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House of Commons Hansard
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Single Payment Scheme
08 June 2011
Volume 529

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It is an honour to serve for the first time under your chairmanship, Mr Scott.

I will keep my remarks shorter than normal, because several of my hon. Friends wish to intervene and comment on the subject, which is important. It is a great pleasure to see the Minister, who is such a doughty champion for agriculture.

I am pleased that we have the opportunity today to debate this important subject, which is vital not only to farmers in my constituency and throughout the country but to ensure that food is on the table of every person at an affordable price. Food production has long been taken for granted in this country and elsewhere in the world, at least since the green revolution. Until recently, it has not been the subject of much political debate in Europe, but it is no coincidence that this year President Sarkozy has made food a top priority at the G20, which is particularly appropriate for a Frenchman.

Recent headlines from around the world highlight the importance of food production: “Devastating food shortage said to be looming in Kenya”—all these headlines are from the past week or two—“Tanzanians debate rising food prices”, “Drought affects rice production in two central China provinces” and “Regional bank warns Caribbean of impact of rising food prices”. At last, we are waking up to the importance of food security, and it is about time, too.

In our own country, according to the Office for National Statistics, the population is expected to reach 65 million by 2018 and 70 million by 2028. With 7 million more people to feed in the UK alone over the next 15 years, we must act now to ensure that we can meet our needs sustainably. We cannot consider our own needs alone. Another 2 billion will be added to the world’s population in the next 40 years, yet uncultivated land is perhaps as little as 10% to 12% of what is currently cultivated, leaving little room for manoeuvre. That presents a huge challenge, which will only be met by better yielding crops, irrigation, fertiliser and so on. It also brings opportunities for the UK.

The UK has a competitive advantage in food production. We have a temperate climate, excellent yields, efficient farmers, high standards and a strong food manufacturing industry.

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I completely agree with my hon. Friend that we need to focus on food production, which it is appropriate to discuss in the light of reform of the common agricultural policy. We need to focus on our profitability and the production of food, as well as, correctly, on protecting the environment. We have to strike the right balance. Does he agree?

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I entirely agree with my hon. Friend, and I will come on to that in a moment.

The strong food manufacturing industry is the largest manufacturing sector in the country and a vital customer for our raw materials. My own county of Staffordshire, along with Gloucestershire, Devon and many other counties represented in the Chamber today, views agriculture and food production as a business of the future and not of the past. Whereas other counties have sold off much of their farm estate, Staffordshire has largely retained its own, and continues to invest in it.

I have to declare a local interest, as about half of the county-owned farms—some 50—are in my constituency. They provide a start for the many young people who wish to farm but do not have the land or capital to do so. South Staffordshire college recognises the need for training young people on the land, and I welcome its application to establish a land-based academy at Rodbaston in my constituency, along the lines of the excellent JCB academy for technical subjects in nearby Rocester.

Last year, UK food and non-alcoholic drink exports topped £10 billion for the first time. If ever we needed a reminder of the importance of Ireland to our economy, it lies in the fact that Ireland is our No. 1 customer, followed by France, the Netherlands and Germany. Our recovery depends substantially on export growth, and agriculture is making a strong contribution. We also import £31 billion a year in food and non-alcoholic drinks, leaving plenty of room to increase market share at home. Food is also of increasing importance to the cost of living, in particular for those on low incomes. As with fuel, the more we produce ourselves, the less we depend on sources of supply over which we have no control on price, quantity and, I must say, quality.

Given the apparently rosy outlook for agriculture, why am I concerned about the single payment scheme or direct payments to farmers? Surely agriculture can survive on its own, without support. I have no doubt that it will, eventually, but that day has not yet come.

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If my hon. Friend can see a future without subsidy, can he outline how that would happen in a global context? It is one thing for the European Union to withdraw subsidy to agricultural food production, but that can only happen if the rest of the world follows suit. It would be unfair for European farmers to be disadvantaged by an American system that subsidises its farms.

