It is not a Bill that strays into our remit significantly. We have not been closely involved in its formulation, but clearly there are areas, for example, such as capturing some of the information at slaughter houses, which we would need to be aware of and we will be working alongside.
Should you be more involved in it? If we are going to improve British farming, it is all going to be about quality. You measure quality in the abattoirs and in some of the other things you do. You are there as the guardians of the public duty. Should you have been more involved as an agency in this Bill?
We focus our attention not so much on the quality argument but on the hygiene and safety perspective. If we take the example that you mentioned about slaughterhouses and abattoirs, our primary purpose through the work of the meat hygiene inspectors and the official veterinarians is two-fold. One is the hygiene and safety of the production and the welfare of animals up to and including the point of slaughter. The quality focus tends to be more of a business arrangement, in that example, between the slaughterhouses and the customers that they are supplying.
Q This is obviously an Agriculture Bill and its primary focus is around schemes to replace the common agricultural policy. Can you confirm whether there are any clauses that you feel undermine your independent ability to do the independent job you have to do? Can you explain the other pieces of legislation from which you draw your authority to implement food standards independently?
There is nothing in the Bill that we feel impinges on our independence. Committee members may not be aware we are an independent Government Department, non-ministerial and directly accountable to Parliament. We do our parliamentary work either directly, like this, or through Health Ministers. There is nothing in the Bill that causes us to have any concerns. There are elements that we think are positive and helpful. As you know, Minister, we are very strong around the openness and transparency with which we conduct our business. Our board meetings are held in public. All the papers are published and they are transmitted live on the internet. The collection and more open aspects of data, and the sharing of data, to help to improve standards, quality and safety are things that we are very supportive of.
In a post-exit world, it is helpful to think about food imports in three different categories. First, there is the food that we import from third countries—non-EU countries. For those high-risk products, which are mostly products of animal origin, but are also certain defined products not of animal origin, we are pre-notified of their arrival and an inspection regime applies. That is EU-driven, and post-exit we will continue, at the point at which we leave—
Order. I am sorry Mr Feeney, but I have to suspend the sitting. The expectation is that there will be two votes. If there are, we will resume at 3.25 pm. If there is only one, we will resume at 3.15 pm.
We were sort of in the middle of a response to Ms Antoniazzi. I am not sure whether you got the answer you required or whether you would like to pick the question up again.
If we have a transition period when we leave, our expectation is that the same standards will continue to apply and we will mirror those arrangements with the European Union for the length of the transition period. If we leave the European Union without a deal, the withdrawal Act in essence rolls existing EU regulations into UK legislation, so the standards will be the same on day one whether we leave the European Union with a transition period or with no deal. If there were any changes to those standards, clearly those would be made on the basis of science and evidence, and we would put our recommendations and advice to Ministers accordingly.
I cover England, Wales and Northern Ireland—the Food Standards Agency covers three of the four countries, and obviously we have a close working relationship with colleagues in Food Standards Scotland. Indeed, we spent two days up there last week working with colleagues from Food Standards Scotland. Food safety is a devolved issue. We are developing arrangements whereby the science and evidence is considered by what we call a regulatory forum, in which all four countries are represented and, as far as possible, we come to a four-country conclusion. All the evidence shows that that is what consumers would prefer, and that is what industry would prefer as well, obviously.
The agency’s charging regime operates a sliding scale of discount. That is the area where we have most impact on small abattoirs. The charges are based on hourly usage of meat hygiene inspectors or official veterinarians. We have a sliding scale of discount where the smaller abattoirs are discounted by up to 80%. I do not think there is anything specific in the Bill that would impact on that particular area, but that is our main interaction with small abattoirs and that is the area that we are continuing to work on with stakeholders.
Q If there is a drive for more farmers’ co-operatives and a greater focus on, say, regional, bespoke agricultural support to reflect agricultural practices and types—or if that is a by-product of the Bill—that should present an opportunity for the agency to have the dynamic to think in a more creative way about how it could support the growth of food of local provenance and its movement from field to plate in a local setting, adding value to a product of which we are seeking to maintain our production levels and volumes. Would you relish the opportunity to help proactively to facilitate that from the regulatory side?
