British politicians and the Brussels Bureaucracy have combined to destroy Britain's agricultural industry

Dr Richard North

If there one was to conduct a poll as to the cause of the problems affecting British agriculture, many people would point the finger at the European Union for its use of that blunt and unpleasant weapon, the Common Agricultural Policy (CAP). Even the Euro-enthusiast Prime Minister Tony Blair, when he is not blaming supermarkets, is keen to join the band of accusers, declaring in a speech to the World Wild Life Fund that the policy was ‘bad for consumers, bad for the environment and ultimately bad for farmers’. Blair, however, could not begin to improve on the last government’s view of the policy, expressed in a memorandum by MAFF to House of Lords European Communities Committee in 1995. It said thus:

"The huge cost of the policy to taxpayers and consumers far outweighs any benefit to them... such large transfers into agriculture represent a major misallocation of resources and thus damage the economy as a whole ...the policy is extremely complex in detail, hence difficult and costly to administer and giving scope for fraud."

In our book, The Castle of Lies, Christopher Booker and I wrote that the CAP is one of the most bizarre creations ever devised by the human mind.

"We are entering here that mysterious, semi-mythical realm of beef mountains and wine lakes, where not only cattle but even plants must be issued with ‘passports’, where the Sicilian Mafia makes a fortune out of ‘paper olives’ (olive groves which exist only on paper), yet where British dairy farmers must pay fortunes to each other for official permits to allow their cows to continue producing milk at all."

"Simply in terms of the mountains of taxpayers’ money it disposes of, the CAP puts all the EC’s other activities into the shade. In 1973 when Britain joined the Common Market, the CAP accounted for no less than 91 percent of all Brussels’ annual spending, at a cost of just over £3 billion. By 1995 the CAP’s share of the EC budget had dropped to only 55 percent, but this was only because other areas of spending had risen much faster. In money terms spending on the CAP had soared to £29.3 billion."

We then referred to our earlier book, The Mad Officials, in which we had written about,

"…the calculation of a Blackburn carpet firm that it would cost less than this sum to cover every square inch of the EC’s land area with top-quality carpet. But these direct payments are of course only part of the benefits the CAP bestows on EC farmers. Thanks to tariff barriers designed to keep out cheaper food from the rest of the world, EC citizens must subsidise the farmers twice over, firstly through their taxes, then by having to pay more for food in the shops. In 1993 this gave rise to probably the best-known single statistic about the EC, when the OECD estimated that, in one way or another, the CAP was adding £1,000 a year, or £20 a week, to the food bill of the average UK family."

Even though this figure was disputed, and anyway had fallen considerably as a result of international agreements and changing patterns of world prices, we argued that the CAP nevertheless maintained agriculture in a position of quite extraordinary privilege. We continued,

"It soaks up more public subsidies than all other sectors of the EC economy put together. And inevitably, with the dishing out of such astronomic sums of taxpayers’ money, by far the greater part serves no useful or productive purpose at all. Billions of pounds go to rich farmers who do not need the financial help anyway. Billions more are siphoned off in wholesale cheating and fraud. Billions more go to paying for produce which is not needed and has to be destroyed or dumped in the poorer countries of the third world. And yet further billions are swallowed up in paying the armies of officials required just to administer such an unbelievably complex system."

Despite further reforms in 1999, spending on the CAP continued on its upwards spiral. Nothing we wrote in 1996, or anyone else has written subsequently, has changed the fundamentally corrupt nature of the policy. But since we wrote our book, British agriculture has declined further and is now at the point of death.

Apart from The Castle of Lies, the task of evaluating the CAP has been done, not least by Richard Cottrell, Conservative MEP for the South-West, by Graham Harvey and in a series of books by Sir Richard Body MP, culminating in his superb Our food, Our land. For a clinical analysis of its failures, it would be impossible to find a more compelling source. At the core of that analysis is a damning condemnation of a key facet of post-war agricultural policy – subsidy payments. For Body, and many other critics, that is what is destroying British agriculture – the corrosive effect of public money which has eroded the capability of farmers to service their markets, distanced them for their consumers, increased land prices, and driven intensification with the concomitant use of artificial fertilisers, herbicides, pesticides and the rest.

