Q 174 For decades, the common agricultural policy, with all its prescriptive rules, has applied to every part of the UK. As we leave, each part of the UK will have the freedom to develop a policy that is right for it. Could you each say what it is about the common agricultural policy that you dislike the most, what you most want to change and what type of system you think is appropriate for the modern world?
I am happy to start. I can quote Mr Eustice back at him and say that the CAP has largely “incentivised inertia”—a phrase he has used many times. We agree. The bluntness of area-based payments has not driven innovation or productivity, or indeed delivered on environmental challenges.
In that respect, we see the departure from the EU and from the CAP as an opportunity to develop bespoke agricultural policy tailored to the individual needs of the devolved Administrations. We have some capacity for that already, in the fact that we have four different settlements of pillar 1 and pillar 2 under the CAP, but we are nevertheless constrained by an awful lot of bureaucracy and by the rules and regulations around mapping, inspections, penalties and so on.
It is vital for us to take the opportunity and for Scotland to be allowed, under the devolved nature of agricultural policy development and delivery, to develop its own suite of schemes and measures that fit the needs and profile of Scottish agriculture, which is significantly different from that of the rest of the UK and, in particular, England. That is absolutely right and, therefore, this provides us with an opportunity.
The Scottish Government position, as I am sure all Committee members will know, has not been in favour of Brexit. We believe that continued membership of the single market and customs union is the best way forward on economic, social and environmental grounds. That includes on the common agricultural policy.
Obviously, there will be areas in the common agricultural policy that are not necessarily to our liking. Work has been under way in Scotland, under the “Stability and Simplicity” consultation, to identify, in the short term, any areas where some improvement could be made to the common agricultural policy. That might be around issues such as mapping and penalties, as Mr Hall has mentioned. We are working, through a farming and food production future policy group, to look at longer-term policy in Scotland.
I have a couple of points from Quality Meat Scotland. This gives us an opportunity to look outside our normal markets. Currently, 69% of Scottish red meat is being sold in the rest of the UK, outside of Scotland, and 10% goes internationally. It gives us an opportunity to continue to build on that. To do that, protection of our protected geographical indicators is essential.
In addition, we need to have no reduction of standards of any other imports coming into the country, to make sure that we have a level playing field for our food producers. We would like to see transparency of price reporting throughout the supply chain, to enable us to make better decisions across that area. As you will perhaps hear later from me, we have been working closely with the Agriculture and Horticulture Development Board and Hybu Cig Cymru on levy repatriation work. We think there is a lot of work that we could build on across the three nations, if not the four nations.
Q When the current design of the CAP was brought in, I remember a lot of concern in Scotland, including from NFU Scotland, farmers and the Government, that area-based payments did not work in such a landscape—that the diversity between the lowlands and the moorlands made it highly problematic for an area-based-only payment to work. Mr Burgess, are you saying that, although you might try to simplify the legacy CAP scheme around the edges, you still think that a basic CAP subsidy on land tenure is the right approach?
The Scottish Government’s approach through the “Stability and Simplicity” consultation is that, for the period from now until 2024, we will essentially retain the features of the current CAP system with some scope for simplification, improvement and piloting. Beyond that, we are open to looking at a more radical reform of the policy. That is the approach we are taking through our future policy group, which includes representatives from the farming industry, food production and environmental groups, so that is the forum for considering the longer-term changes in Scotland. Whether it retains area-based payments or moves to some other system, or a combination of the two, remains to be seen.
I support that, in the sense that area-based payments are far too blunt and do not deliver the objectives that we all aspire to, not only in supporting agricultural incomes and productivity but in addressing challenges such as climate change, biodiversity and so on. The sooner we move to an approach that is more action- based than area-based, the better. However, we are in alignment with the Scottish Government in the sense that from 2021 onwards, we will be venturing into uncharted territory in many ways, given the changes in our operating environment, trading issues and other areas. The ability to retain direct income support that offers some stability in the interim is key. We are absolutely in alignment about change, but the key questions are about the pace of that change and how we manage it.
We note with interest what is happening in England and the Bill’s proposals for phasing out direct support. Of course, that would be inappropriate and inapplicable in a Scottish context, so we need the devolved capacity to do things differently. The direction of travel is very much the same and the landing space is probably the same as well, but we have to consider the pace of that change and recognise the challenges and issues that are particularly pertinent to Scottish agriculture.