Certainly. We know from our research that consumers are particularly interested in that area, so there is a market opportunity there and we are there to ensure the safety and the provenance. When we use our strapline of “Food We Can Trust”, it is not just a safety issue; it is about authenticity as well.
We shall now hear oral evidence from the National Farmers Union Cymru and the Farmers’ Union of Wales. We have until 5 o’clock, although we might not take that long. Gentlemen, starting with Dr Fenwick, will you introduce yourselves for the record?
Q Schedule 3 is substantially different from other parts of the Bill relating to England. How do you think the Welsh Assembly did it and what hints can you give us in England to strengthen some of the different issues that we think need to be strengthened in the Bill?
First, I apologise for the fact that I have not spent days reading the Bill. We have our own pertinent issues going on in Wales, so we are very much catching up with the Bill. There are obvious areas where there are differences such as WTO, which might give rise to some concerns. It is certainly a concern for Scotland, and an understandable one. When it comes to what is going on in Wales at the moment, one of our key concerns relates to the similarities between the area in relation to farm support and the transition to public goods payments, which is effectively a cut-and-paste of what is in the same relevant English section. That cut-and-paste from the Bill has happened while Wales is still in the middle of a consultation process about the future of our own payments system, and yet it has been published in the Bill with the approval of the Welsh Government. I apologise for not being completely fluent as far as the detailed parts of the Bill are concerned.
There are some key changes and key differences in the English part of the Bill. We are part of a supply chain that employs nearly 20% of people in Wales. Food and farming is a £7 billion industry. It is absolutely vital that those supply chains are efficient and work well, so we support this part and are pleased to have it. Far be it from me to try to influence or advise you on English policy, but we are pleased to see this part in the Welsh part.
Dr Drew asked how the Welsh Government achieved this. We have been told that they worked closely with DEFRA throughout the summer on the provisions with respect to Wales. I think the differences between England and Wales are fairly modest. The biggest or perhaps the most apparent is the one on page 30 of the Bill, which gives Welsh Ministers financial assistance in connection with some designated purposes such as supporting businesses or communities in rural areas. That is one that some of my colleagues in England have looked at with a little envy, perhaps, but the differences are fairly modest. Because the powers are broadly drafted, it will fall to how the Welsh Government choose to utilise those powers following the consultation that is currently taking place.
Q Are you expecting the same payment arrangements? Whatever Administration is in power in Wales, you would expect them to keep to the agreement that the money is secure, certainly for this Parliament and, one presumes, for the seven years after that.
It certainly appears to be the case that there will be great similarities in what happens in England and Wales under current proposals. They will stand in stark contrast to what is going on regarding our main competitors in other countries and Scotland.
Hugely. They are untried, untested and un-modelled. We have not had an impact assessment. From a legal point of view, I have grave concerns that they may contravene WTO rules. It was concerning to hear our own Cabinet Secretary—last week, I believe—read her response to a written question from the shadow agricultural spokesman for the Conservatives, Andrew R. T. Davies, in which she said that it was not appropriate to inquire whether what was being proposed is legal or not for the World Trade Organisation. That is a grave concern and we are well aware of the sort of problems that can crop up when it comes to the WTO. It is going on with regards to the USA, China and Europe at the moment, including with regard to agricultural goods.
Q As a point of clarity, agriculture policy is devolved, so perhaps I can clear up the mystery as to how the Welsh Government did it. They simply asked us to include a schedule in the Bill. Northern Ireland did the same and Scotland was the only part of the UK not to. There was no lobbying exercise or debate. It was a request that was duly accommodated.
I want to probe this point about the WTO. What is it in particular that concerns you? We obviously have an amber box allocation in which we could do market-distorting support if we wanted to, and it is largely accepted that the proposals would be green box. Just explain your concern about the WTO.
Specifically, annex 2 of the agreement on agriculture sets out strict rules in relation to “Payments under environmental programmes”, which prohibit payments that are over and above costs incurred and income forgone. That is an explicit disallowance of such payments, superficially at least. I am not a barrister or a lawyer, but it certainly seems fairly black and white. That is a grave concern given that we have asked for clarification and have not received it as explicitly as we might have liked.
