Speech by Rt Hon David Miliband MP Secretary of State for Environment, Food and Rural Affairs at the Oxford Farming Conference
"Farming 2020"
This speech is about the long term future of English farming. Imagine this conference, the 74th Oxford Conference, in 2020. What will we be debating? What will have happened? Where will agriculture be? Will it be thriving amidst a massive increase in global population and wealth? Or will it be suffering from exposure to a world free from tariffs and subsidies? Will climate change mean temperatures that enable British farmers to enjoy record yields and become the envy of farmers around Europe, or will water shortages, nitrate bans, and carbon pricing see the UK importing ever more food?
This is the subject of my speech today. The long term future of English agriculture; the need for a compelling and shared vision of what that future should be, and the respective responsibilities of the industry, government, retailers and consumers in making that vision a reality. The core argument is that the future of farming is more about environmental security than food security, the role of government is to create opportunities and contracts, not protectionism and subsidy. And we will know when we have succeed when farming is renowned for its entrepreneurial mentality not accused of a victim mentality.
But the truth is that while values and vision are imperative for success in the medium to long term, people live in the short term. Let me start with what is going well – not because we should be looking through rose-tinted spectacles, but because one sub-text of this speech is that while in important respects the farming industry has a good story to tell, not enough people are telling it, and the population at large could be forgiven for thinking that the only news is bad news:
- in 2006 cereal, potato, oilseed and cattle prices were all significantly up
- after 10 years of an export ban, the UK is exporting over 5000 tonnes of beef a month, and the momentum is gathering
- we have so far kept avian influenza at bay, and government-industry cooperation kept consumer confidence high
- there are almost 28 000 Environmental Stewardship Agreements (ELS & HLS) now in place covering nearly 4 million hectares of the country, pioneering a new contract between taxpayers and farmers. And, as we announced last month, we are also continuing the Hill Farm Allowance in 2007, through to 2009.
- there is significant new investment in biofuels as the requirement under the Renewable Transport Fuel Obligation for five percent of forecourt sales comes attractively into view.
Peter Kendall in his tough but upbeat New Year’s message said 2006 could be a turning point. We need to make sure he is right.
Equally, there is no point pretending that everything is going well. For example:
- oil and feed costs are up and dairy and poultry prices are down
- the Single Payments Scheme has been a very serious problem for farmers
- the Rural Development Programme is badly delayed thanks to opposition from the European Parliament to voluntary modulation
- herd incidence of bovine TB is down by around a quarter, but in certain parts of the country it remains unacceptably high
So the immediate priorities for 2007 write themselves:
- we need a stable and predictable year of farm payments, with efficient delivery of partial payments from mid February where full payments are not possible.
- we need to break the logjam in Brussels and get the RDP on track, with clarity for farmers about levels of modulation and government co-finance, as a prelude to further fundamental CAP reform in the 2008 CAP healthcheck and thereafter to ensure that English farmers benefit from being first down a track that all will have to follow.
- we need to deliver on the agreed plans for regulatory change that will contribute about £30 million estimated savings from reducing the administrative burden to farmers’ bank balances by 2010, and delineate the terms of a new deal between the taxpayer and farmers over responsibility for animal health and welfare;
- we need to continue to work for a level playing field at home and abroad that allows farmers to compete on quality, with shared responsibility all the way up and down the food chain.
- we need to support you in making the Year of Food and Farming, starting in September 2007, joining schools and farms around the country, a real success; Don Curry, together with the Delivery and Leadership Groups, has done a huge amount since 2001 to help us implement our Sustainable Food and Farming Strategy and this is one of his most promising ideas
- we need a mature debate about bovine TB. We need to understand the downward trends in incidence – are they cyclical or something else? We need to go beyond an either/or debate of a national badger cull or farmer biosecurity. Good husbandry is essential in every farm; whether, in what circumstances, and how additional local badger management could help tackle the problem, rather than make it worse, is the right place for the debate.
So a full agenda. But we need more than this. We need in 2007 to develop the confidence and security that comes from a shared vision of the future of farming. A shared, positive vision that speaks not just to farmers but to the whole country. A shared, positive vision that is about profit and about community, about exports and about climate change, about landscape and about farming diversification. That is what the rest of this speech is about.
