Chapter 8: A new future for farming

• View findings from the Rural White Paper Review [92KB]
• See progress towards this commitment in the Rural White Paper Implementation Plan

Key issues

• Farming is going through its most difficult period since before the Second World War. Farm incomes have fallen by around 60% over the past five years. No sector of farming has been unaffected.
• Some pressures common to all sectors of the economy: the problems of competing in an increasingly global and more competitive market; the need to meet ever more sophisticated consumer tastes and preferences; and the challenge of new technology and new ways of buying, producing and selling.
• Other pressures specific to farming: a long and deep international slump in commodity prices; falling sterling support payments due to the weakness of the Euro; and the devastating impact of the BSE crisis, not only for the beef industry but also for other parts of farming.
• Growing demands to manage the countryside so that its beauty and richness are enhanced rather than damaged.

The future - what we want to see

• Farming's main task will still be to produce the food we eat.
• But farming will be more forward-looking, competitive, and flexible, more capable of responding quickly to market changes and new consumer demands.
• An increasing recognition of the role which farmers and land managers play in maintaining an attractive and diverse countryside and in sustaining the wider rural economy.
• Many more farmers will turn a positive approach to the environment to their own economic advantage, with payments for environmental ‘goods' that the nation wants - flourishing wildlife, living landscapes, a protected heritage and opportunities for leisure.
• The growing market opportunities for sustainable products will enable the production and environmental functions to be combined via the marketplace for an increasing proportion of the industry.
• There will still be room for large and small farms, full-time and part-time businesses. But farms - including entrepreneurial family farms - will be more diverse in terms of structure, business organisation and the mix of agricultural and non-agricultural activities.
• Farmers will take up opportunities to learn, develop and exploit new skills and new techniques.
• Government and industry will continue to work closely together to meet these challenges: to get away from the cycle of short-term crises and become again what farming should be - a world-class industry in a world-class setting.

Contents

8.1. Introduction

8.2. Strategic action

• Reform of the Common Agricultural Policy
• Re-directing agricultural support to improve, not damage, the environment
• Strategic action at national level

8.3. Marketing, skills and innovation

8.4. Farm diversification

• The Planning Environment
• Diversification and the rating system
• Diversification into non-food crops

8.5. Regulating only when it is really necessary, and removing burdens that are not justified

8.6. Farmers and the wider community

• Farming on the urban fringe
• Measuring the public benefits which farming and land managers provide

8.1. Introduction

8.1.1. Farming is important. It supplies most of our food. It directly employs around 600,000 people (including seasonal and part-time workers). It contributes £7bn each year to the UK economy. It is and will continue to be the bedrock of a UK food chain worth £57bn each year and 3.3 million jobs. Farming has defined most of the landscape and shaped its diversity.

8.1.2. Farming communities have created the fabric of our rural life over centuries, and in many areas still maintain it. Our countryside and the environment we cherish still depend on our farmers. Farming is not the same as the countryside, but rural life and the rural environment as we know it would not exist without farming.

"There's also the countryside and the issue of who is going to look after this vast area if people are not actually making a living out of it. And that concerns me greatly, because it's a very beautiful country that we live in, and on the whole pretty well maintained."

8.1.3. The economic crisis in farming has been very painful and it is not over yet. It is bringing about major restructuring in the industry. Many farmers have left the industry. The number of workers employed in farming has fallen significantly. The trend towards bigger farms has accelerated.

"We have five farms within the village and each farm has one or two people, but it's all father and son - there isn't a single employee now from outside."

8.1.4. We believe that farming must emerge stronger from this crisis. We accept that the industry cannot achieve this by acting alone. But nor would it be right for the Government solely to direct and manage the way forward. For the past year, the farming industry and the Government have been working together on a new direction for farming which meets the challenges the industry faces, and which defines the right roles for industry and for government. At the heart of this new direction is a vision of agriculture for the future. It is set out above, and in more detail in our New Direction for Agriculture, published in December 1999, and the Action Plan for Farming launched by the Prime Minister in March 2000.