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My hon. Friend makes an excellent point, and I entirely agree with him. I will come on to how I see the future and how we can eventually get to a stage at which no subsidy is required. However, that day has not yet come. As the National Farmers Union has stated:

“while we are looking forward to the day that farmers no longer need state support, this is unlikely to be within the next few years and it is vital that we maintain and develop the industry now.”

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I congratulate my hon. Friend on securing this important debate. On subsidies, does he agree that hill farmers in particular represent a special case, given their incomes relative to those of lowland farmers? If we are to encourage young people, to whom he has referred, to get involved in farming in such a context, it is important that we do more.

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I entirely agree. That is a particular concern in my hon. Friend’s constituency in Devon. I do not have hill farmers in my constituency—I do not have enough hills—but in nearby Staffordshire Moorlands we do. If I understand the statistics correctly, hill farmers have suffered the greatest decline in income in recent years—the decline is greater than for any other form of farming. The problem with the single payment applies in particular to smaller farms in the livestock sector. It has been estimated that in 2009 59% of all farms would have been loss-making without their single payment; in the livestock sector the figure was even higher at 87%.

Last week, I had the privilege of attending the Staffordshire county show in my constituency. At the same show, some years ago, I met the Minister for the first time—he kindly came along and showed his support for Staffordshire farmers, as he does for farmers up and down the country, which all of us welcome. Talking to farmers at the show, many of whom have smallish holdings, it was quite clear that without the single payment they would eventually go out of business.

The single payment is essential for the short-term sustainability of agriculture. In the longer term, one might argue that farmers should look to diversify their income so as to reduce and eventually eliminate the need for support, and that that continuing support somehow makes them put off that evil day—or that day. However, no hon. Members who have farmers in their constituency agree with that. Farmers are constantly looking at ways of diversifying their income away from food production. They are taking matters into their own hands, and they do not want to rely on subsidy, in the same way that any other private business man or woman does not.

In any case, the single payment is not simply a subsidy. The payment recognises the vital public functions carried out by farmers: the management of the land in a way that provides an attractive and diverse landscape for those who live in the countryside as well as for visitors; and sustainable production, which meets the highest standards of food safety, traceability and animal welfare.

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My hon. Friend makes an important point, but does he not agree that the direct single payment is also a buffer against volatile commodity prices? While commodity prices except for milk are reasonably buoyant at the moment, there could come a time when they are in decline, which would be difficult for farmers to sustain.

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I entirely agree with my hon. Friend. He speaks with vast experience from his own Brecon and Radnorshire constituency which is one of the largest, if not the largest, in England and Wales. I ask the Government to recognise the importance of maintaining direct payments to farmers at the heart of the common agricultural policy after 2013. I recognise the importance of environmental management, but it is vital that the primary need to produce high-quality, safe food is kept firmly in mind. Schemes must be flexible and practical to operate for smaller farmers, as well as large landowners.

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I congratulate my hon. Friend on securing this important debate. He has touched on food security, and I agree entirely with him on that. He has said that farming is going through a rosy patch at the moment, and that is certainly so in arable farming, but not in livestock farming. Does he believe that, despite the need for subsidies, certainly in the short term, supermarkets will play a key role in driving up incomes for farmers and how they are dealt with in future?

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I agree that livestock farmers have been going through a difficult time for many years. Arable farmers, particularly on the eastern side of the country, are seeing better incomes, but that is not so for all farmers. I will address my hon. Friend’ comment in a moment.

We must ensure that markets work more efficiently, so that there is less need for support. Increasing demand from Britain and around the world will do much of the heavy lifting in the long term, as it raises prices.

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As my hon. Friend’s neighbour, I know that Staffordshire farmers appreciate his work to raise their profile and their issues. We have heard about the problems for arable farmers and livestock farmers, but we have not yet mentioned the terrible situation of dairy farmers, which has been an ongoing problem for many years, driven particularly by the supermarkets forcing down the price of milk as a loss leader to tempt people. Does my hon. Friend agree that we desperately need to do something to support our dairy farmers if we are to have a sustainable industry going forward?