There are three parts to our journey to a profitable and competitive farming industry, which is a positive net contributor to the environment, and which reduces the environmental footprint of our food consumption – the definition of success that I sent to the Prime Minister when we exchanged letters on my appointment (both available on the Defra website). We need to understand the context; articulate our vision; then agree our respective responsibilities in achieving it.
Changing Context
Farming isn’t like other industries. After all it is responsible for 80% of English land. And it has a unique place as the meeting point of huge questions about food, energy and land.
The food sector is increasingly driven by consumer questions about quality, health and environmental impact as well as price. .
The energy sector needs to decarbonise and decentralise supply, reduce demand, and exploit to the full renewable energy sources.
Land use needs to marry economic, social and environmental value; it needs to adapt to demographic and economic pressures while increasing biodiversity and wildlife; enhancing beauty and access; and maintaining flood protection, carbon sinks and other eco-system services.
Farming is critical to all three debates in a special way. But farming is like other sectors in that over the next two decades, its entire operating environment will change:
- Global demand for your products and services will rise dramatically as a result of rising population and wealth. According to the FAO, over the next 40 or so years, global meat and milk production are each projected to more than double (c.230 million tonnes to 465 m tonnes; milk – 580 m t to 1043 mt)
- As well as new markets there will be new competitors; I see an inevitable process of trade liberalisation, with huge pressure to cut subsidies and end restraints on trade.
- Competitors are changing but so are consumers; they will want more information on where their food has come from and how it has been produced, and higher standards of nutrition and animal welfare. Labelling is not a panacea, but free and open information is essential.
- Finally, climate change already underway means the biggest shift in comparative advantage for food production since before the industrial revolution, while the battle against further climate change means that the torchlight will be shone on farming as well as other sectors. The FAO report that the livestock sector generates more greenhouse gas emissions than transport, and over 30% of European GHG come from the food and drink sector, according to a recent European Study (EIPRO – EU Environmental Impacts of Products study). There is only one direction for the price of carbon and that is up; there is only one direction for emissions trading and that is to embrace ever more sectors and greenhouse gases; and there is only one future for any industry and that is to recognise its environmental impact.
In this context, my vision for farming in 2020 is positive not negative, driven by economic, social and environmental goals. It starts in a simple place. We need an industry that is profitable in the marketplace. It will continue to produce the majority of the food we consume and contribute to our exports. But there just isn’t a food security argument for taxpayers to subsidise food production. It was a perfectly good argument during the war. It is not a good argument at a time of European integration and free trade. Today’s defining threat is not starvation in Britain it is environmental insecurity.
In my vision, British consumption of British food will be the result of the skills, innovation, investment, branding, and quality assurance of British farmers and the British food industry, not the generosity of the taxpayer. Where the taxpayer does have a role is in promoting environmental sustainability.
Second, we need an industry that makes a positive net environmental contribution, notably in respect of global warming but also more widely. The truth is that every industry needs a paradigm shift if it is to account for environmental cost. Farming is no different – and the paradigm shift creates opportunities as well as burdens. The successful farming industry of 2020 will have lower resource use, notably in respect of nitrogen, pollute water, air and soil less, play a key role in reducing carbon intensity through energy crops, and will need to reduce methane emissions through genetics, diets and manure handling. If 3000 farms in Germany are using anaerobic digestion to produce biogas and biofertiliser, we should be asking why aren’t we?
Third, I want to say a special word about landscape. It is related to climate change but it is not the same. The word subsidy carries a negative connotation; it reeks of charity at best and protectionism at worst; but the payment on contract to farmers of public funds to deliver public goods, notably environmental goods of landscape, biodiversity, carbon storage, flood prevention, should carry a positive value not a negative one. That is one reason I say farming can and should be of benefit to the whole country and not just the countryside, and why the whole country has an interest in its success.
If that is the vision, there is a clear choice: adapt and seek prosperity, or refuse to change and prepare for slow decline. Those who defend the status quo try to caricature the case for change as being about saving money not saving agriculture. But they are wrong. There really isn’t a third way: either we reform with the chance to plan and deliver prosperity, or we put our heads in the sand and wait for the sea to overwhelm us. The world of protection and subsidies – you may have in mind the vision propounded by some of my European colleagues – just won’t last. The question is whether we manage the transition gradually, or just wait for the whole house to come crashing down. I much prefer the former course.