Q We have set out in this Bill a seven-year transition for England, from 2021 to 2028. I suppose it is possible that the Scottish Government might say, “We will keep the current system with a few minor simplifications until 2024”, but then ditch it overnight and go straight in one leap to a new system. Do you envisage a sharper transition than seven years, or have the Scottish Government made clear that they will definitely not do things faster than seven years?
No, I do not think so. The Agriculture (Retained EU Law and Data) (Scotland) Bill, which implements the stability and simplicity approach for the period between now and 2024, is currently before the Scottish Parliament. I have mentioned the future policy group, which aims to bring forward proposals by the summer of this year. That is the point when we will begin looking at the transition—things that may be piloted between now and 2024—so we are definitely not looking at a sharp cliff-edge transition in 2024.
Hopefully within that time period, we will gain a clearer understanding of our trading regime with Europe and the rest of the world. At the moment, it is frankly quite hard to work out what we should be doing with sectors such as sheepmeat, given that we do not know what the situation with our largest export markets will be.
A number of interests in Scotland have suggested that there should be a sunset clause in the piece of legislation that Mr Burgess has referred to, so that it comes to a definitive end in 2024. However, we would not agree with that, because it would potentially create a cliff edge where we would go off the stability elements that we have talked about and into the unknown. We want to avoid that; we need to be able to adjust to and reflect on the circumstances of the time, and it is right that the Scottish Government have the ability to do so under the legislation that is going through the Scottish Parliament.
Good afternoon. I think Mr Clarke alluded to this point briefly earlier, but I will ask all of you, as I have asked most of the witnesses: what effect do you think allowing imports of food produced to lower environmental welfare and health standards will have on Scottish consumers and producers and, most of all, on the Scottish environmentQ ?
It would be a disaster for the Scottish red meat industry. The Scots were pioneers of quality assurance. Scotland was the first country in the world to set up whole of life, whole of supply chain quality assurance, and that gives a unique selling point to our world-class products of Scotch beef PGI, Scotch lamb PGI and specially selected pork. For any diluted product to come to market and be able to compete directly—as far as I am concerned, that has no place on the supermarket shelves.
It is also worth adding that the produce of Scotland—commodities is the wrong word—is not about, “Stack it high, sell it low.” We are not going to compete on world markets. We are not a volume producer. We are based on the authenticity and the provenance of our product, and the welfare standards and environmental standards behind that. If we expose Scottish agriculture to cheaper imports of substandard production methods and so on, we will blow large sections of Scottish agriculture out of the water. That will have significant impacts on the agricultural industry itself, but also, more importantly, on the wider issues around rural communities and the environment and habitats that Scottish agriculture underpins with its extensive grazing systems and so on.
Q Paragraph 21 of the written evidence from NFU Scotland touches on the complicated question of the governance of common frameworks. We had the same discussion with representatives from Wales this morning. How do you see a way forward on that? It seems that divergence is inevitable at some point, and yet it needs to be managed.
It is quite clear, in many ways, in the sense that the development and delivery of agricultural schemes and policy, in terms of what outcomes we want to achieve from managing our land in an agricultural sense, should absolutely be devolved, and is today. However, when you are looking at the operation of the internal UK market, we need to be able to operate to the same rules in a very transparent and open way across the United Kingdom.
Our worry and concern is that a lot of the discussions from outside of the Government appear to be about common frameworks, but we are unsighted on that. We are not seeing what common frameworks might look like. More important to me is the governance of those common frameworks going forward. Like or loathe the European Commission, at least it acted as some sort of referee when it came to compliance with regulation, standards and so on across member states and within the UK. If we are going to preserve the internal UK market, as Alan Clarke has pointed out is so important to Scottish agriculture, we need to ensure that we are all playing to the same rulebook on a whole range of issues. We are unsighted on an awful lot of that. We are still trying to flush out of Governments—plural—the actions and discussions that are going on.
I am sorry to interrupt the hon. Lady. We are halfway through and a number of Members want to ask questions, so I would be grateful if you could be short and precise.
If anything, we would like the pace to be a wee bit quicker. As I said earlier, we recognise that we are all venturing into an unknown world, in terms of the operating environment in which we will find ourselves, so it is probably more pragmatic not to give ourselves distinct deadlines. I mentioned the proposal for a sunset clause in the current legislation, which might suggest a deadline for new policy to be put in place for the longer term. We do not want to be a hostage to fortune on that. Certain sectors of Scottish agriculture might find it particularly bumpy in 2021, 2022 and possibly 2023. We want to see change happen sooner rather than later, but let us not push ourselves into a situation where we must accept change but that change does not take us in the right direction.