However, it is perhaps possible that the EU – in this very specific context - is not a destroyer. It has a good alibi. The system of production support embodied in the Treaties of the European Union, which is the subject of the indictment, is not unique. The United States and most of the developed world have supported agriculture in this way. Even the UK, before joining the (then) common market, supported production with what were known as deficiency payments. Minimum prices were set for certain agricultural commodities and farmers were compensated when their products, sold on the free market, failed to attract those prices. By this means, they were guaranteed minimum incomes, irrespective of the state of the market.

Furthermore, there is another problem in lining up the CAP – or, at least its authors, the EU – as one of British agriculture’s destroyers. That problem is simply that the CAP is a common agricultural policy, applicable to all fifteen member states. Should the CAP be a primary cause of decline, every agricultural industry in the EU would be in its death throes. Yet, according to the EU’s statistical service, Eurostat (May 2001), agricultural income in the EU increased by 1.9 percent in the year 2000 (compared with 1999). And, while Finland and Denmark achieved 24.8 and 23.8 percent increases, Britain’s income declined eight percent. Using 1995 as a base, the overall index of EU agricultural incomes stood at 103.5 while the UK managed only a lamentable 58.9 – the lowest performer in the whole of the EU by a very large margin. The closest loser was Ireland at 87.8 while the index for both Spain and Belgium increased to 117. Clearly, the EU, in this context, may be an accomplice but is hardly an assassin.

What Britain needs

Before eliminating the EU from our enquiries, there is room for more subtle probing on the role of the CAP. Here, it is instructive to note that most of the pundits who have involved themselves in the debate about farming, occasioned by the onset of foot and mouth disease, seem to agree on one thing: if there is a silver lining to the debacle, it is that agriculture - and rural policy – have been put firmly on the political agenda. Media attention has also been focused on the CAP at a level of intensity rarely experienced.

As an example of that media attention, The Times published an editorial the morning of the day Blair announced his election date. Its writer opined,

"Britain’s rural landscape is an asset whose value has been both distorted and reduced by mountains of subsidy designed in and for another age… The subsidies of the iniquitous common agricultural policy have been cut back in the past decade, but only to be replaced by compensation payments to farmers which, again, are heavily biased in favour of those with huge and highly productive holdings who need no handouts. The European Union’s pet monster is still untamed."

The ‘pet monster’ is untamed. What Britain needs, The Times continued…

"…is a wholly new concept, one that ceases to treat agriculture in isolation from rural strategy. It must begin by asking the question: what kind of countryside do we want, and what are we prepared to pay?"

There, in the search for culprits, lies a clue - as clear as a patterned footprint in the mud outside the forced window of a burgled house: what Britain needs… Perhaps it is not the CAP per se that is wrong. It is more likely that the CAP delivered something of a boost to British agriculture (and protected it from domestic frugality). That it contributed to the rationalisation of the industry cannot be laid exclusively at its door. This was happening anyway, both here and globally. But it has outlived its usefulness. Once prosperous farmers are no longer thriving. Insofar as it ever did, the CAP no longer meets the needs of the UK and is in need of reform. Maybe, it is that lack of reform that was, at least in part, responsible for killing British agriculture.

Agreement on reform

All the traditional political parties agree that CAP reform is necessary. For instance, the Conservative Party in its 2001 manifesto opined:

"The Common Agricultural Policy has damaged consumers, farmers, the taxpayer and the environment. It must be reformed to cut the bill for taxpayers and consumers, provide sustainable long term support for farming, and protect the environment and the countryside. We will renegotiate the CAP so that many decisions currently taken at EU level would be taken by the governments of individual member states.

The Labour manifesto offered something essentially the same:

"…British agriculture will only thrive in the longer term through a further, radical reorientation of the Common Agricultural Policy (CAP), away from distorting Europe-wide production subsidies towards more national responsibility for domestic farming, environmental and rural development priorities. CAP reform is now more possible; Labour’s engagement with the EU gives us the best chance of making it happen."

Then there was the Lib-Dem offering:

"Reform is long overdue. We will promote the sustainability of agriculture and redirect support so that small and family farms are more effectively supported. We will seek to refocus payments on achieving public, environmental and social goals rather than encouraging unnecessary production, while maintaining the current overall level of support for farmers and rural areas."