Shared Responsibility
The role of Government is to deliver a policy framework that encourages innovation and investment to build market share and justify public spending. For example, we are already taking a major step by reforming the levy boards. Responsibility starts with Defra, but goes much wider. The rest of Government needs to see support for farming as important to its brief – to understand the impact its policies have on farming, and the knock-on effects these have on landscapes, on tourism and on the rest of the rural economy.
- First, regulation and competition. Being a smart regulator means, for example, by 2020 we need fundamental shift in the relationship between Government and the livestock industry to achieve better management of animal disease risks. The best people to have responsibility are those at the front line – with improvement in animal husbandry standards starting at the farm level. In return there needs to be greater industry ownership: real responsibility both for shaping policy and for implementing it. And the deal is clear: there must be no gold-plating or double-regulation – which is why it is right that the EA are looking at the right risk-based approach to regulation of the IPPC for the intensive pig and poultry sectors.
- Second, planning and land use. There is a necessary debate opening up about planning and land use – not just for wind farms but also for disused agricultural buildings. The Barker review suggests minor commercial developments should not require planning permission, and that where permission is needed it should be quicker and easier for businesses to apply. I think Kate Barker is right to open up this debate – and right to say we should debate the relative value of different parts of the green belt, and recognise that there are many environmental issues not captured by the greenfield/ brownfield distinction. I will have more to say about this in a speech to the CPRE in a couple of months’ time.
- Third, skills. The Leitch review has laid down a challenging set of recommendations. We need skills for the future, making up for lost time, and preparing for the future with the real engagement of industry and individuals. I would like to know from you how you think a skills strategy for the agricultural industry of tomorrow could work.
- Fourth, procurement and investment. Public procurement also has a key role to play - whether schools, hospitals, or prisons ordering food or the Department for Transport specifying the share of forecourt sales to come from biofuels. Public bodies need to be intelligent customers with the right understanding of the relationship between short term cost and long term sustainability.
- Fifth, emissions trading and taxation: as the Stern Review set out, in the long term, the price of goods should reflect the environmental damage caused by greenhouses gases, whether this is in production, distribution, consumption or waste disposal. We need to look closely at how incentives within the food, energy and land markets can reflect environmental impact more closely.
- Finally, we need a level playing field for competition at home and abroad. At home that means a competition regime that commands confidence for transparency, independence and legitimacy. I will address the dairy sector in a moment. Abroad, it means building on successes of existing CAP reform with the fundamental changes envisaged in the joint DEFRA/HMT 2020 CAP Vision document. We are committed to a system where – by 2020 - public funds are used only for public goods that the market cannot deliver, in particular environmental benefits. We need to therefore extend compulsory modulation further and ensure full decoupling of farm payments. Ultimately, we are looking to the effective end of pillar one and the end of other restraints on trade. That is the framework for our negotiations in Europe this year, leading to the CAP and Budget reform discussions in 2008 and 2009.
If government lives up to these aspirations, there are responsibilities on the industry too. Here are five challenges that I think the industry needs to address.
First, big is not necessarily beautiful, but small is vulnerable, so farmers need to consolidate or cooperate. KG Fruits began life as an Industrial and Provident Society organising transport to help seven growers access wholesale markets, and is now the largest specialist soft and stone fruit cooperative in the UK with an annual turnover of over £100m. We need more of this.
Second, move up the value chain. There is a lot said about the dairy industry, but one of the most striking facts about English dairy production should be that while our herd size is some of the largest in Europe, our production is some of the least diversified and developed. More than half of UK dairy production goes into the liquid milk market rather than yoghurt, cheese, cream or butter; the EU - 15 average was 24% in 2004. I welcome the fact that as part of their investigation into the groceries market the Competition Commission are looking at the behaviour of supermarkets towards their suppliers and at supermarkets’ buying power; I also applaud the actions of supermarkets who are leading the way by developing long term contracts with dairy suppliers; supermarkets do a huge amount for quality and choice, and when they show responsibility in their relations with suppliers they do good as well. Equally, the only people who can lead the dairy sector from dependence on regulated prices to prosperity from innovation is the industry itself.