8.1.5. The Action Plan identified more than £200m of new aid, directed not only to short-term relief, but also to industry restructuring and other longer-term action on marketing, diversification, training and removing regulatory costs and burdens. It was a new partnership between the Government and the farming and food industries. A majority of its 60-plus measures have already been implemented by the Government.

8.1.6. As well as implementing the March Action Plan, we are committed to to identifying new action to achieve the farming strategy and vision drawn up with the industry. The recent Spending Review will provide a further £300m over the next three years to continue and develop the measures in the Plan. An Industry Forum chaired by the Minister of Agriculture, Fisheries and Food is giving strategic direction to this work.

8.1.7. To maintain momentum on the farming strategy:

• Our aim remains radical reform of the Agricultural Policy;

• We will undertake national strategic initiatives to make farming fit for the future;

• We will put new emphasis on marketing, skills and innovation;

• We will support new opportunities to diversify;

• We are committed to regulate only when it is really necessary, and to remove burdens that are not justified.

8.2. Strategic action

Reform of the Common Agricultural Policy

8.2.1. The Government pays £3-3.5bn in the form of EU and domestic support to UK agriculture each year.

• Over the period 1997-01 farmers will have received a total of £629m in aid to offset the effect of exchange rate movements.

• On top of this, we have in the past two years agreed additional aid packages worth £235m.

8.2.2. The industry recognises that subsidy and aid by themselves are not the answer. Indeed, much of the EU Common Agricultural Policy (CAP) still acts against the new vision and direction we are seeking. Subsidies which simply reward production have damaged the countryside and have stifled innovation. A complicated bureaucracy has created expensive surpluses of basic products and has prevented farmers from responding to what consumers really want.

8.2.3. The Government will therefore continue to lead the drive to reform the CAP. Last year's Agenda 2000 reforms were a substantial step forward. Its price reductions will reduce the annual food bill for a family of four by around £65 a year. Its reforms will further direct agricultural support away from production subsidies towards measures which deliver environmental benefits.

8.2.4. But more still needs to be done. The CAP must be further deregulated so that agricultural production can adapt to a competitive world market. Production quotas which prevent farmers from responding to the market must be removed. The CAP must respond to external pressures too. In a few years we will have an expanded EU with up to twelve more member states and a total population of 500 million people. Without CAP reform, the budgetary consequences would be unsustainable. Negotiations have also begun on liberalising agricultural trade in the World Trade Organisation. This will open up new markets as well as exposing us to greater competition. An unchanged CAP will simply hand the advantage to our competitors outside Europe.

See progress towards this commitment in the Rural White Paper Implementation Plan

Re-directing agricultural support to improve, not damage, the environment

8.2.5. The Government recently secured EU approval for the England Rural Development Programme (ERDP) which includes a major switch of CAP funds from production aids to support for the broader rural economy. We will spend £1.6bn by 2006 - around 10% of total support for the agriculture industry - on measures to advance environmentally beneficial farming practices as well as on new measures to develop and promote rural enterprise and diversification, and better training and marketing.

See progress towards this commitment in the Rural White Paper Implementation Plan

8.2.6. These schemes, together with farm woodlands schemes, are vital to biodiversity. They also provide important income-generating opportunities for farmers. The additional resources will mean that many more farmers can participate over the coming years. Part 3 of this White Paper provides more on farming's role in our landscape and biodiversity objectives.

"What we get to walk on and play with, that made us move here, is what farmers have managed." "Down our way they've started setting hedges again"

Strategic action at national level

8.2.7. Although much of the economic and regulatory framework is European, we will tackle key strategic issues affecting the structure and efficiency of the industry. These include developing a clear vision of how key sectors, such as the dairy industry, will develop in the future, and can exploit likely changes to the CAP. We also need to ensure that we protect essential infrastructure which will support farmers diversifying and expanding into new and added-value markets.

See progress towards this commitment in the Rural White Paper Implementation Plan

8.3. Marketing, skills and innovation

8.3.1. Many farmers are already taking advantage of better marketing, new skills and innovation. They are making use of integrated crop management and organic farming, and are getting closer to their customers through farmers' markets and other channels.