I do not want to imply that it is not legal, but there is an ambiguity around it— payment for public goods is effectively environmental payments, which is what annex 2, paragraph 12 of the agreement on agriculture deals with. It raises concerns that, even if it was legal, it could be used as a vehicle for other countries spuriously to raise barriers to trade and so on. That could trigger a lengthy dispute that goes on for years and has adverse impacts on us. We know from experience that countries tend to use such tools where they become available.
A major part of the support for public goods is dependent on moving in that direction in terms of the boxes. That has never been done by any other country before and we are obviously concerned. We need to see some proof that that has been properly researched and is achievable.
Q Just a second point on the issue of fairness in the supply chain. Obviously the premise behind the Bill, which the Welsh Government seem to have also adopted through the schedule, is that we should, in the long term, have the objective to move away from an arbitrary, area-based subsidy payment and instead correct the causes of low profitability in farming by strengthening our position in the supply chain. Could you give us your thoughts on that section of the Bill?
Obviously we are very keen to see a functioning marketplace. We are keen to see it moved in an orderly fashion. Dr Fenwick referred to our main competitors. Obviously, Europe is a fairly major competitor. It will reserve at least 70% of its budget into direct payments. We are keen to maintain some form of direct payments in Wales because that will allow us to invest in the environment and give us the confidence to invest in productivity and resilience schemes.
We need a balance and to have the opportunity in what is a very changeable marketplace at the present time. We have a great deal of uncertainty and believe there is a need for stability. When we have a functioning marketplace that pays a fair price for what we produce, we are very keen to take advantage of it but, at present, we are some distance from that.
Anything that improves the supply chain has to be welcomed and there are certainly elements of the Bill, from that point of view, that we absolutely welcome, including issues such as farmers working in co-operation. That is a separate issue to the issue of support, which is a grave concern given that a shift even over what superficially appears to be a lengthy period of seven years could effectively just slow down something that has a huge adverse impact, not just for farmers but for those who rely on farms.
Average incomes over the last five or six years for Welsh farms would be maybe £24,000, and yet those farms have turnovers of around £80,000 or £90,000. That money is effectively going out to local businesses that are not themselves farmers but which are reliant on the agriculture supply chain. We have said for the past two years that any such radical changes to agricultural policy should be investigated thoroughly in terms of their impact on the wider, broader and longer supply chains. We live in areas where up to 28% of the working population is employed in agriculture. That is not the number of people who are farmers; that is the number of people employed in agriculture. Any disruption could have a catastrophic impact, which is why we have argued for that impact assessment to take place.
I do not have much to add to that other than to offer the comment that it is suggested that the Rural Payments Agency could be the agency overseeing the fairness in the supply chain issue. I am not sure whether NFU Cymru are sure that the RPA might be the best placed agency to do that. I also make the point that the existing principles around exempting producer organisations from competition law need to be rolled forward as well.
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.
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.
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.
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?
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.
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.
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.
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?
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.
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.
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?
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.
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.
Q We know about the differences between Ulster and the Republic, but there are places where farmers farm on both sides of the English-Welsh border. If there is a different system, what problems could that present?
I do not think that those problems have to be insurmountably difficult. We have different regimes for TB cattle controls, which can sometimes cause problems. There are cross-border holdings, but the England-Wales border is pretty well integrated in terms of farms, especially compared with the Scotland-England border. We have had different arrangements, which does cause problems from time to time—farmers on the border often face a delay in receiving their payments—but if the Governments of England and Wales work together more closely, I think a solution can be found. It does not have to be a problem; it just requires the political will to work closely together.
As Huw pointed out, we already have different systems—very different, in many respects. That has been the case since 2005. What we see as the prime problem is not the difference between the systems, but—I am afraid to say—the implementation of the system on the English side. Our members who have land in England invariably face delayed payments because of delays in the Rural Payments Agency sending data to the Welsh payment agency.
Q The CAP payments operate to a seven-year cycle. Could you share your thoughts on the suggestion that future payments might be tied to the Westminster budgetary cycle? If farmers are lucky, that might be three to five years, but the Government might change and the money flow might stall as a result. Can you tell us about your concerns on that issue and set out your thoughts on what sort of mechanism might be used to resolve it?