And there we have it. Reform (or renegotiation, which amounts to the same thing) is the centrepiece of all three main political parties’ agriculture manifestos.

An international view

Agreement on the need for reform is not exclusively British. From being one of the main obstacles, the Germans suddenly came ‘on-side’ in early 2001 after embarrassing revelations that BSE had been present in Germany long before it had been officially admitted. The result was the appointment of a new German agriculture and consumer protection minister, Renata Kunast, leader of the Green Party. At last Germany had a minister dedicated to the ‘greening’ of agriculture and she lost no time in declaring ‘The BSE scandal marks the end of agricultural policy of the old style’. Her prescription was that the EU member states should progress to organic farming and other ‘environmentally friendly’ systems, moving away from production support to environmental subsidies.

Kunast’s appointment was hailed as shifting the balance of power in the EU, to the extent that the bi-partisan alliance of Germany and France, which had scuppered the UK’s ambitions for CAP reform, no longer existed. France, it was felt, could no longer rely on Germany’s help to block reforms. And even the French agriculture minister, Jean Glavany, seemed to be bending. At the agriculture council held at Östersund in Sweden in April 2001, he spoke of the CAP being ‘outdated’ and in need of ‘reorientation’. Attention was focused on an expected ‘mid-term review’ planned for 2002 and, speaking to Socialist deputies at his own national assembly, Glavany even dared to criticise president Jacques Chirac for refusing to contemplate reform of the CAP until 2006, when the existing financial agreements were due to be renegotiated.

Chancellor Gerhart Schröder then added his voice to the fray in late May, publishing a motion for his SDP Federal Party Conference in Nuremberg, due to be held on 19-23 November 2001. His Party was in favour of a new agricultural policy ‘…which concedes the highest priority to consumer protection and the quality of our food…’ and therefore argued for ‘a new definition for the objectives for CAP’.

Empty posturing

Like the UK political parties, and their manifestos, Schröder et al were indulging in empty posturing. At a breakfast meeting with the European Policy Centre in Brussels in early May, Dr. Franz Fischler, EU agriculture commissioner, had already reminded member states of the terms of the Berlin agreement. The mid-term review was intended for procedural adjustments. It could not be hijacked. It would provide only an ‘opportunity to re-examine the workings of a number of market regimes such as beef, dairy and arable crops’ and to examine how best to use the CAP budget ‘while staying within the imposed limits’. Nailing down the lid on the coffin of early reform, he added ‘It is important to understand that we are not changing the objectives of the CAP as re-formulated in Agenda 2000 and agreed in Berlin’. And no, he did not favour a wholesale shift to organic farming. Kunast was not going to get her way.

More or less as a sop to the reformers, Fischler told the German current affairs magazine Der Spiegel that tiny farms could have a flat-rate subsidy of 1,250 euros a year, to save them filling in the forms to obtain land or cattle subsidies. But the ‘barley baron’ subsidies would be unchanged. In an almost contemptuous snub, the EU Commission promptly announced a five percent increase to the agriculture budget for the forthcoming year, a direct negation of the Berlin agreement where reforms had been finalised on the basis of a progressive reduction of subsidies. Thus, whether attacked by Nick Brown, Tony Blair himself, or the devil incarnate, the CAP was going to roll along much the same as before.

The essential wickedness of all this was that, in terms of the 2001 general election, farmers had been disenfranchised. No matter what the political parties had said in their manifestos, there was no prospect of change in agricultural policy until 2006. Since governments are elected for five years, any changes could only be negotiated by the following government. Agriculture was firmly off the agenda. Even if it had been on, voters would not be given an opportunity to select their policy-makers. We do not have an agricultural policy in this country. That is determined by the EU. The role of the British government is constrained to that of supplicant. We get to elect our negotiators, nothing more.

Powerlessness

Nothing more illustrates the powerlessness of our governments than the performance of New Labour which, prior to the May 1997 election, had pledged CAP reform. Armed with a massive majority and its commitment to a ‘constructive, engaged and positive’ approach to ‘Europe’, the newly elected government – soon to take over the presidency of the EU - was determined honour its commitment. Within a month of the election, the new minister of agriculture, Jack Cunningham, was declaring that farm subsidies had to be scrapped and replaced with EU aid to ‘rejuvenate rural areas, encourage jobs and protect the countryside’. Speaking before opening the Royal Show at Stoneleigh that year, no less than Britain’s premier agricultural show, he said that the government had made reform of the CAP a ‘major objective of its European policy’.

