"TOWARDS A BRITISH AGRICULTURAL POLICY"

British farming is facing its biggest crisis in history. After 25 years of the EU's Common Agricultural Policy, every sector of agriculture is on the floor. Whether it is eggs, poultry meat production, beef, pigs, potatoes, wheat, barley, milk or - as we have heard recently - sheep meat - the whole industry is facing a barely imaginable catastrophe.

...... To illustrate the problem, I recently had a very tense and somewhat heated conversation with a sheep farmer whose income is now one quarter of what it was ten years ago. We are good friends and agree on many things but, this time, there was one thing I had difficulty accepting from him. His view, like so many others in his dire position, was that the industry needed more money from government to see it through the current crisis - enough to bring the unwanted ewes off the hills and subsidise their disposal.

The problem, as I saw it, was that it was the subsidies which caused the problem in the first place.

Ever since the EU started subsidising ewes which induced sheep farmers to breed ewes for the subsidy payments rather than fat lambs for the table - it was inevitable that, sooner or later, there was going to be a surplus of ewes.

With demand for their meat being relatively inflexible, it was a matter of cold brutal economics that the price was going to nose-dive.

4 That, of course, is not the whole extent of the problem but the fact remains that the net effect of any production-linked subsidy is to distance the producer from the final consumer.

Thus, when market distortions occur which they will always do in a subsidy-driven system - the self-correcting mechanisms of the market are blurred and the result always ends in tears.

For my farmer to ask for more of the same is like a drug addict looking for another fix to cure his pain.

As it stands though - much as I am pained to admit it - my farmer was partially right. Upland sheep farmers do need urgent financial assistance, pending more fundamental reforms of the subsidy system. But that is something which they cannot have.

The EU will not allow it.

Looking at the broader issues, however, the basic need is to tackle the addiction to subsidies in the agricultural industry, which has turned formerly independent, yeoman farmers into the slaves of an increasingly oppressive system. But such is the addiction, the craving for the subsidy cheque, that when I was invited to address this conference, concern was expressed that I might advocate the New Zealand solution, and call for the abolition of all subsidies.

.... Actually, those fears were unfounded. No-one in their right mind can believe that the New Zealand scenario should apply to the UK.

5Attractive though removing subsidies might be, the economic infrastructure and the markets in the Antipodes are so very different from the conditions in the UK that a straight transposition would be disastrous.

Nevertheless, while one cannot advocate the complete removal of subsidies, one thing is very clear - the focus on production subsidies must be drastically changed. We have more than enough experience now to know that this form of aid is pernicious and ultimately highly damaging to those it aims to protect. And that much is universally agreed. It is at the centre of the current round of CAP reforms, an issue even understood by Mr. Nick Brown, our agriculture minister. (This was 1999)

However, the EU reforms are focused on introducing a scheme of payments to farmers, related to acreage (or hectarage) rather than units of production. This is already the basis of the bulk of arable subsidies, under the notorious IACS system, where "area payments" are made. This is also coupled with "set-aside" which compensates farmers for not producing.

But what the system does not do is protect the small farmer, or the diversity of production which contributes to the richness of what true countryside we have left.

Protection is the key word.

Whatever one's views of subsidies and "featherbedded farmers", there can be absolutely no doubt whatsoever that UK agriculture cannot compete freely with global competitors.

For instance, an Australian rancher, with a homestead the size of Wales, managing several thousand head of cattle with one man, a dog and a light aeroplane - tolerating welfare conditions which would have him in jail if he allowed them in the UK - will always be able to produce beef more cheaply than can UK farmers.

The same goes for virtually every other commodity. For instance, British horticulture cannot compete with the volume of cheap produce coming from Spain which has round-the-year sun, cheap labour and a more benign tax regime on transport and distribution - to say nothing of a more relaxed regime of pesticide control which would never be tolerated in this country.

Now the unreformed free-marketer would say that the high-cost regime should go to the wall and we should allow free rein to cheaper imports.

But the price of that would be the destruction of the countryside as we know it, the loss of thousands of jobs, and the collapse of the rural infrastructure - to say nothing of the loss of quality food. This is too high a price to pay.

But this is not even on the agenda with the EU. The Commission is not generally in favour of free trade. It is quick to introduce protectionist measures to defend the broader Community interest - as in the "banana war" with the US.

What it does do is prevent Britain from protecting its own agriculture, in favour of supporting different systems in the other member states. Therefore, we get neither the benefits of free trade nor the luxury of defending our own interests.

In the EU we get the worst of both worlds.

Essentially, if we are to have a vibrant agriculture, we have to limit imports, not only from non-EU states but from our EU partners as well.

To suit the needs of our own agriculture, we need to be able to apply our own import levies and quotas - the most effective instruments of control - to restrict imports. As with the single currency, where the limitations of a "one-size-fits-all" interest rate policy are more clearly understood, we cannot have a "one-size-fits-all" agricultural policy for 15 member states, without adversely affecting our own interests.

Now here is the rub. The CAP is commonly cited as the cause of increased food prices in the UK. A thousand pounds a year per family is often quoted, through protectionist measures such as import levies.

But this is not the issue. What actually matters is that when levies are imposed, the proceeds disappear into the EU coffers rather than being paid to our own treasury. Thus, we pay higher prices for food without the compensatory increase in government revenues, reducing the burden of taxation elsewhere.

And the fact is that we are not heavily burdened. As a nation, we spend more on sports equipment than we do on food, which demonstrates where our priorities lie.