Obviously, we need a long-term, multi-annual framework to deliver support, because farming is not a short-term business. For instance, sheep that are going to the tup now will be sold in a post-Brexit marketplace. That is very short-term. We plan in generations, not years, so the longer it can be and the more robust model we can have to allow that would be useful. We are not entirely clear on any solution, because we recognise that future Governments are not bound by the previous Government, but that is a real issue for farm support going forward, because it is a long-term business.
If I may, Mr Thomas and Dr Fenwick, I will just pick you up by saying that there are not that many cross-border issues. Given that Brecon and Radnorshire share 65 miles of Offa’s Dyke, there is a lot of cross-border and I hear of great difficulties that arise on both sides of the border, with both systems, so I would not necessarily say that it is all one way.
I am afraid to say that, on an annual basis, in terms of the payments, it is routinely the RPA that fails to provide data to the Welsh payment agency and that causes delay. Wales has an exemplary record when it comes to payments. It releases about 95% of payments on
There is an issue with cross-border farms but what I was saying was that such issues are not insurmountable with a political will to get over them. Yes, there are farmers—hundreds of farmers—on the border who suffer every year from delayed payments, simply because they have one foot in England and one foot in Wales, but given the political will, I think these problems could be solved. As Nick has said, the Welsh Government have a good record when it comes to paying promptly and on time. Often the problems will lie with transferring the data from the English side.
The Welsh consultation came out in early July and then the Bill came out in mid-September, so their publication was not synchronised. However, it is quite obvious that they are different sides of the same coin. Obviously, a consultation is predicated on a piece of legislation that has been put through the UK Parliament, as can be done. The Welsh Government have expressed a desire to provide specifically Welsh legislation in due course for a Welsh agricultural Bill, so they may well revisit some of these provisions.
What we were anxious to see was some certainty and continuity at quite a volatile and unstable time. In that regard, at least we have a starting point for a discussion around what shape future agricultural policy should take in Wales, and we are starting from the fact that we have a lot of concerns about some of the content.
I do not think we took a view. I do not think we had a member discussion about how people felt about that. There was a lot of anticipation—this consultation was long anticipated. We have done an extensive member engagement exercise over the last few months. We are coming to the end of that process and we will be putting in a comprehensive response to the consultation.
Thank you, Sir Roger. Perhaps I can have slightly more freedom, being president. I regularly sit round a table with the presidents of Ulster, Scotland and England. In Wales we are very keen to see the best policy being copied or used, whichever country it comes from. We need to ensure that that fits the bill for the needs of Wales, which are unique and rather special. We need a bit of flex within a UK framework.
It is important for me to say that we were extremely disappointed. As has been made clear, we are opposed to what is proposed in England and Wales. It is untried and untested, and there are big questions about its economic viability and impacts, so naturally, it was a grave concern. The Minister is aware of our concerns; we have discussed them on many occasions. We had hoped that Wales would do what it has done in the past, which is to undertake detailed modelling and work out what is best for our rural economies, rather than simply follow England’s lead.
Another way of asking the same question is: how would you have felt if the Welsh Government had declined to take part and had not asked for a schedule to be included in the Bill? How do you think that would that have gone downQ ?
That is the position that Scotland finds itself in. It is a difficult position, because it does not have anything to consult on, to discuss with its members or to try to formulate a policy from. It is a bit invidious, I suppose. It is quite aligned with DEFRA. We have our reservations about what is proposed, but we need to move forward somehow.
I hope that the consultation that the Welsh Government are undertaking is a genuine consultation where all options will be on the table and where they will be prepared to listen, because our members are concerned about several things contained in the document. We are working closely with our members and gathering a view on it.
Q We heard from an earlier witness that 40% of UK lamb is exported to the continent, but we also heard that domestic consumption of lamb is reducing. I should declare an interest: I am a Welshman. After north Dorset lamb, I think that Welsh lamb is the second-best available to consumers—I want to ensure that that is on the record.
