FARM’s response to DEFRA consultation on Options for Reform of the
Common Agricultural Policy, 24/10/03.
Executive Summary
 No long-term vision for Food & Farming
Farmers & the public are being asked to make choices on the detail of the
proposed Reforms without knowing whether they form part of any longterm vision for UK Agriculture. If there is, will the Reforms help deliver it?
 Risk Assessment required of UK’s Food Security
An overall risk assessment setting out in broad terms how many farms of
what type and scale would be best to sustain food security should be
urgently drawn up.
 Answer the real question, ‘Why doesn’t growing food pay?’
The subsidy system past, present and future represents a market failure
and governments’ admission that farmers, the primary producers of our
food and managers of our countryside, are not able to receive prices from
the market-place that meet their costs of production. Before committing
another massive tranche of taxpayer money into farming for the
foreseeable future, the Government needs to explain honestly to the public
why it is that the type of farming they want to see sustained in the UK
doesn’t pay.
 Coming clean about ‘Cheap Food’ claims
Subsidies have been used by successive governments to claim they’re
providing ‘cheap food’ for their citizens; food is certainly cheap at the farmgate, but it is disproportionately expensive by the time it reaches the
supermarket shelf – i.e. milk, the product of careful management of
pasture and cow is sold to the processors at 15/17p a litre at present (c.
5/6p below the costs of its production) to be sold on by supermarkets at c.
60/65p a litre. With farm-gate prices below their costs of production, any
significant reduction in the amount of subsidy farmers receive will mean
bankruptcy and ruin for many.
 The majority of farmers do not want to rely on subsidies
In a survey carried out for FARM in 2002 of over 500 farmers across the
English regions: 87% said that they did not want subsidies – they simply
wanted to produce food and other agricultural outputs for the public at
prices that gave them a fair return on their costs of production.
 Government exploit poor to push ‘globalisation’ agenda
Some Government ministers have been blatantly campaigning to cut
subsidies by publicly wringing their hands over the plight of poor farmers in
the South, whilst also playing less altruistically to consumers’ self-interest.
Three ministers joined Oxfam and CAFOD in their simplistic attacks on ‘$2
dollar a day Euro cows’, whilst failing to explain why the average income
of farmers is around £10,000 despite all the alleged subsidies?
 Any New Scheme must support New Entrants
The Single Farm Payment (SFP) scheme could ossify farming, with older
farmers holding onto their land and entitlements, so reducing the area of
land available to new entrants. The National Envelope should be partly
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used to provide an allocation of entitlement to young farmers, and to build
up a reserve of entitlement for the future.
 Support Farmers, not Speculators
The SFP should not be tradeable – i.e. as were milk quotas, with even
football clubs investing in ‘milking’ (the system). SFPs should be based on
area, rather than historic payments. FARM supports the objective to break
the link between payments stimulating excessive production of particular
crops or livestock, but we are opposed to single farm payments being
based on historic subsidy received. The latter would simply consolidate the
current inequity of 20% of UK farmers receiving 80% (4% of farms across
the EU receiving 40%) of all subsidies and would reinforce the negative
public image of farmers as ‘barley baron subsidy junkies’.
 Cross-Compliance = Public Service not Subsidy
In return for the maintenance of the countryside and delivery of wider
public goods and services, farmers merit and require rewarding. This
should not be called a subsidy, but rather a real reward for delivering
genuinely needed and wanted public services.
 Overall Conflicting Objectives
The UK Government and European Commission are seeking to reconcile
conflicting objectives through the CAP Reforms, wanting an agriculture
that is competitive on international markets as far as possible without
taxpayer support, yet, which is also ‘environmentally friendly’ etc.
 Short-term Political Fudge
Without addressing the central issue of how to achieve fair farm-gate
prices for farmers, the Reforms will always be a fudge, plastering over the
cracks in the short-term.
 Public would support real action
Yet according to a recent Eurobarometer survey, the public would support
politicians taking real action to tackle the true causes of farm income
decline: only 25% of people in the survey believed the CAP to date had
been successful in defending farmers against the intermediaries,
distributors, processors and retailers they have to sell to. Indicating some
room for optimism that the general public do understand that the so-called
‘free market’ is rigged in favour of big business.
The key questions to ask of the Reforms, before we delve into the detail
are:
 Will they deliver ‘ a profitable UK farming industry’ as claimed by Mrs
Beckett?
 Will they help reform UK agriculture in line with the recommendations of
the Curry report?
 Will they help poor and deserving farmers in Developing Countries by
ending export dumping of surplus production on their markets?
 Are they driven by public aspirations or private interests?
 Is there a long-term vision for sustainable food and farming in the UK,
across the EU and which is also sustainable globally and if so, will these
reforms deliver that?
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Overall comments on the context of the Reforms:
The CAP has long been the subject of criticism by commentators from many
areas: environmentalists, consumer groups, taxpayers, ‘free-marketers’ etc.
We share many of the concerns of some of those critics:
 Subsidies linked to specific outputs and sectors have distorted markets
and pushed farmers to over-produce certain crops – leading to the
infamous ‘wine-lakes’ and ‘butter-mountains’ of the past, as well as to
‘dumping’ on developing countries’ markets.
 The emphasis on production above all else has had negative impacts on
the environment.
But nor has the CAP benefited the majority of farmers. One of the key stated
objectives of the CAP in addition to increasing agricultural productivity was:
‘to ensure a fair standard of living for the agricultural community’.