Q Correct me if I am wrong, but my understanding is that the Scottish Government still maintain a headage payment system, particularly for the beef sector. Would that sort of measure remain on the table as you design a future agricultural policy?
We have had a beef calf payment since 2005 under the CAP. There are strict rules on how much money can be spent on that. It is about how important the suckler herd is to the socioeconomic fabric of rural Scotland. It certainly has not driven production, because suckler cow numbers have continued to decline over that period. If anything, it has slowed the decline down, so I would not call it a production support. It recognises the additional cost of suckler production in our hills, in particular, and therefore it is a very important piece of the policy toolkit. It enables the retention of suckler beef in Scotland, and that has significant implications further downstream and into the supply chain, as I am sure Alan Clarke would agree.
We do not have much time, so could you let us know quickly the main areas you have concerns with in the Bill? You have expressed some of them—governance frameworks is one, of course, Jonnie. One of the things that was brought up was the livestock information provision. An organisation is being set up, and this morning our Welsh counterparts expressed real concern about that. They said that that section of the Bill rang alarm bells and raised important operational issues about whether this could indeed be overseen and directed through England, through the Agriculture and Horticulture Development Board and the Department for Environment, Food and Rural Affairs. That is a starting point, but are there are any other areas of the Bill that you have concerns aboutQ ?
In our evidence we cite a number of areas. If you look at the Scottish Bill going through the Scottish Parliament and the Bill that you are considering now, there are clear overlaps, not just on animal traceability issues but marketing standards and other things. Many of those issues are devolved, but our concern goes back to the operation of the internal UK market. It is quite right that those things are devolved, but how do we ensure that there is consistency in application of those devolved issues across the United Kingdom? If there is not consistency, there has to be at least co-ordination of those things. It is right that the capacities are devolved. It is right that the Scottish Bill is doing what it does and the UK Bill does what it does, but it is about where those things might rub together to create problems in the UK internal market. There are a number of examples in there. [Interruption.] I am not saying that it will happen, but we need to have consistency if not co-ordination across the UK.
From the Scottish Government’s perspective, the Bill is something of a curate’s egg. The provisions that we like include the red meat levy provision, which we played a large part in developing at the outset. We very much welcome that, and we would like to see a commitment from the UK Government to its swift implementation.
Other provisions in the Bill on food security and fertilisers make a great deal of sense, but we have some difficulties with others, including the livestock information provision, which has already been mentioned. Again, the concern is really about governance and the appropriate role of the Scottish, Welsh and Northern Ireland Governments.
Similarly, the organics clause to some extent recognises devolved competences, but we are concerned about the power that is given to the Secretary of State to act in devolved areas without seeking the consent of the Scottish Parliament. Other concerns of long standing from the previous Bill relate to producer organisations, the World Trade Organisation agreement on agriculture, and fair dealing in supply chains, where we have a very different view on devolved competence from DEFRA.
I will pick two, Deidre, because I am conscious of time. In relation to the LIP system that we talked about, I think there has always been a history, if there has ever been a disease breakout, that everybody has worked extremely well together and come together and shared all the information. I think it is important that that is retained and that anything that is developed in England must read across to the rest of the UK. ScotEID, again, has been leading the way on that in Scotland. There must be those links. I know the meetings happen regularly every month with the devolved associations and the developers of it, but the mechanism that George talked about is one to consider.
The second issue is levy repatriation. I have been working very closely with AHDB and HCC towards getting a scheme of operation, which can be put to Ministers, showing what the long-term solution for levy repatriation would look like. We have identified, using that scheme, the numbers involved. It would mean that every year, £1.2 million of producer levy that is currently trapped in England would come back to Scotland, and £1.1 million of Welsh levy currently trapped in England would come back to Scotland—to Wales. Apologies—Wyn will not forgive me for that one. Essentially, the scheme has been agreed by the three levy bodies. It has now gone to each of the boards, and we hope to be in a position to put that to the Ministers in a short period of time.
Behind the scenes, we have been looking at the interim solution of the ring-fenced fund—the £2 million that has been ring-fenced for the benefit of levy payers in England, Wales and Scotland. We hope to make an announcement in the next few weeks on greater working relationships between the three levy bodies. This gives us a really good opportunity. We would like to see a date put into the Agriculture Bill to say when the legislation must be passed and the scheme be in operation by. The three levy bodies are working to a date of
Q On Tuesday, we had evidence from Jake Fiennes, the general manager for conservation for the Holkham Estate. In his view, the definition of livestock in clause 1 should not be extended to game—to grouse, pheasant or venison, such as the excellent produce produced in Scotland. Do you agree with that observation, or do you think that the management of game and financial help from the taxpayer for those sorts of landscapes would be beneficial to the future of agriculture in Scotland?