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I entirely agree with my hon. Friend. That is why the Bill that proposes a supermarket ombudsman is welcome, but we need that as soon as possible, because in some parts of the dairy industry, despite recent small improvements in prices, there is a crisis, with people going out of business every week.

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Does my hon. Friend agree that it is surprising that only Government Members are here today to support this debate?

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I thank my hon. Friend, but I will not comment on what he has said. This is an extremely important matter, and I am sure that many hon. Members who would have loved to be here are not in their seats because they are otherwise detained.

I shall conclude, because I know that at least one other hon. Member wants to speak, and I must rightly give him time. The discussions about the future of the CAP after 2013 are critical for Britain. If the outcome is right, British agriculture will thrive and deliver high-quality, fairly priced food to the British people and to the world. There will be increasing employment in rural areas, with increasing exports and a narrowing of the trade gap. We will also ensure our own food security and that of those to whom we are net exporters of cereals, as we are in many years. Essential to getting the CAP right, in my view and that of many others, is the maintenance of direct payment to farmers, which keeps so many of them in business through the ups and downs of farm-gate prices.

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I congratulate my hon. Friend the Member for Stafford (Jeremy Lefroy) on securing this debate and on all his work for farmers in Staffordshire and more generally throughout Britain. I shall speak briefly, and begin by saying that the issue is enormously important, as my hon. Friend has emphasised. Not only does it make all the difference to lifestyles, to communities and to preserving farms through price volatility, but it is a good long-term bet in terms of food security.

Sitting suspended for a Division in the House.

On resuming

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I have little to add to the brilliant exposition by my hon. Friend the Member for Stafford of why single farm payments are so vital to everybody. We see that every day in Cumbria, where such payments are vital for the support of our hill farms; in some areas, about 93% of farms would go bust if they did not receive the single farm payment. The entire agricultural economy depends on those payments and, as my hon. Friend suggested, they stretch into every area including the governance of agricultural colleges. The fight in my constituency is to protect Newton Rigg, our agricultural college, from having its assets stripped in a takeover.

I do not need to emphasise the problems faced by all farmers. There is no need to talk today about the horrors of the Rural Payments Agency, but all strength to the arm of the Minister for the steps that he has taken to sort it out. The system is totally unacceptable and debilitating for so many of our farmers.

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On the RPA, farmers in my constituency constantly complain about bureaucracy and red tape. Does my hon. Friend welcome Richard Macdonald’s recent review on cutting red tape and its 200 recommendations, and will he urge the Government—as I will—to take up those recommendations with some vigour?

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Absolutely. The second area connected with red tape is, of course, the effects of these environmental schemes. Whether we are talking about cross-compliance or stewardship schemes, we exist in a world often of craziness, of indigestible tufts of grass emerging, of self-seeding oak plantations that never self-seed and of floodplains that never flood, because of a lack of local flexibility, so I again congratulate the Minister on pushing for more local flexibility. However, the short point that I wish to make is about our diplomatic initiative.

The really big game in the end is not the red tape; it is ensuring that we get 2013 right, that we team up with the right partners in Europe, that we are there with the Germans, that we understand the French position and that we are winning that diplomatic fight. That will not be done just by the NFU or by the Department for Environment, Food and Rural Affairs; it will be done by the Foreign Office. We must invest in our embassies. We must invest in ensuring that the European countries are not ahead of us in that game—in ensuring that we get the best deal possible for British farmers through diplomatic enterprise in Europe.

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I endorse what I have heard from my hon. Friend the Member for Penrith and The Border (Rory Stewart).I also very much approve of the line that my right hon. Friend the Minister has been taking on agriculture. We must ensure that we get the kind of farming that is needed. I congratulate my hon. Friend the Member for Stafford (Jeremy Lefroy) on his approach to the matter. To add one other note, I want to ask my hon. Friend the Member for Penrith and The Border whether he thinks that it is important that the badger population is kept properly under control, because that is vital in areas such as my own.