Yet despite the annual UK CAP budget of £3bn, hundreds of farmers and
farm-workers are leaving the land each week:
 According to the Office of National Statistics, 55,000 fewer people were
employed in the farming and fishing industries between 2001-2, the vast
majority of these jobs will have been lost from agriculture.
 Across the current 15 Member States of the EU, one farming job is lost
every 2 minutes.
 Figures published by DEFRA put the average farm income in 2002 at just
over £10,000.
The subsidy system past, present and future represents a market failure and
governments’ admission that farmers, the primary producers of our food and
managers of our countryside are not able to receive prices from the marketplace that meet their costs of production.
Unfortunately, increasingly subsidies became a camouflage to mask the fact
that the market wasn’t delivering a fair price. Rather than subsidising farmers,
the public was in effect subsidising the agribusinesses that grew up around
agriculture – both the supply industry before the farm-gate and the traders,
processors and retailers beyond the farm-gate.
The food chain from plough to plate has been illustrated as an hour-glass on
its side, with the produce of many farmers going through the constricting
bottle-neck of the contrastingly few and very much larger traders, retailers and
processors who squeeze down prices to farmers, adding as much value as
possible to the raw foodstuffs before selling on to the many consumers.
Undeserving subsidy ‘junkies’
Much of the public and press believe that farmers are addicted to subsidies –
and that a good number of them have lined their pockets undeservedly at the
taxpayers’ expense:
‘Britain’s richest farmers in the ‘prairies’ of the east, buoyed by a
bumper harvest are making a killing from generous European Union
subsidies at the expense of poorer areas…
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The harvest has been good for Oliver Walston and good for many other
farmers. His grain was cut early. Prices shot up… Mr Walston volunteers
that he gets around £165,000 annually in subsidies…
‘The more acres you have, the more subsidy you get, says Mr Walston.
‘One of the fatal flaws in the system is that it does not discriminate
between the big and small farmer. It just pays you according to how
much land you have, which is bloody stupid. They seem incapable of
changing it.’
Barley barons reap rich EU subsidy harvest, The Guardian, 22/9/03
A few farmers, as Oliver Walston is honest enough to admit above, have
indeed done well out of working the system, but the majority have not. In the
UK it is calculated that just 20% of farmers have received 80% of subsidies,
for the EU in general it is 4% that receive 40%. Yet the majority of farmers did
not and do not want to rely on subsidies.
In a survey carried our for FARM in 2002 of nearly 600 farmers across the
English regions: 87% said that they did not want subsidies – they simply
wanted to produce food and other agricultural outputs for the public at prices
that gave them a fair return on their costs of production.
Before committing another massive tranche of taxpayer money into farming
for the foreseeable future, the Government and farming, environmental and
development organisations needs to explain honestly to the public why it is
that the type of farming they want to see sustained in the UK doesn’t pay.
With farmers receiving farm-gate prices below their costs of production, any
significant reduction in the amount of subsidy they receive will mean
bankruptcy and ruin for many.
Decoupling – Single Farm Payments
FARM supports the objective to break the link between payments stimulating
excessive production of particular crops or livestock. But we are opposed to
single farm payments being based on historic subsidy received.
The latter would simply consolidate the current inequity of 20% of UK farmers
receiving 80% (4% of farms across the EU receiving 40%) of all subsidies and
would reinforce the negative public image of farmers as ‘barley baron subsidy
junkies’.
National Envelope
As well as the objective, which has clearly failed for many farmers, of ensuring
‘a fair standard of living for the agricultural community’, the original CAP had a
number of wider structural objectives:
 To encourage young farmers;
 To manage the exodus off the land;
 To address the problems of small or marginal farms
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A long-term vision for sustainable farming and food production in the UK
would provide more opportunities for people to enter farming.
FARM is concerned that the Single Farm Payment scheme could ossify
farming, with older farmers holding onto their land and entitlements, so
reducing the area of land available to new entrants. The National Envelope
could be partly used to provide an allocation of entitlement to young farmers,
and to build up a reserve of entitlement for the future.
Need to undertake a Risk Assessment on our Food Security
There is, as far as we are aware, no overarching strategy setting out in broad
terms the number and diversity of farms by sector, size and system that is
necessary to sustainably produce food for our population over the longer
term. We urge that an overall risk assessment setting out in broad terms how
many farms of what type and scale would be best to sustain food security is
drawn up.
Modulation
According to the Reforms, all CAP payments are to be gradually reduced over
time – but these cuts are to be ‘modulated’. The first 5000 Euros or £3,500 of
payments is exempt from any cuts. The funds amassed from the cuts are to
be redirected into rural development more generally. The £3,500 exemption
would seem to be helpful to smaller farms, as a greater proportion of the
funds they receive will be spared cutting.
Cross-Compliance
To receive the single annual payment farmers will have to meet (‘comply’)
with a set of 18 environmental, animal welfare and public health measures.
This is key to ensuring and sustaining public acceptance of the single
payment scheme unrelated to food or fibre outputs. Without addressing the
central issue of how to achieve fair farm-gate prices for farmers, the Reforms
will always be at heart a fudge plastering over the cracks in the short-term –
but perhaps that’s all the politicians want and need to achieve?
Full version of response at : www.farm.org.uk/FM_Content.aspx?ID=150
FARM – The Independent Voice of Farmers
PO Box 26094
London
SW10 0XZ
020 7352 7928
www.farm.org.uk
ENDS
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