8.3.2. The Government believes that there are still huge opportunities for agriculture in better marketing, training and innovation. For example, the UK applies animal health and welfare standards that are among the highest in the world. We must make these a point of distinction and market on quality. Similarly, on training, there are also huge opportunities for farming in the knowledge-based economy. And new methods of co-operation between farmers and others in the food chain can bring various benefits. The resulting economies of scale can generate lower costs, of production, inputs and professional expertise. Co-operation can also help farmers to guarantee the continuity and quality of products to their suppliers.

8.3.3. The Government can help in various ways on marketing, training and innovation. It can bring different parts of the food chain together and can provide financial aid to kick-start initiatives.

8.3.4. Our help will include:

In addition:

See progress towards this commitment in the Rural White Paper Implementation Plan

8.3.6. We continue to believe that the farming and food industries can only prosper if they work together. We therefore support the creation of Assured Food Standards to bring the main existing assurance schemes within a single structure and have offered grant aid to help its establishment. We welcome the move to use the British Farm Standard red tractor logo on a wide range of produce, enabling consumers to identify those products that have been produced to the exacting standards of assurance schemes.

See progress towards this commitment in the Rural White Paper Implementation Plan

8.3.7. These positive campaigns for health will, together with DfEE action on school meals, be of significant benefit to producers through increased demand for good quality fruit and vegetables. The challenge to the industry, including farmers, is to work with us to increase provision and access to fruit and vegetables, for example through local initiatives such as Farmers' Markets.

8.4. Farm diversification

8.4.1. We will help farmers diversify, to strengthen their core business of providing the food we eat. Over the past twenty years, many farmers have decided that diversification can give their farming incomes some protection against market fluctuations. Often the whole family are involved in setting up and running new enterprises such as bed and breakfast facilities, or farm shops. Sometimes new businesses may be established solely by one partner within the farm. Research undertaken by the National Farmers Union in 1999 showed that one third of all women on farms questioned were involved in some form of diversification to bring in additional income.

8.4.2. We believe that, if it is pursued intelligently and realistically and with the right encouragement and support, diversification can play an even greater role in the future in strengthening UK agriculture. Section 7.6 describes the measures we are taking to provide better business advice to farmers and others running small businesses. We are also taking other steps to make this vision a reality:

See progress towards this commitment in the Rural White Paper Implementation Plan

The Planning Environment

8.4.3. Surplus farm buildings can provide suitable accommodation for diversified businesses. The Government is determined that the planning system should be sufficiently flexible to enable this to happen.

8.4.4. Advice for planning authorities on sustainable rural development, including the re-use of rural buildings, is set out in The Countryside - Environmental Quality and Economic and Social Development (PPG7). A DETR/MAFF seminar in May 2000 identified the need to ensure that this guidance was implemented more consistently at local level. There is evidence of good practice by many local planning authorities, but it needs to be spread more widely. Planning officers and councillors in local authorities must recognise the crucial role that diversification can play in sustaining and developing farm businesses.

8.4.5. The May seminar also found that most farmers were unfamiliar with the planning system. This results in many poor-quality applications. There is also anecdotal evidence that farmers may sometimes be discouraged by local authorities from submitting and pursuing worthwhile diversification proposals. Another concern was that planning guidance on transport (PPG13) is often being interpreted in a way which undermines other policies designed to encourage rural diversification.

8.4.6. The Government is taking steps to address these problems through:

See progress towards this commitment in the Rural White Paper Implementation Plan

Diversification and the rating system

8.4.7. Farmers are already exempt from business rates. In its March 2000 Action Plan, the Government set out proposals to stimulate diversification into small-scale horse enterprises, such as stables for trekking or livery. We have since consulted publicly on proposals to introduce transitional rate relief for farmers diversifying into farm-based horse enterprises and in the light of that consideration we shall be consulting further on extending rate relief to farm diversification generally.