By September that ‘major objective’ was running off the rails, with reports of ‘clashes’ with Germany, which was opposing sweeping reform. Jochen Borchert, its agriculture minister, could not have made his country’s stance clearer. ‘The reform is unacceptable to us in its present form, and it will have to be changed considerably if we want to reach a consensus’. Effectively, by January of the following year, it was all over bar the shouting. Despite John Prescott, the deputy prime minister, having reaffirmed reform as a ‘key priority’ in the Queen’s Speech debate the preceding May, and Blair, in his Lord Mayor’s Banquet speech in the November, having declared that Labour would ‘change Europe where it needs changing’ putting CAP reform at the head of a list of changes, The Daily Telegraph duly recorded ‘Blair abandons farm reforms’. The Prime Minister – on assuming the EU presidency – had failed to include reform as a top priority ‘because of stiff opposition from German farmers’.

Writing for The Daily Telegraph in March Jonathon Porritt, a ‘green’ activist and member of Cunningham’s Agriculture Advisory Group, thought differently. ‘There’s a serious reform agenda in town, and it’s starting to get to those who must once have thought they were beyond reforming’ he gushed. ‘The UK has to be able to punch its weight in Europe at ministerial level, especially as the UK is one of only three or four countries seriously engaged in trying to reform the CAP’. But, when agriculture ministers gathered in Brussels in February 1999, familiar ‘deadlock’ headlines began to appear. As farmers rioted in the streets, France and Ireland added their opposition to the reform agenda.

Cunningham, meanwhile, had been replaced by Nick Brown. Despite Porritt’s gushing enthusiasm, he was forced to witness the ultimate failure. After three weeks of tedious negotiation, he conceded a position which, far from saving money, increased CAP funding by nearly £1 billion. With an understatement that belied his Austrian nationality, Fischler admitted that the reforms ‘were slightly less ambitious than the Commission’s original proposals’. Nevertheless, the position was ratified at the Berlin summit in late March after a twenty-hour negotiating marathon which had ended in ‘exhaustion and fudge’. All that was left was for a grinning Tony Blair to emerge into the dawn light and announce a victory for Britain. But so badly had the reforms been ‘bungled’ that the Commons Agriculture Committee warned that they would have to be renegotiated within two years. This was not to be.

A failure in waiting

Come the arrival of 2006, attention will be focused on yet another bout of CAP ‘reform’. According to Mrs Beckett, the newly appointed head of the Department of Environment, Food and Rural Affairs, Britain will, once again, be ‘leading the pack’ in pursuing reform along greener lines. But, from past experience, talks will be dominated by speculation as to whether the Germans, the French, or the Dutch, Austrians, Spanish or Greeks will play ball with the Finns, the Danes, the Swedish, the Irish or the Portuguese, or any other combination imagination can construct. Crucially, we will also be entertained by the fraught question of EU enlargement, where CAP funding has become the sticking point which could bring the whole project to a grinding halt.

Already, the writing is on the wall. The Polish Prime Minister, Jerzy Buzek, has insisted his country must receive the full aid package given to existing EU members, should it join the EU. In particular, Poland wanted equal farm aid, despite having more farmers than the rest of the EU put together. Germany - the main paymaster of the EU – has made it clear that it is not prepared to fund the Polish demands. France and the UK have done likewise. Without additional money, payments to Poland or the rest of the twelve aspirant states will have to come from subsidies paid to Italy, Spain, Greece and Portugal. But these ‘Club Med’ states are not willing to foot the bill either. Neither is Ireland, which remains a major beneficiary.

As a foretaste of the battles to come, Spain, during the course of the early part of 2001, started to block routine EU business to safeguard its national interests. Ireland, on the other hand, by voting in its referendum against the Nice Treaty, has signalled its opposition to enlargement and the possible dilution of its subsidies. Motivated by the need to maintain their own subsidy base, the Irish could also prove a formidable obstacle to CAP reform. And, come the negotiations for real, any fundamental change in the Policy will require revision to the EU treaties. That requires unanimity. Even little Luxembourg – with a population the size of a London borough - can exercise a veto. If either Ireland or Spain use their veto, reform will be dead in the water.

