Common Agricultural Policy (EUC Report)

My Lords, I thank the noble Lord, Lord Sewel, for giving us the opportunity to debate this issue. Although I have nothing to do with the report, as I am married to a farmer I thought I might make a few comments, because I help her with the regulatory paperwork side of the business. It is an interesting report that helped to explain some things. I was interested in the government response and astonished myself by agreeing with quite a bit of it. I liked the objective of continuing to produce the majority of the food we consume, but my worry is whether we will end up doing that. We live in a complex system and a complex world. Agriculture is even more complex, and we have complex interrelationships with nature. A rules-based system does not work properly. In an ideal world, the market will work, but the trouble is that one cannot predict things well enough. We cannot predict what is going to happen to farming in a few years. We cannot assume that prices will continue to go up, particularly for Europe. Many different things could change. Zimbabwe could sort out its problems and start producing a proper harvest again; Ukraine might do the same; Australia may get some years of rainfall; and suddenly our wheat and grain would be totally uneconomic again. On the other hand, the people who still have some cattle left will like that. Those interrelationships are difficult to predict. People forget also that farming had some very tough times while the prices were down. Overdrafts have increased. Now that farmers are trying to make some profits, they probably have to give 40 per cent of them to the Treasury in a really good year. It is therefore quite hard to get the overdraft back down again before the next bad time comes along. If the Government are this year modulating 18 per cent of money that could go to help pay off the overdraft, it does not help because it is yet another tax. Competing in open international markets sounds like a wonderful idea and is a great aspiration. However, let us suppose that nitrogen costs go too high—that assumes that we can get nitrogen because no predictions have been made on whether any will available in one or two years. There is huge pressure to stop producing it. It is energy-intensive and people want us to stop putting so much nitrogen on the ground. The trouble with that is that one’s yields will drop, at which point we all suffer and enter a more difficult cycle. Since our underlying and infrastructure costs are higher, we will make a loss if we do not have a fairly high yield off the farm. The cost of fuel is going up, as are many other production costs. The report is wrong in stating that regulation of emissions will not have an effect on costs. Merely complying with those regulations is bound to have a cost—one should not kid oneself otherwise. Defra’s desire to simplify the regulations is sensible. There are many stupid inconsistencies at the moment. A more common-sense approach is needed and decisions need to be taken more rapidly—particularly as the time to submit SP5 forms approaches—so that people really know where they stand. I give an example of a ridiculous regulation this year related to planting wild bird cover. Maize is technically a combinable crop, so one can fertilise, spray and look after it. It thereby flourishes and helps the wild bird population. A mixed crop, which would be better for the wild birds, is not harvestable. It therefore comes under GAEC 12. You are not allowed to fertilise or spray it; your crop will die; and the wild birds will have nothing to feed on. It is just stupid. Why can Defra not get its act together to say something about that early enough? Instead, it says, ““Oh, no, we’re bound by the rules from Europe””. It should get its act together. Adding water costs to the SMRs and GAECs will make life more complex and difficult. At the end of the day, the farmer faces a whole lot of rules which state that one should do something on certain dates as if the world were a perfect place and they could predict everything. But they are coping with the weather, which is unpredictable and changing. Their machinery may break down at the wrong moment. Their contractor may decide to move to a different farm at that date. Their livestock may go ill. One cannot predict what is going to happen. It is not like running a great factory. Most of those businesses are not run with lots of spare capacity, machinery and manpower; they are small, tightly knit organisations which are run close to the bone, so one cannot do it. It is said that the bigger businesses will benefit from all this regulation because they will be able to deal with it. I agree with those who say that the payments should not be capped. Just because the businesses are bigger does not mean that they are making a lot more profit—all kinds of other inefficiencies will exist. One has to find out whether they are profitable before one can start saying that one is going to remove their income. All that would do is bankrupt agriculture generally. It is not the income that matters, but the bottom line. Interestingly, if we move to bigger units, it will help people who worry about set-aside disappearing. Now that set-aside has been removed in the past year, I have noticed that a lot of fields that my wife popped into set-aside she does not want to remove again. Why? The machinery has become too big. It is not worth turning something of only 2.5 hectares back into wheat. You lose too much around the edges anyway; you have to have 5-metre margins around the watercourses under the pesticide regulations and you will not be able to get the table for your combine. By the time you have got it into the field and put the table on, it is time to take it back off again. So they are not worth farming any more. Some of these things are going to be permanently set aside. If you have a larger unit, the machinery will be bigger so you have de facto set aside. So you should go for bigger units. The Pillar 2 redistribution is a very good idea. It is what the public want and there is a lot of environmental benefit from it. I enjoy seeing wildlife back, although it has always been around. It has just been shifting around—and, yes, there have been some problems. But with Pillar 2, it is a case of where the money is going to end up. There is a suggestion that some of it should really be going into regeneration schemes, rural development schemes and other things that are not to do with land management. At the end of the day, I thought that this whole area was about land management, and it is the land management that will suffer. If you put big money out there and pop it with some quangos to decide where it is allocated, the farmers will not be the ones sitting on the committees because they will not have the time or the inclination for the bullshit that goes around in those committees, and they will not understand it—