What opportunity, if any, do you think the Bill presents in terms of its ambition to support food production and to allow farmers to come together to better promote their produce in a more patriotic way, free of the EU guidelines that have often acted as a dampener on the patriotic promotion of provenance? What scope is there in the Bill and in the envisaged regime for supporting innovation and productivity?
You are right to pick up on product innovation, which has been sadly lacking in the lamb sector, because they consider it easier to add cost than value in those things. That is something that we have to adapt to with the modern consumer, because we are seeing year-on-year reductions. We accept that challenge and we need to move forward with it. There are some good things in the Bill about producer organisations. Obviously, we would like to see a stronger focus on product development and innovation and how we can support that.
I agree entirely. Those elements of the Bill have to be welcomed, and we certainly do welcome them. The trouble is that, while that is happening, there is a risk that another Department or another part of Government is opening the floodgates to cheap imports. Effectively, there are elements of the Bill that tighten up our own production standards and so on, but meanwhile we are opening the door to cheap imports. It is fine for the middle classes who decide to buy their organic burgers or whatever they buy, but I am afraid that most consumers shop in less salubrious supermarkets. They buy quality food because we are in the EU, but once we have trade deals with other countries, there is a big question mark in terms of the cost of production in other countries and the degree to which, for the bulk of food, it could undermine our market.
Q Quite a lot of Wales is covered by a national park designation, so we have the national park, the Welsh Assembly and Westminster and the Department for Environment, Food and Rural Affairs. Do you see the national parks as being a useful string to the bow in terms of fostering and supporting agriculture, or are they a potential irritant? [Interruption.] I can tell by the whispering that I have hit a chord.
I am adjoined with the military base, so we are just outside it. I think there is a need for best practice, which is in place in some national parks, to be replicated throughout Wales, because they must be a support for the communities in which they are based rather than a hindrance. There is a real need to get policy aligned throughout Wales and considerable improvement could be made in some of the national parks. I will not comment much further than that.
Q I want to ask specifically about the Bill and the difference between the schedule for Wales and the main Bill, which, when you boil it down, is paragraphs 1(2)(a) and 1(2)(c) of schedule 3. I do not need anyone to look it up—I can explain where it is. Broadly speaking, all that does is give Wales the power to support businesses or communities in rural areas and also to support persons involved in anything from the processing, marketing, or distribution of products derived from agricultural activity. Coming back to Dr Fenwick’s point, are you pleased with these additions or not? You talked about the importance of an active farmer test and making sure that the money goes to farmers, but the additional measures in the Welsh schedule open up the possibility to give money to post offices or any other type of rural community business. Do you support that or not?
If that is the case, that is welcome. Those pieces that effectively reflect the English text appear to be, as John described it, one-dimensional in terms of facilitating a movement from the current system to a payment for public goods system. That is the main focus of the Welsh proposals that are currently being consulted on and, indeed, the English proposals that are now in the Bill. Obviously, we have concerns about that, because effectively it is revolution as opposed to evolution. It is not an evolution if it is a transition to something that is, effectively, revolutionary and has never been done before. As I say, I am not a barrister or a lawyer, but there are big questions about how much that ties the Welsh Government down, if they were to decide to take a different course and perhaps reflect what is happening at an EU level or what is happening in Scotland or Northern Ireland.
Q Have the Welsh Government given you an indication of how they intend to use those additional powers? It could mean giving direct payments to farmers, or giving grants and money to people who make jam or cider or other novelty food process products.
In fairness to the Welsh Government, their focus is quite rightly on their consultation at the moment. That is the best indication we have of what they would like to do in Wales, which has an element of that type of direct support for businesses or economic resilience, as they call it. Clearly, the main focus is on moving away from support for farmers to a payment for public goods. On that issue I would highlight a major concern that we have, which is that Wales currently has a cap on its payments. As a union, we have supported capping agricultural payments since 2007, since the CAP Health Check.
At the moment it does not appear that capping is going to feature in England or Wales as regards public goods payments, whereas on the continent in the EU they are looking at bringing in lower caps to try and push money down to family farms. Our concern is that not having capping will move money away from family farms to private individuals, large companies, charities and so on, with no cap on how much money those businesses or charities—or whatever they are—can receive. We believe that it is absolutely the wrong direction of travel.