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I thank my hon. Friend for his intervention. It is vital that we deal with tuberculosis. We have just had our first incident in Penrith and The Border—a shocking incident. Much of it seems to be about the movement of cows from areas that are already TB-infected. That infection then can get into the badger population. Any measures, including proper control of badgers, must be taken. TB in our cows is completely unacceptable.

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I am delighted to speak under your chairmanship for what I think is the first time, Mr Scott, and to have the opportunity to respond to the debate initiated by my hon. Friend the Member for Stafford (Jeremy Lefroy). I am sorry that it has been only a brief and an interrupted debate, because the issues that he and other hon. Friends have raised are central to a huge part of Britain’s rural economy. The debate comes at a time when, as my hon. Friend the Member for Stafford said, a range of issues are before us. There is no doubt that there is an emerging global challenge as to how we will feed the world in the future.

The Foresight report produced a few weeks ago by the Government’s chief scientist, Sir John Beddington, considered all the challenges and how we can deal with them. It went through the statistics relating to population growth in the UK and the world that my hon. Friend referred to in his excellent speech. We are talking about something approaching a 50% increase in the world’s population by 2050. The report identified hunger and environmental degradation as key problems that we face.

Last week, DEFRA published the national ecosystem assessment, which began for the first time a full analysis of the environmental challenges that we face and how that feeds through to our natural capital and ultimately to our ability to exploit that natural capital for the production of food.

For all the reasons that have been given, we should all be able to agree that a do-nothing approach is not an acceptable option. There will be far more people in the world. Many of them will be much wealthier. In the emerging economies, people are demanding better and more extensive diets, often involving more animal protein. Competition for water, energy and land will increase as economies grow. All that is compounded by the impact of climate change. Water will be a particular issue, but some of the projections show that in addition a lot of current global arable land could be taken out of production. When we remember that one third of all the world’s arable production land is within 1 metre of sea level, we realise just how little sea levels have to change before we face serious problems.

In the meantime, we already have the price volatility to which a number of hon. Members have referred. I am delighted to say that the French Government have seized on that as a key issue during their presidency of the G20, which, as hon. Members probably know, meets in a couple of weeks’ time. We are wholly behind the French Government in their efforts to find ways of reducing the risks of international food price volatility.

There is no option but to change. Equally, there is no option but for every country to do its bit. For the last 13 years or at least for the first 11 or 12 of them, we had a Government who basically said that British food production did not matter and we could import it all. It is fair to say that in the last year or so, they changed tack, but far too late—a lot of damage had already been done. Our self-sufficiency—the proportion of the food that we consumed that was produced domestically—had fallen by some 10%, which is horrendous. We have moved on from the days when we worried about self-sufficiency in terms of every egg, every apple and every piece of wheat, because trade is so much more important and our modern diet is so much more international. However, the position does mean—my hon. Friend the Member for Stafford referred to the trade deficit and so on—that there is huge potential for our food and farming industries, which after all are part of the same industry, to do a great deal more for our economy.

There are issues to do with research. I am thinking of the development of precision farming for better use of resources, the phrase “sustainable intensification” and the concept of producing more from less. All those things are relevant, but my hon. Friend focused, as I will now, on the single farm payment and CAP reform. There is no doubt that that gives us a great opportunity, but it has to be seen against the background that my hon. Friend and I have described. There are those who advocate a return to the coupled payments that existed until six or seven years ago. Although production needs to increase, I do not believe that turning the clock back and simply linking payments to production is the best way to encourage efficiency, leaving aside the fact that that would be outside the World Trade Organisation agreements.

