Rural Economy

My Lords, in thanking the noble Baroness, Lady Miller, for initiating the debate, I want to talk about the new CAP. Here I greatly endorse the remarks of the noble Earl, Lord Peel, who has much more experience than I do. Between now and 2012, how we adapt to it will have a dominating effect on our rural economies, particularly on our upland areas and their communities. It is on the uplands that I want to concentrate. The future of the upland communities depends on a symbiosis of farming and tourism. Most of our national parks and AONBs are uplands and they are some of our finest landscapes, as the noble Baroness, Lady Miller, reminded us. Their attraction depends on their being actively farmed. I emphasise that without farming they would revert to scrub. But in economic terms they are fragile. Cumbria, for example, has one of the lowest GDPs per capita in England. For decades the farmers have depended on subsidy, and as we all know, a production-based subsidy—a headage-based subsidy. As is well known, the new CAP is now in the main a single-payment hectarage-based subsidy. In the uplands, that is having a dramatic and alarming effect. Last summer, the National Trust analysed the future prospects of 60 of its tenanted hill farms in the north of England. The analysis showed not just that larger farms, especially those with large areas of moorland, did much better than smaller farms, which was to be expected. The major finding was that smaller farms would under Pillar 1 be loss-making, some seriously so. That was particularly evident in the Lake District, where the average farm size is 900 hectares compared with, for example, 1,500 hectares in the Peak District. A further factor emerged: smaller farms tended to be more intensively grazed—that is, they were overgrazed, so the switch to hectarage has been a double whammy for them. But, environmentally, it was a good thing because overgrazing had been a problem. We now are perhaps likely to face the opposite problem of undergrazing. What is to be done? Some responses, such as diversification, bed-and-breakfast or part-time farming are not really a true answer. Certainly, amalgamations will in particular cases be a possibility, albeit a reluctant solution—an ““if all else fails”” solution. One is left with the agri-environment measures of Pillar 2 of the CAP, the so-called rural development regulation budget. It seems to be clear that the future of many of these upland farms, and hence the local tourism economy, will depend on how the RDR budget is developed. It would be most helpful therefore to have the Minister’s thoughts on that. What, for example, is likely to be the extent of switching funds from Pillar 1 to Pillar 2—modulation, to use the jargon—and over what timetable? The noble Earl, Lord Peel, spoke about that with more authority than I can. I am told that the Government are consulting widely on this, which is surely to be welcomed. I hope that these consultations are wider than pure farming considerations. I hope that they take on the wider aspects of upland economies and the experience of our national park authorities, NGOs such as the National Trust, the CLA, and so on. The more that I think about this complicated subject, with its technical Euro-jargon, the more striking I find the contrast of the Euro-bureaucratic world with the real world whose problems it seeks to address. It is a world of farms of all shapes and sizes, of varying characteristics and of different traditions, which are run by people and families who are the custodians of some of our most important landscapes. In our uplands, they underpin a much wider economy. That contrast suggests that we need to come up with a shopping basket of environmental goodies. We need to get away from the blanket solutions; to understand and tackle the issues at a farm level; to provide advice and training; and we may need to provide exit strategies for retiring farmers or as a result of amalgamations. If we are to ensure the future of our upland landscapes, a good deal of modulation or agri-environment farming will be needed. It will need to be of a rather tailored nature, tailored to individual farms. I am reminded of a European Union Committee report published in November 2002, which warmly commended ““whole farm”” management schemes, which may be the appropriate way forward.