Q It is an interesting point. The additions in the Welsh schedule could be read both ways. If you are worried about an active farmer test, then arguably you would not want that.
They can be. The powers throughout the Bill are pretty broad, enabling powers. There is always an element of risk with such powers as to how they are utilised by Ministers. A lot of policy discretions are conferred upon Ministers, including financial discretions. The devil will be in the detail, as always, but there is not much detail in the Bill. It has to be read in conjunction with the consultation and the further policy statements from the Welsh Government next year, as well as the direction of travel they are wishing to take. It is difficult to say at the moment, but I do take your point.
IQ have two questions, if I may. You have already mentioned the powers granted in the Bill to UK Ministers. Do you have any thoughts about the impacts that some of these powers might have on Welsh Government, and their ability to formulate agricultural policy? Are there any aspects that you welcome? Are there any aspects about which you have concerns?
I think the part 7 clause 26 powers around the WTO, for example, could be concerning, because potentially they will artificially constrain the type and level of support that a devolved Administration might be able to pay because of considerations around the WTO. That may be one issue where there is potentially something that risks becoming contestable or contested in the future between the UK and the devolved Administrations.
Obviously a UK framework is vital, not by imposition but by agreement. We need to get to the dispute resolution part of that, and clearly work out how those issues might be resolved. At the present time there is not that much clarity.
It is a proposal to take powers into the centre. It is not the common consent common framework that we, as NFU Cymru, always envisaged and espoused. We always said that we recognised the need for common frameworks, and that limits needed to be set on certain things, but they need to be decided by common consent, not imposed from the centre. With respect to the WTO provisions in part 7, the UK Government and the devolved Governments need to get together and agree between them, rather than having this quite heavy-handed approach that involves proposing to take these powers into the centre, and accepting the Secretary of State for DEFRA as the ultimate arbiter of who gets to do what.
Q In that sense, are you surprised that there is not more in the Bill? Is there something that you would have liked to accompany the Bill in terms of progress made on these common frameworks and how they might be agreed upon in future? What strikes me is that not only will you have the initial discussion about how the original of the first new frameworks will operate, but there will inevitably be a need for these things to be renegotiated at a future date. Is it something that you would have liked to have seen?
I think there was an expectation that there may be more in the Bill about common frameworks and how they might work. There was agreement in the spring around 24 identified areas that would require some sort of common framework, whether a statutory common framework or a memorandum of understanding between Governments.
I do not feel that we have moved forward enormously from that point. We need to get these things in place if we are to preserve the integrity of the UK single market and ensure that we are not distorting between the home nations. I was perhaps a little bit surprised that there was not provision. We perhaps had not moved forward a little bit from the position in the spring around the 24 identified areas.
I agree entirely. We absolutely need those mechanisms and systems to arbitrate, to work out what is right and wrong. That is something that we have argued for the past two years. We certainly welcomed the announcement in recent weeks that there will be a review of how money is allocated between the devolved nations, and that is absolutely needed. It is a contentious issue—there is no denying that—but it had to be addressed.
We also need almost a parallel process to look at how countries agree on frameworks—whether it is through memorandums of understanding, rather than nations feeling or knowing that things are being imposed on them, against the spirit of devolution.
Q The Minister might remember my raising this question last week. Recently, a review was announced into the way in which payments will be allocated across the four countries of the United Kingdom. Would it be fair for that to include an element that looks at the future frameworks and how any disputes are arbitrated, and when reallocations come along in several years’ time, how they then come to be decided as well?
It may be opportune to extend the remit of that Committee. We always hope it goes the way that we would like it to go. It certainly needs looking into because we worked for so many years with a council of Ministers. We now have a void, a vacuum, where there is potentially a free-for-all, and countries or nations could move in very different directions and cause market distortions internally, without anything to do with WTO. There could be internal market distortions that are not in anyone’s interest.
