Thursday, July 14, 2005

A missed opportunity

It was not only Charles Clarke who was over in Brussels yesterday. Separately, the great caravanner, Margaret Beckett was there too, telling (not) the EU parliament’s agriculture committee about the British government's plans for CAP reform.

According to The Independent and others, she had a rough time of it as some MEPs, stunned by the utter vacuity of her presentation, walked out in disgust. That must have been some achievement. Anyone who has been to these committees can attest that watching paint dry, by comparison, is the equivalent of driving a Formula 1 racing car at high speed.

What particularly upset these MEPs were Beckett's evasions – something to which British MPs are inured. Although repeatedly challenged to give some detail, her responses were "insubstantial or misleading", whence at least five MEPs walked out. This apparently left a flustered Beckett, pleading for MEPs to remain in their seats.

What did emerge, of substance, however, was confirmation of that which we all knew – that Blair's rhetoric on reforming the CAP was completely empty. According to Bloomberg, Beckett revealed that: "All people are talking about is the next financial perspective beginning in 2014." In other words, nothing is going to happen until after the 2006-2013 budgetary period, and the current CAP settlement is locked into place until then.

All of this goes to support the general impression that Blair was using the CAP gambit as a counter to Chirac's attack on the British budgetary rebate, and Beckett has no genuine plans for reform or change.

The lack of ideas - from a Minister who rarely attends farming or country events, has never been known to visit a farm and who recently said that, if she needed to know what farmers thought, she would ask her officials - is a great pity. The current "reforms" from the so-called "mid-term review" are very far from satisfactory, and entirely unsustainable.

Based on the principle of "decoupling", completely breaking the link between subsidies and the production of crops or livestock, farmers are to be paid on the basis of their "historic payments", regardless of whether they produce anything. When the great British public realise that farmers are being paid to do nothing, there will be even more hostility towards farming than there already is.

Yet, while there is no case for subsidising food production, there are valid reasons for continuing public support – albeit in entirely different forms. One such is borne out by a remarkably simple equation: although the farm-gate value of food produced is in the order of £12 billion annually, the value of rural tourism, which is reliant on the scenery that farmers produce, is in the order of £13 billion.

In other words, the scenery produced by farmers as a by-product of producing food is actually worth more than the food they produce, and is of genuine economic value to the nation. Yet, while they are paid for producing food, there is no mechanism for rewarding farmers for maintaining or improving the scenery.

Even the most ardent, free-market economist would recognise this as a "market failure". State intervention in this context is regarded as justified. An "amenity payment" to farmers, based on their contributions to the visual amenity of the countryside would be entirely valid. Also, there are good precedents for "environmental payments" where farmers suffer losses or incur costs in providing "added value" to the environment, improving or maintaining the biosphere.

Further, there is too much emphasis on farmers as producers of food. Crop developments and technology improvements could allow farming to make significant contributions to the UK energy demand. And while the Greens are critical of farming subsidies, they are happy to see huge subsidies given to wind farms (one 2.2 Mw turbine attracts nearly £500,000 in subsidy, annually). Yet the same or less subsidy paid to farmers to grow energy-producing crops could yield higher net gains, without the visual and other damage caused by wind farms.

Then, under certain circumstances, in addition to producing the crops, farmers could generate electricity themselves from them, selling the surplus to the National Grid.

There are, therefore, exciting ways that agriculture could break away from producing excess food, reliant on CAP subsidies, and provide positive economic and other benefits to society which would justify continue public support. Such schemes could even resolve the damaging EU sugar regime, by encouraging farmers to produce beet for ethanol, used for transport fuel.

And keeping farming healthy is important to the nation for, while currently there is a world surplus of food, the year before last the world consumed more grain that it produced. As demand from China increases, we may find that we enter a period of global food deficit, so food security is a vital. Land laid down to energy production at the moment can be quickly turned to food production should the need arise. But if farming is allowed to decay – as Mrs Beckett seems to want – then would could be storing up serious trouble.

None of the above, of course, can be done under the current CAP regime – other than environmental payments, through a scheme that is so bureaucratic as to be unwieldy and often counter-productive – which means that Beckett had every incentive either to seek reform (which is unlikely to happen) or push for abolition, which Blair claims to favour.

But all we got from the great caravanner was the same empty rhetoric for which her boss is rightly derided. At the very least, it was an opportunity missed. In reality, it was a betrayal of our nation and those many farmers who recognise the damage done by the CAP and want to restore agriculture to its former position of glory.

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