dunn is quite correct on that.

At the moment, we know so little about what the Government are thinking behind the de-linking proposals. It is very difficult to predict how it could operate; on top of all the considerations that George Dunn raised, there is also how it will be taxed, for example. There is an awful lot to go and think through when deciding how it could work.

[Mr Goodwill]

Q I can understand that a tenant retiring would not necessarily be able to afford to buy a house out of the proceeds, but if he was on the verge of bankruptcy, presumably it would be a very attractive straw to grasp.

George Dunn: Again, I disagree with the premise of the question. This is not something to save people from bankruptcy; this is to allow people to make a rational economic decision about their future. At the moment, lots of tenant farmers cannot make a rational economic decision to retire because they do not have a house to go to or another opportunity to take up. We are not saying that this will be the be-all and end-all in that process, but if it adds to a payment that comes from the landlord, or to the live and deadstock at the end of the tenancy, it could be the thing that allows the tenant to make that change.

[The Chair]

Minister, this may have to be the final line of questioning, because the Minister is on his feet in the Chamber and we might find ourselves interrupted.

--- Later in debate ---

[Sandy Martin]

Q Sorry; I meant consultation on the regulations that will give effect, rather than on the Bill itself. Clearly, consultation on a Bill that does not specify exactly what will happen is one thing. Consultation on the regulations that will specify what will happen is surely something that you might welcome.

Huw Thomas: The Welsh Government have said that they will publish a White Paper early next year that will flesh out what they are consulting on at the moment, which will derive from this. In effect, there will be a consultation around that. Certainly, there would need to be further consultation before Ministers took some of the powers forward and utilised them, because they are so broadly drafted in the primary legislation that they could allow such a range of actions to be taken under their provisions. There has to be consultation with industry and stakeholders following that.

Dr Fenwick: I agree. It is part of a transparent, democratic system to consult. I do not mean on every occasion, on every tinkering, but when it comes to things that have an impact on jobs, people’s lives and so on, those should be consulted on.

[Mr Goodwill]

Q Farmers in other European Union countries have perhaps been more successful than farmers in the UK at attracting the capital funding that the Minister described in schedule 3. Given that those farmers have some very well organised and very large farmer-owned co-operatives that can not only get funding for processing, marketing and grain storage, but are big enough to square up to the supermarkets and other customers, how well organised are co-operatives in Wales, where you have lots of small farmers so co-operatives work very well? Do you see the capital funding going to the industry that the Bill would allow being a good thing for farmers, and would you see them as a preferred bidder to commercial companies that would be doing the same sort of thing?

Dr Fenwick: I agree. My first job this morning, before I got on the train, was to go down to our farmers’ co-op. It has branches all over the west side of Wales, from north to south, and employs large numbers of people. My grandfather has been a member of that co-operative since 1947, and it is one of a number across Wales. We sometimes forget that they are even co-operatives, but they do exist, and there are plenty of them in Wales, across England, and into Scotland.

I would guess that some of the funding made available to European co-operatives comes from rural development funding. We have an incredibly low historical allocation of rural development funding from the EU, as a result of our having handed it over as part of the CAP negotiations in the first part of this decade. We gave up what we were entitled to, effectively, when there was an equalisation process, which was obviously disappointing, and for that reason we have high modulation rates, particularly in Wales. As I am sure Mr Davies is aware, that is a big bone of contention, and it is to fill a gap that we have in our funding. It should not be forgotten that European businesses and farmers have access to far more funds when it comes to direct investment and support, because they make more use of a larger rural development programme budget.

John Davies: You are absolutely right in identifying the balance of power in the marketplace. We have been successful in terms of supply-side co-operatives in Wales, but we have not been as successful as the likes of Müller, Kerrygold and other co-operatives in other parts of the EU. We have to look at how this could work, and help and support that in the Bill, because there are opportunities to focus more on new product development. Having travelled to New Zealand and seen how a real focus of the farmer-controlled meat operations has been new product development and accessing new markets, over and above shareholder return, there are lessons to be learned from other parts of the world. You are absolutely right to identify those opportunities in the Bill.

[Mr Goodwill]

Q Do you think that because in the past, we have had a deficiency payment scheme—or, for some commodities, intervention buying—farmers have been less on the front foot? For example, we could sell skimmed milk powder and butter into intervention, when other countries were developing new products.

John Davies: Having travelled to France and other parts of the world, there is a different approach to co-operative marketing, and we can learn some of that sticking-together principle more effectively. There are lessons to be learned. We need to look at how to do it. I do not think that is because of the deficiency payment; I think there is a slightly different mindset in the UK. We are slightly more independent, possibly. One penny will break a co-operative. I have had experience of being involved in a different farming co-operative in the past, and a 1p difference in your base price will break a co-operative.

[Mr Goodwill]

Q Would you say that the provisions in the Bill give a great opportunity for farmers in Wales to take advantage of this sort of scheme, which will then extend markets and take on the competition that may be coming in from abroad?

John Davies: Absolutely. We need to look to each and every lever we can pull, and there is scope within the Bill to utilise those opportunities.

Dr Fenwick: It requires the political will to use those levers appropriately, and I am afraid to say that in the past, we have not seen that political will when it comes to some co-operatives and some farmer-owned businesses. We have seen bodies broken up, effectively, because it is perceived that they have too much power, and that is the opposite of what we would like to see in terms of empowerment of the industry. We need to make up for that huge imbalance that has developed over the last 30 or 40 years in terms of the supermarkets.

[Deidre Brock]

Q I have a quick question about the consultation that the Welsh Government are conducting at the moment. Does it include proposals around the capping of payments?

Dr Fenwick: Only with regard to the capping of basic payments during a transition period in order to move money over to a public goods scheme. If I recollect correctly, there is no reference to the capping of payments, which is something that we have raised repeatedly. Indeed, some have told us that there should be no cap on payments, which is a huge concern because we saw capping as a great movement forward in terms of the reputation of what is currently the common agricultural policy and in terms of the reputation of the industry.

Sadly, when we see headlines in newspapers about millionaires or racehorse owners getting huge payments, we are all tarred with the same brush. People do not realise that in Wales they took the progressive move back in 2014 to cap agricultural payments. We appreciate that the CAP legislation was not designed as well as it could have been in terms of making it possible in every country; we appreciate that England had problems from that point of view, but it is a massive backward step not to have capping.