Q I represent a Cumbrian constituency that is made up of English Lake district upland farms and coastal lowland farms. My sheep, beef and dairy farmers inform me that they receive about £70 for a lamb, £50 for a sheep and just 90p for wool per head and 29p for a litre of milk. Is that enough? What assessment has been made of what a fair price is? Does the Bill enable farmers, through innovation, through the reduction of supply chain, through enabling better local markets, to receive a fair price for their public goods?
There could be more in the Bill in terms of how we get a fairer share of the retail price, because we are at some historical lows, once again. Milk is slightly better than what it has been, but we are close to breaking even in nearly all of those commodities.
We need to take responsibility as well, mind, to become more efficient. The biggest factor is within my own farm gate; we do not shirk that responsibility, but we need to find ways in the Bill to ensure that other people are operating to similar standards. If we compete on a level playing field, we have an opportunity to do that. We have a higher welfare aspect and environmental aspect and that is a cost that has to be taken into account.
There are certainly powers within the Bill that would potentially see the strengthening of the farmer’s position within the supply chain. At NFU, we have been calling for more transparency around price reporting for some time.
Because the powers as drafted are so broad, I suppose it ultimately comes down to how they are used. There is scope to do some good here, but we need to ensure that Ministers go away and use the powers that they are granted to do that good for the supply chain. As John said, we do not know what sort of situation we will face post Brexit but we could face the very difficult situation of imports coming in produced to lower standards than in our domestic production, further undermining our prices and marketplace returns.
It is worth noting that the current system is the latest incarnation of a system introduced after the war, which has reduced household expenditure on food by half since the 1950s. That has freed up money to allow people to go on holiday and what not. People spend less of their income on food now than they had to over the years. That is the result of a system that is specifically aimed at giving people plentiful, safe food at affordable prices. I am afraid to say that we now face a situation where that direct link between farming and food production is being removed. It is less direct than it was, obviously, but it is proposed that it be removed, and a quid pro quo is needed to restore the cheap food that we have managed to secure over the years.
In terms of many supply chains, yes, you can make the most of middle-class markets and local hotels and we see a lot of great innovation going on with farms—I am sure you see the same in the Lake district—but the fact of the matter is that the vast majority of our produce goes on to what is effectively a global market or an EU market, and we are competing against people from across the EU, across the UK and so on, as regards quality, but a bulk product that is going into our supermarkets in this country. That needs to be taken account of—that we are competing against other people.
If, as some people say, agricultural support is so bad for agriculture and holds us back so much—I agree with John that elements of that are true—one would question why, if it is that bad, it is regarded by the World Trade Organisation as something that should not be allowed and should have limits on it. That would suggest that the WTO has missed the point, but I do not think that that is the case; I think some of us are missing the point.
Q The Bill has already been characterised today as a scaffold rather than a building. It gives Ministers very wide discretionary powers, and most of the effect will be given by regulation. Yet there is very little statutory expectation of consultation. Would you feel more comfortable if there were more statutory consultation in the Bill?
Clearly, we are reading the Agriculture Bill in conjunction with the “Brexit and our land” consultation that is taking place in Wales. They are not synchronous, because one came out before the other, but you can see where the direction of travel has been set.
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.
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.
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?
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.
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.
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.
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.
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?
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.
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?
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.
Q Another quick question. We have spoken a lot about what is in the Bill today. Is there anything you would like to see that is not there? I have in mind the meat levy. There was some discussion in Wales about the possibility of including that in the Bill. Do you have any views on that particular omission and is there anything else you would like to see in the Bill?
Certainly, there has been a lot of discussion about how this could have been an opportunity to take account of the fact that Wales is currently losing money through the red meat levy legislation. We appreciate that some moves have been made to address and correct that, but it is far from ideal. We lost hundreds and hundreds of thousands of pounds when a single slaughterhouse closed a few years ago, and that hamstrung our meat marketing body hugely in terms of how it could market its meat, whether in England or on the continent. So it absolutely needs addressing. Certainly an opportunity has been lost there.
In terms of other elements, I am afraid I am more concerned about what is in it than what could have been in it.
