Common Agricultural Policy

Roger Williams Excerpts

Monday 7th July 2014 Commons Chamber

[Roger Williams (Brecon and Radnorshire) (LD)]

I, too, draw the attention of hon. Members to my entry in the Register of Members’ Financial Interests regarding agriculture.

The debate tonight is on the CAP in England, and my farm is in Wales so it is not covered, but the common agricultural policy and the way it is delivered in the United Kingdom have implications for all the devolved nations as well. The important word is “common”. While the UK farmers continue to compete within the European single market, we need a common policy. It is important that we remain within the single market: 40% of all lamb produced in the UK is exported. Although we welcome some of that lamb going to the middle east, and some, we hope, to China in the future and perhaps even to the United States, the bulk of the lamb goes to the continent.

We have a single market there, a market that is open for every second of every minute of every hour of every day throughout the whole year. I can remember when we did not know whether that market was open or not. We could take lambs to market and one day they were worth £10 less because the market was closed; the next day they were worth £10 more because the market suddenly opened. That was no way to do business.

The original purpose of the common agricultural policy was to lift incomes in rural areas, and that is as important now as it was then; incomes in rural areas are still lower than in urban areas. A reduction in the European Union budget naturally resulted in lower pillar one and pillar two allocations. I am particularly concerned about upland areas, where incomes are very low. Hardly any farm businesses would show a profit without the single farm payment, and those that did would generate no cash for investment, yet in his written evidence about food security to the Select Committee on Environment, Food and Rural Affairs, the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Camborne and Redruth (George Eustice), said:

“Farm subsidies can allow inefficient farmers to continue to operate a farm rather than exit the industry.”

Giving oral evidence to the Committee, he said:

“we can support farming better through Pillar 2”.

I can tell him that that causes considerable apprehension in farming communities, particularly in the uplands.

The family farm remains the foundation of the rural community and the rural economy. Money received by farmers gets recycled among many local businesses—garages, shops and other tradespeople. The single farm payment enables farmers to invest, become more efficient, and be more market-facing. It gives farming businesses the resilience to come through periods of poor weather when outputs are reduced and costs soar, as in spring 2013. Any suggestion of moving away from direct payments would devastate many rural areas, break down the cohesion of rural communities, and have a drastic effect on traditional production chains and, indeed, total food production.

I turn to the thorny issue of voluntary modulation, which turned into an almighty row between farming organisations and environmentally focused charities—and one can understand why. Those on both sides of the argument were going to receive less money. Pillar one was reduced by 2.7%, and pillar two by 5.5%. One might ask why there is not this row in other countries. Only five other countries of the 27 in the European Union even engage in voluntary modulation at all, and two do it in the reverse order, moving money from pillar two to pillar one. The Flanders area of Belgium modulates by 5.5%, Germany by 4.5%, France by 3.3%, Latvia by 7.4%—we have to remember that it had a 50% increase in its pillar two allocation—and the Netherlands by 2.5%.

Of course, as we have heard, in England the modulation is 12%, probably rising to 15% in 2018. In Wales, there is 15% modulation. In Scotland I believe it is 9.5%, and it is zero in Ireland. Why is the UK such an exception to all this? The answer probably lies in the UK’s pillar two allocation. The UK receives €2.3 billion for pillar two in this financial period, whereas Poland receives €9.7 billion, Italy €9.2 billion, France €8.8 billion, Spain €7.3 billion, and Germany €3.3 billion. Why does the UK have such a poor allocation for pillar two? I will not go into the suggested reasons, but there is common cause to be made. The farming unions could combine with the environmental charities to review our pillar two allocation fundamentally, which would be good for farmers, the environment, rural communities and the UK as a whole. Our pillar two allocation is low, which I do not understand. I cannot find any reason why we have such a poor allocation. Increasing the allocation would be good for our farming community, but it would be good for our environment, too.