See progress towards this commitment in the Rural White Paper Implementation Plan

Diversification into non-food crops

8.4.8. Agriculture has for centuries provided a wide range of materials other than foodstuffs. These include fibres (flax and hemp), oils (linseed and rape), dyes (woad and madder) medicines (willow and foxglove) and energy (coppice wood). Modern technology has expanded the range of products which can be produced from plants and the yields which can be obtained. Non-food crop products include automotive components, lubricants, nutritional supplements and feedstocks for speciality chemicals. These uses contribute to sustainable development, both in environmental terms by reducing greenhouse gas emissions, and in economic terms by boosting farm diversification and rural incomes. They also have the potential to create new jobs in rural areas. We are launching the following initiatives to stimulate these developments further:

See progress towards this commitment in the Rural White Paper Implementation Plan

8.5. Regulating only when it is really necessary, and removing burdens that are not justified

8.5.1. We underlined in our Action Plan in March 2000 a commitment to regulate only when it was really necessary. The Action Plan also explained that our policy on implementing EU obligations relating to farming would be to avoid all ‘gold plating' of legislation, both in its implementation and enforcement; to regulate in the least bureaucratic and burdensome way; and to avoid implementing legislation ahead of specified EU deadlines.

8.5.2. The Action Plan contained a number of specific commitments to review and remove regulatory burdens affecting farmers. All of these have since been acted upon, and most have been completed. Progress reports are set out in a regular Action Plan for Farming Bulletin issued by MAFF. We are currently considering the recommendations of the Better Regulation Task Force Review of environmental regulations and their impact on farming, and will respond shortly. The Food Standards Agency is also due to report in the coming months on its separate reviews of the current main measures to protect the public against BSE/vCJD in relation to the food chain, and of the Meat Hygiene Service's efficiency.

8.5.3. We believe it vital to maintain momentum in this area. To this end, in addition to the steps set out in the Action Plan, we will take forward the following new initiatives:

See progress towards this commitment in the Rural White Paper Implementation Plan

8.5.4. Hygiene controls are an essential protection for the public but they can impose unnecessary burdens. For example EU legislation lays down detailed requirements for slaughterhouses, including a high level of official inspection and supervision that is not related to the risks to consumers, and bears especially heavily on small and medium-sized slaughterhouses which are important to farmers seeking to diversify into new markets.

See progress towards this commitment in the Rural White Paper Implementation Plan

8.5.5. There is a wide range of advisory services available to farmers and land managers on the various schemes and activities covered in this chapter. We will look further at whether we can improve the accessibility, quality and relevance of this advice, and better integrate economic and environmental messages.

8.6. Farmers and the wider community

Farming on the urban fringe

8.6.1. Farming on the urban fringe has its own special attributes and problems. Its landscape is vitally important in its own right and as a bridge to the wider countryside. Demand for access and amenity is high. Crime and vandalism can be problems. The Urban White Paper recognises the importance of agricultural and horticultural businesses in and around cities and towns and sets out our policies for dealing with problems such as crime and antisocial behaviour.

8.6.2. But urban fringe farmers also face the same challenges as the rest of farming. Our measures will help these farmers too. For example, the ERDP has a separate London chapter, programming group and budget for rural economy measures. And our initiatives to improve the planning environment will achieve a better dialogue and awareness between farmers and urban authority planners.

See progress towards this commitment in the Rural White Paper Implementation Plan

Measuring the public benefits which farming and land managers provide

8.6.3. Most of our landscape is the result of farming and other rural land uses, such as forestry. As the following chapters indicate, these land management activities - often through private investment and without any direct public support - can provide very significant public benefits through maintaining landscape features including hedges and other field boundaries and watercourses, and the wildlife they support. A fuller understanding of the implications of the challenges facing agriculture and land managers for the delivery of public benefits of this sort could be useful. It would also help to have more quantified information on the environmental and other public benefits provided by land managers, through a range of different land management approaches and their costs, to help in assessing whether public policies generally need adapting to encourage such benefits in the future.

See progress towards this commitment in the Rural White Paper Implementation Plan