First, I do not think the likes of game—pheasant, grouse and, indeed, wild deer, because we have farmed deer as well—should be governed as agricultural activity. The husbandry is not the same. They are wild animals. The habitat may be managed in their interests, but nevertheless they are not livestock that are bought, sold and managed in the same way as cattle, sheep, pigs and so on, so I do not see the benefit of that.
I do see, particularly in the Scottish context, the benefits of multiple land use in the same vicinity—the same land—such as having grouse moor management and managing wild deer populations in the interests of conservation, as much as in the interests of stalking and venison, alongside extensive grazing systems for the delivery of key habitats. That is one thing, but we will also be thinking increasingly about the preservation and restoration of our peatlands in the effort to tackle climate change. Grazing management will become a more fundamental issue—and extensive grazing management in Scotland—specifically for its public benefits and public good delivery, rather than just the production of an agricultural product.
That debate is an important one, but at this moment in time I do not view those things as agricultural activities. They can be supported through other means, because they are essentially environmental delivery mechanisms as well.
Given the broader ambitions of this Bill, and that which is going through the Scottish Parliament at the hands of the Scottish Government, how seriously do you view the potential for any checks on agricultural commerce between Scotland and Northern Ireland, in terms of how that affects crofters, farmers and processorsQ ?
Again, at the risk of repeating myself, the preservation of the internal UK market is vital to the interests of Scottish agriculture. Alan Clarke mentioned some statistics about red meat. Our most important market is the rest of the UK, but we want to grow markets beyond that. I have often referred to the spending power within the M25, where we are sitting right now, as our bread and butter. That remains key, so we are very mindful of anything that rubs against the free flow of not just finished agricultural produce, but livestock. If I were a beef producer in the Scottish borders and wanted to buy a bull from Northumberland, I would not think it a smart move to operate different animal traceability systems and have all sorts of checks and balances at Berwick. In theory, that could be the outcome if we do not get these pieces of legislation to align.
Q What I was trying to get at was the particular role of trade between Scotland and NI, and the implications of any kind of impediment to that free movement. We are not going to have that between Scotland and England, or between Scotland and Wales, but we potentially will with NI. How big a deal is that for Scottish agriculture?
I do not think it is a huge deal for produce leaving Scotland and going to Northern Ireland, but it is a very big issue for Northern Irish colleagues, who obviously want to access markets in GB—the rest of the UK. That is a real conundrum, in the sense that regulatory alignment with the EU will clearly be a vital issue on the border between Northern Ireland and the Republic. If that has implications for regulatory alignment with the rest of the UK and the EU, I can foresee lots of headaches and issues with that.
From what I see, we are moving more and more towards the potential of triangular trading agreements between ourselves, the EU and non-EU countries—for example, those in North America. There clearly has to be some sort of tension point at some level, because the UK Government have made it clear that there will not be regulatory alignment with the EU, although there will be equivalence—whatever that might mean—in order to secure deals with non-EU countries. That puts in doubt or jeopardy our potential to trade both with the EU and with other countries at the same time. That is a major concern for us.
I asked your Welsh counterparts this question this morning. Mr Hall, you talked about the transition from an area-based to an activity-based subsidy regime. There is also an outcome-based regime. I am interested in your view on the right principles that should guide us in designing a regime that has public good as its objective. Do you think we are sufficiently clear at this stage about whether farmers should be rewarded for what they do, or for what the outcomes of their work areQ ?
I think it is a very important point for the future direction of agricultural policy anywhere. I would say at the outset that blunt area payments reflect neither activity nor outcomes; they are simply a ticket to receive an income by declaring an area of land and doing some compliance. We really need to work on a system that recognises the actions that deliver an outcome; you then pay for the actions that deliver the outcomes you require. If it were exclusively about delivering outcomes, that is a very risky situation for farmers and crofters in Scotland. We probably need a combination of both systems, and we are piloting various things in Scotland—for example, an outcome-based approach to agri-environment in different parts of the country.
It is about actions on climate change and so forth. How do we encourage more efficient production systems, soil management and extensive grazing systems? That is within the gift of the farmer or crofter. What is not in their gift is the precise outcome that we get from that. We might think that we will get the right outcome, but we do not 100% know. There are lots of forces at play in agricultural land management, and the risks need to be managed carefully. The key thing is to move away from area-based payments in the first place, with actions then delivering the outcomes and objectives that you want.