Third, diversify into new sectors and innovate. In 2020, if we are successful, farmers will be making money from a wide variety of new products, notably in the environmental field as they farm energy, farm water, and farm carbon, as well as farming food. But they will also be diversifying within traditional sectors and using new technology to best effect. When Philip Halhead of Norbreck Genetics explains to me how his family’s farm has moved from traditional livestock into pedigree beef genetics he describes a process of innovation that has come from necessity, and brought new life to the company. But innovation is not just an option for some pioneers; it needs to be for all.
Fourth, differentiate your product and reconnect with consumers. The market in local, seasonal and organic produce is set to grow. The public sector can help. Consumer information and labelling is very important. But farmers have a key role themselves. Supply can create demand if it is explained properly. In organics, demand is growing – it has doubled over five years to around £1.6 billion per year. Jim Collins who runs Ashlyn organics explained to me that he began going organic in 1997. Now the entire farm of 1450 is farmed organically. Alongside this, he has helped champion local organic produce and reconnect consumers with farms. The company runs three farm shops, supplies local schools, runs catering training for school cooks, opens its farms up to farm trails, picnic sites and educational visits, and has developed a farmer led cooperative that supplies the public through its organic box scheme.
Fifth, see climate change as an opportunity not (just) a threat. Global warming creates problems – but it will also create new markets and new opportunities. That doesn’t mean it is a good thing; it does mean we need to make the most of it. Over the next decade, the requirement is to ensure the costs generated by greenhouse gases across the economy are fully priced so that the polluter pays. That means greenhouse gases generated in producing food or in food miles need to be recognised in the same way as greenhouse gases generated in other industries. If UK farming prepares now for this new future, it can get ahead. The UK can become leaders in green farming – developing innovations that reduce the use of natural resources and reduce pollution. It can do so by applying science and technology to transform the productivity of traditional farming processes, and using land for new purposes. For example, over the next two decades the market in biofuels will grow substantially as demand for renewable fuels increases. We need to meet this demand in a way that helps the environment. The NFU’s ‘Why Farming Matters’ campaign suggests there is potentially one million hectares of land available for growing renewable energy crops in the UK. For example, SembCorb is building a 20 Megawatt power station on Teesside that will use 300,000 tonnes of wood. Of this 55,000 tonnes will be supplies as short rotation coppice grown by farmers in a 50 mile radius of the site. In transport biofuels, British Sugar are building a processing plant in Norfolk that will use sugar beet and other feedstocks to produce biofuels.
Its simple really. We have responsibilities in government. In the old world, if we fulfilled our responsibilities, you made money. In the new world, we can create opportunities. But it is up to you to grab them.
Conclusion
So we have responsibilities and so do you. Together they can give a sense of direction to the industry. A sense of direction and confidence that makes the difference between the son and daughter of a farmer staying in the business or going into accountancy. A sense of direction and confidence that makes the difference between a retailer settling a long term contract with a British farmer, or buying abroad. A sense of direction and confidence that makes the difference between a news editor running a story about farmers going into new business or farmers going out of business.
In July last year at the Royal Show, I called for a new focus on ‘One-Planet Farming’. As the WWF have calculated, if all countries consumed natural resources at the rate we do in the UK, we would need three planets to support us, not one. Since then, my belief that One-Planet Living is the goal all of us have to sign up to - as a government, as business, and as individual citizens - has deepened. Every part of our economy will have to change dramatically if are to live with our environmental limits. It is the new bottom line. And like Eastern Europe after the Cold War, all economies are now transition economies.
Farming as a sector is no exception. Preserving the status quo will not deliver what I hope is a shared vision of an industry with a positive balance sheet both economically and environmentally. But nor will abandoning farming when it so integral to our environmental objectives in food, energy and land.
Farming in England is in transition. It needs to find new sources of competitive advantage, new confidence in its future, and a new place in the public’s affections and perceptions. I am determined government will play its part, and I am determined to work with you to make it happen.
Page published: 3 January 2007