We want to see agriculture in the Agriculture Bill. We want to see a real, strong focus on the active farmer and how that comes through in terms of a sufficient degree of self-sufficiency. That would be useful. We see food security as a public good or a public right. That is vital. So there are a number of issues there. We want a safe and traceable domestic food supply. We want equal standards for imports and a level playing field, so that needs to be tightened up. There is an opportunity around public procurement. There is a real, strong opportunity around better labelling. It is vital that consumers are properly informed about their purchasing decisions. So there are a number of places there where we can see room for tightening and more detail. It is broad enough. We just need to focus in on that.
Q You probably heard the talk earlier about how there could be a compounded payment in the transition period. Do you think that would work in Wales and would it be a benefit to many of our senior farmers who were looking to retire? Do you see it as a benefit or not?
We would have some concerns around that in terms of the active farmer. We do not accept that it will be the correct and proper time to transit out of direct support or a level of direct support, so obviously we would not agree with that. That option has not at the present time been flagged up strongly in the consultation, so we need to focus more on that, with the membership, but initially we would say no, we would not be supportive of that.
I am afraid I was on a train, or on a tube train maybe, when that was raised, so I did not hear the discussion around it, but I agree with John Davies that it is a concern. We would have preferred to see some proactive moves to encourage young farmers and a transition from the older generation to the younger generation, with greater succession, etc., rather than moves which potentially leave vacuums, but are done for all the wrong reasons rather than being something that actually ensures that there is an incoming generation that probably is more deserving of any moneys.
Q Following on from Mr Davies’s question—he is good at taking mine—what impact will the transition period in the Bill have on farmers in Wales, directly? Will there be any?
It will have quite a major impact if transition is too quick. We have the opportunity, under the Bill, to transition over a seven-year period. I think the key thing is where we transition to. That is all part of the consultation at the present time. Until that is finalised and until we see the clear path there—I don’t mind transitioning more quickly to something that is desirable, but if not, obviously I want to take as long as possible. We have a seven-year plan at present, with the option to extend, and it is important that if things change we take the opportunity to pause and reflect, to see whether that is workable and whether the money has been well spent or not. There are flexibilities in the Bill.
I am afraid we do not know what we are transitioning to in terms of its economic impact on individual businesses, on the supply chain, on rural jobs, and some urban jobs—indeed, in slaughterhouses and places like that. As John said, if it is transitioning potentially to something negative, we want to take as long as possible. You don’t want to transition away from a car to a bicycle; and we really do not know where we are going at the moment. It is extremely concerning.
What is being proposed in Wales, potentially: it will just be a slower death, maybe, for some communities if our worst concerns are realised. What we would say is that before making any suggestion of such a move, that detailed assessment has to be undertaken. It is no good trying to stop halfway through when you have lost 20% of your rural businesses and unemployment in rural areas is on the up. You simply need that impact assessment.
I do not have much to add to the comments made by my colleagues there, but yes, a transition needs to be extremely carefully managed; otherwise, you risk doing some pretty significant collateral damage to the industry.
I did want to put in a final word in regard to the transition period. We have a huge concern which relates to the fact that in Wales contracts are proposed for individual farmers. Our experience with regard to the administrative burden that that represents for the authorities does not fill us with any great hope that it would work well. We are talking about potentially trying to get in place tens of thousands of contracts in a short period of 18 months or two years. It has taken us seven years to get 3,700 complex contracts in place, yet we are now talking about potentially getting tens of thousands in a period of years, and introducing a system that would be far more burdensome for our administrators than the one we currently have.
Thank you very much for coming. Thank you for your evidence. Have a safe journey home. We are grateful to you for the answers that you have given to all members of the Committee.
AB01 John Greenshields
AB02 Sophie Hyde
AB03 Kathy Keeley
AB04 Sustainable Food Trust
AB05 Arla Foods UK
AB06 Countryside Alliance
AB07 Dawn Grocock
AB09 Shaun Leavey OBE FRAgS
AB10 Tenant Farmers Association
AB11 British Veterinary Association (BVA)
AB12 Dairy UK
AB13 Mrs Catriona Cook MBE
AB14 The Trails Trust (TTT)
AB15 Mid & West Berks Local Access Forum
AB17 Anglian Water
AB18 The Landworkers Alliance
AB19 NFU Scotland