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Common Agricultural Policy: Financing (EUC Report)

My Lords, this debate is very welcome because it raises some sharp-end issues that people would otherwise not think about. The CAP is very expensive, and everyone has been saying for a long time that it is in need of reform. Particularly nowadays, it is sensible to move to Pillar 2 and to environmentally linked payments, but what about the people at the sharp end whose livelihoods will be affected? That concerns me because the effect may not be the one that is expected. It depends what you want and what you are going to get out of it. Part of the trouble stems from the ceiling placed on the amount of money available. The EU is enlarging, and there is also the Pillar 1 financial discipline mechanism. When I read the details of it, I realised that, from what Defra put out a year ago, it was going to try to see farmers through the period of change. That change was going to be quite heavily modulated—in other words, it would be taxed by the Government in order to do other things with the proceeds. Interestingly, having realised that that would be a problem, the other EU countries are not carrying out their additional voluntary modulation, as it is called. They are paying far less than we are in this country. I seem to remember that the figure is something like 3 per cent compulsory, and we have added an extra 2 per cent in the first year to make it 5 per cent. For the second year, I think that the figure is 4 per cent compulsory, and we have added an extra 6 per cent to make it 10 per cent. There is talk of going higher after that because Defra does not think that there will be enough money in the pot. On top of that, there will be a financial discipline mechanism, which may reduce the overall pot even further, and that is not taken into account. So there will be a great deal less money available to see us all through the transitional period. I should explain that I am not a farmer, although I am married to one. I have ended up having to do all the work in the evenings—usually until two or three in the morning—sorting out the paperwork. The paperwork is referred to in the report, which states that it should not be too burdensome. That is nonsense. I shall come to that in a moment if I have enough time, but the amount of paperwork is terrifying. I want to ask what, finally, we want. Who do we want to carry out the farming? Do we want people who have been farming the countryside for a while and know about it, or do we want new industrialists or people who have made money in the City or whatever who will buy the bankrupt farms for their amenity value, paying high prices? They will then be nicely controlled by Natural England, dancing to Defra’s tune. People who have carried out environmental studies will tell them all about the puddle police and how they must not have puddles in their fields. They will be told how they must let their hedges grow long and leggy, not cutting them too often, because it is nice for the birds which nest high up in them. However, they do not realise that there could be problems for ground-nesting birds. I shall not go into the detail because it will be interesting to see what happens. However, I do not believe people realise that you cannot go back 50 years to the point when you had low inputs and also low outputs. When you were getting less than one tonne per acre, you could afford not to put on lots of fertilisers and sprays. The trouble is that one tonne to the acre does not pay the wages, let alone the compliance costs, let alone the overheads of doing all the things you have to do in a modern business. You therefore have to increase the yields and once you do that you have to use fertilisers and sprays. Then you get into problems and you have to aim at four tonnes per acre—about eight to 10 tonnes to the hectare. That means that you farm in a completely different way, but you have to farm efficiently. The other problem which emerges is that farmers were heading for that, were geared up to do so and were doing quite well. However, the price you get for your wheat has halved over the past few years. On a 200-hectare farm, say, your income will be down £100,000 to £150,000. What goes out of the window, therefore? It is your advisers: the agents who advised you and the management. You take out all the tiers and you use contractors where you can. Suddenly, everything comes down on the poor old farmer—back to the paperwork issue. I have got so fed up with it, and that is why I want to speak in the debate. People need to remember what is said at paragraph 51 of the report: that,"““witnesses stressed the need to compensate farmers for the non-production services which they provide to the community””." By the way, I would say to the noble Lord, Lord Whitty, that a large estate—we do not have a large estate—must of course receive more money because it has more miles of hedgerow and ditches to maintain, margins to keep up and so forth, according to the new rules. Just because it is bigger does not mean to say that it does not have to spend the money on doing the work. People do not realise what is involved. I notice that there is a mistake in the report because according to page 46, farmers are required to establish a protection zone measuring two metres. Actually, if you are growing wheat and you look at your pesticides regulations, you will realise that if you are going to use a category A pesticide—and you must if you get flea beetle, say, and you want to save your crop—you need to have a five metre zone as a wet water course and you cannot reduce that even if you do a LERAP—local environmental risk assessment for pesticides. I am afraid that the amount of regulation just goes on and on. I shall wind up because we have only six minutes. I will not bother to list the two pages of things that I have worked out we have to know about. There is everything from farming; forestry; health and safety; visitors, both invited and uninvited; disabled access; property, commercial and other; building regulations; planning consents; the administration accounts; VAT; payroll; getting stuff through Government Gateway on the Internet; the employment law, including grievance procedure, maternity, sick and holiday leave; and equal opportunities. I presume that in your farm offices you will know about the VDU seating requirements; Internet policy; work/life balance; and the insurance for the contractors who come on to your land. Finally, we get down to all the Government’s single farm payments, single payment systems and entry level and they cannot even get the maps back to us. All this money is supposed to be in the system and we are supposed to get this entry level stuff, but they cannot get the maps to us. We have been trying to apply for entry level for six months, since August. The whole thing is in chaos. You cannot get the money because the money is not there. To conclude, to give your Lordships an idea, farming is a business and we must explain to the bank why we are getting no income this year. Under EU law, farmers should have been informed of their provisional entitlements by 31 December 2005. They will not now be informed until shortly before receiving payments next year. This is a contravention of the EU law and court proceedings can result. I expect that some farmers can be involved.