But, if the British consumer is paying slightly more for food than is strictly necessary, there is an important factor in the equation which needs to be taken into account.

Here the simple fact is that, although agriculture now accounts for less than one percent of GDP in Britain, it occupies something like 80 percent of the land mass. That land - the landscape - is a vital part of our heritage and is a significant tourist attraction. It has a real value to the economy, which is not found on any agricultural balance sheet.

Furthermore, that landscape has a significant effect on our appreciation of who we are as a people. It adds - to use that old-fashioned phrase - to the gaiety of life. It provides the backdrop for much of our entertainment and recreation. It sustains wildlife. It provides of green lung for the urban population; a retreat from the cities without which urban life would be intolerable.

These factors, likewise, do not appear on any balance sheet, but they are a vital part of our nation of which the farmer is the custodian. If we want to keep the countryside, there is a price to pay.

But it has to be said that this backcloth of our nation is not just a function of agriculture, but of rural society as a whole. It is not just the fields that make the countryside what it is, but the buildings, the villages, the churches, the pubs, the shops and the people - all of which sustain the rural economy as a whole, of which agriculture is just a part.

And therein lies the central mistake in the EU's Common Agricultural Policy. It concentrates on the disbursement of funds to farming while the rest of the rural economy goes begging.

Thus, while we have barley barons waxing rich on subsidies, they preside over a hinterland barren of people, with employment opportunities - especially for the young - a dearth of cheap housing; and a shortage of shops, schools, busses and the rest. The mistake is the failure to support the rural economy as an integrated entity, and the equal failure to understand that it has always been a complex, mixed economy which needs more than just farming to sustain it.

Thus, much of the funding which goes to support agriculture could and should be diverted to supporting the rural infrastructure - to keep the shops trading, the busses running, the schools open and to provide affordable housing for rural workers. This support would have a knock-on effect on the economics of farming, keeping workers and enterprise in the district and providing a broader economic base.

Add to that a more liberal approach to planning and regulation generally. Farms could set up shops selling a wide range of goods instead of being limited to what is produced on the farm. Small abattoirs and food processors could thrive. Diversification could be a realistic proposition, and farms could feed off their local communities, adding value to them and getting value from them.

The ultimate proof of this is my farmer friend who, if he had a local abattoir, could have sent his ewes for slaughter and bought them back to stock his freezers, for sale to his neighbours.

But he cannot.

Through the destructive implementation of EU rules, his and thousands of other local abattoirs have been closed down. Even if he had this facility, he has too few neighbours to support his enterprise. The hills have been denuded of population by 25 years of the CAP.

And if subsidies had not forced a concentration on sheep as a product, he would in any event be producing fewer sheep and a wider range of goods for his local customers. If planning restrictions were not so tight, and red-tape so onerous, he would have diversified into non-agricultural activities, subsidising his own agricultural enterprise.

As it is, we have a situation where the loudest sound in the countryside this autumn will be the drone of JCBs, digging holes so that unwanted sheep carcasses can be buried.

Meanwhile, hard working farmers, subsidised to the hilt, waste away in penury, while cheap food imports - mainly from the EU flood the supermarkets. This is a policy of insanity.

The trouble is, as long as we are members of the EU, the straightjacket of "one-size-fits-all" will dominate policy making.

We are locked onto this policy of insanity. And if it is near-impossible, if not actually impossible, to devise a farming support package which suits the individual needs of each member state, think how much more difficult it would be to have a totally integrated rural policy developed by the centre.

How can one policy - one support system - take account of the special needs of the sun-soaked Basques and frozen Sweden, or the needs of farmers on the Rhineland plains, or of the intensive farmers in lowland Holland or in Denmark, where a population of 4.5 million produces 22 million pigs a year.

Others would, of course, have it differently. Owing to the strong pound, farmers have lost out as a result of the peculiarities of the system by which we pay money to Brussels and then receive some of it back in a debased currency - the Euro - in order to pay our farmers.

Much better, some would say, if we joined the euro, and then our farmers would not suffer from exchange rate fluctuations.

How incredible this argument is.

If we paid our farmers directly, instead of recycling the money through Brussels, not only would they not lose out, they could actually receive more without any increase in taxation. However, given an enlightened policy, we would probably have to pay less.

Whichever way you look at it, there is no case for a Common Agricultural Policy. Any attempt at a common policy is fundamentally flawed. And it is not a question of a need for reform. You cannot reform something which is fundamentally flawed. It will still be fundamentally flawed.

What we need is a British Agricultural Policy - a rural policy - to suit British farmers and the British people.

We need a Ministry which implements the policy on behalf of Britain, instead of acting as a branch office for Brussels.

We need Ministers who can make decisions instead of whining that their "hands are tied" every time there is a crisis.

We need Ministers who do not have to go rushing off to Brussels for permission, every time they want to do something.

We need Ministers who can produce genuine aid, targeted to where the need is greatest, instead of producing "smoke and mirrors" packages of pretend-aid because the EU will not allow them to do anything else.

All of these things we need. None of these things we can have, as long as we are members of the EU.

While we still have some countryside left, and some farmers to populate it, we have to make a choice - our countryside or the EU. We cannot have both.

That is the message we must deliver.

Dr Richard North, UKIP Conference, Birmingham, 1st October 1999.

Reprinted with acknowledgement to UKIP (Scotland).

Written in 1999 long before the FMD crisis