There might be slight dissent among my hon. Friends and me about the single farm payment. The Government believe that the CAP should provide a framework that enables farmers to raise their competitiveness and produce food, while rewarding them for their role as stewards of the environment. My hon. Friend referred to the single farm payment as doing some of that work in rewarding farmers to care for the environment. He also mentioned a number of other issues. If we look at it in those terms—of course, cross-compliance exists—it is an extremely blunt instrument. It does not focus on any form of outcome. That is why the Government take the view that reward for public goods, whether environmental or otherwise, is better achieved through what is currently pillar 2—the rural development programme for England—rather than being achieved much more bluntly and less effectively through the single farm payment.

The reform that we seek of the CAP must involve a twin-track approach. It must build the competitiveness of the industry—the ability of the industry to respond to the challenges that my hon. Friend and I have described in relation to both domestic production and increased exports—but also reduce its reliance on subsidies over time to ensure that it can better deliver the food and environmental goods that we need. The competitiveness issue is at the heart of our efforts on CAP reform. We want to be able to focus more of our resources on assisting competitiveness, which is why we believe that pillar 2—the rural development programme money—is the more effective way. As a result of the abolition of regional development agencies, we are bringing that money back in-house as of July this year, so that we can focus it more effectively on industry competitiveness.

I need to deal next with what I hope was not behind my hon. Friend’s speech but which is clearly a myth in some circles. It is that the Government are somehow calling for the abolition of the single farm payment. We are not, and I cannot over-emphasise the fact. The Government recognise, as my hon. Friend said, that the single farm payment is critical for today’s farmers. The figures that he gave were correct, and I would not dream of countering them. However, the background that my hon. Friend sketched out, and to which I have added, provides us with the opportunity to develop a trajectory for beginning to phase out the single farm payment.

The NFU is right to say that farmers cannot live without it today. However, although it is reasonable to say that, over time—I do not mean over the next seven years, but over a longer trajectory—we should be looking at how to phase out that direct form of support against the background of world shortages that will inevitably lead to higher prices. That is how we want to achieve it.

I share entirely my hon. Friend’s view that the industry needs to be more highly regarded and to have a higher reputation both here and abroad, not only because of its ability to produce our food but because it is an important part of our economy. Food manufacturing is the biggest sector of our manufacturing industry, and farmers also act as carers and managers of our natural environment, rather than assailants of it, as they were sometimes painted in the past. I emphasise that we are not calling for the scrapping of the single farm payment tomorrow, nor over the next seven years of this CAP period, but we do want genuine and far-sighted reform.

The Commission has published its early proposals. After much discussion and consultation, it will produce regulations later in the year, so we do not yet know what will happen. For the first time 26 member states are now involved, and for the first time the European Parliament is a co-decision maker, so the crystal ball is extremely murky on what will happen. However, I have absolutely no doubt that the single farm payment will be continued. Whether it is a straightforward payment, whether it will include the Commission’s proposal for a green element, whether there will be further cost compliance, whether the payment could be construed as simply paying for something that is already being done or whether it will provide real added value for the taxpayer, I do not know.

I turn quickly to some of the other issues raised during the debate. They were all relevant. My hon. Friend the Member for Central Devon (Mel Stride)—I think that it was him—mentioned dairy farming. Only yesterday, we spent an hour and a half in this Chamber debating that subject, so I do not wish to repeat myself other than to emphasise that the Government are fully persuaded of the crisis affecting the dairy industry. There is obviously a limit to what we can do. We cannot force up the price of milk; but as has been said, we shall introduce a supermarket adjudicator as soon as we can.

Hill farming was mentioned by my hon. Friends the Members for Central Devon and for Penrith and The Border (Rory Stewart). The payment is most important in those areas. Indeed, it is important to our whole livestock industry. Again, however, we believe that the right way to support it is through the use of pillar 2 payments, as targeted support for the benefits that hill farms provide the nation. Those farms are important to the social structure of rural communities in our uplands, but there are other factors. They store carbon and water in their peat and are marvellous centres of biodiversity, and the ecosystems assessment to which I referred provides us with the tools to recognise that fact.

Finally, on the question of TB, all that I can say is that the Government intend to make a full announcement on the matter before the House rises for the summer recess.