That is the reality of CAP reform, described by Brian Gardner, farm policy analyst at PRM Consultants in Brussels. He put his finger on the problem. It would be ‘persuading governments, who are still intent on maximising their own take from the agricultural budget’. Every member state is willing to accept change, as long as its contributions are not increased and its receipts are not reduced. The system is in perpetual gridlock. Thus, even if there was a general willingness to undertake a root and branch reform of the CAP, it will not happen.

Mansholt to MacSharry

When the 2006 attempt at reform fails, it will come as no surprise. No reform of the CAP has ever succeeded and, after each attempt, expenditure has increased. Yet, prior to each attempt, the rhetoric is alarmingly similar. When in 1969 the Commission produced its first substantive proposals for reform (known as the Mansholt Plan), it concluded:

"The Community is now having to pay so heavy a price for an agricultural production which bears no relation to demand that measures to balance the situation on the market can no longer be avoided…"

That the Mansholt reforms – and the marginal reforms of 1977 and 1988 – failed is adequately demonstrated by the fact that, by 1991, there had been a thirty percent increase in the CAP budget, there were twenty million metric tons of cereals in store, one million tons of dairy products and three-quarters of a million tons of beef, rising at a rate of fifteen to twenty thousand tons a week. Ray MacSharry, the then Agriculture Commissioner, in 1991 argued that ‘the continuation of such a policy is not sustainable physically or from the point of view of the budget’. True to form, he then warned that ‘the status quo cannot be defended or maintained’. But, while his reforms of 1992 managed to reduce the surpluses, they neither stemmed the escalating costs of the CAP – which increased from 30 to 40 billion euros in ten years - nor addressed the structural problems of agriculture. By those measures, MacSharry failed, as did the Agenda 2000 reforms before they even got off the ground. There can be no dispute that the only consistent feature of the CAP reform process is that it always fails.

The tragedy of modern farming

The tragedy of modern farming is that nowhere will you see in the literature from the main UK parties an acknowledgement of this reality. Nor will you see an admission that the UK does not have an agricultural policy of its own; that it has to rely on the common policy determined collectively by member states. Nowhere will you see spokesmen admitting that significant changes must be agreed unanimously. Nowhere is it conceded that UK demands will not necessarily be agreed (and, in fact, are unlikely to be agreed), so policy formulation will be constrained by what is acceptable to the rest of the EU member states.

All that is on offer is ‘denial’, an absolute refusal to confront reality, a perplexing, irrational attempt to maintain the charade that we are still in control of our own affairs. Thus we see in the Conservative manifesto the claim that:

We will also fight for a fair deal for consumers, by introducing honesty in labelling and requiring the country of origin and method of production of the main ingredients to be stated on the label of all food products.

Yet, when in the year 2000 Tory back-bencher Stephen O’Brien tried to do just that by introducing a private member’s Bill, he was rebuked by the Minister of State for Agriculture, Joyce Quinn. She coldly informed him that his Bill was an ‘abuse of the Parliamentary process’ because the proposition was contrary to EU law. What price Mr Hague’s wonderfully misleading slogan ‘In Europe but not ruled by Europe’?

Nevertheless, ‘denial’ is not the sole province of the Tories. All three main political parties are locked into the myth that, somehow, their dreams and aspirations can be realised by the process of reform. This is a fantasy of such crass vacuity that it is scarcely possible to believe that grown adults could be so dismally stupid as to even consider it, much less speak it out loud. But then, we are talking about politicians.

They are the real culprits. The EU with its CAP is not actually the villain. Looking at it dispassionately, very few policies are wholly good or wholly bad. For a time, for some member states, the CAP had its uses and performed a positive role for some agricultural economies. But not even good aspects of a policy can be good for all time and, when they have had their time, they become bad. The essence of good policy-making – like good farming – is flexibility, the ability to respond to changing circumstances. Therein lies the central flaw of the CAP. It requires the assent of all parties – fifteen disparate member states – before any fundamental changes can be made. So frighteningly inflexible has become the policy-making machine that the only agreement now that can ever be reached is an agreement that the parties to the policy will never be able to agree to those changes.

But British agriculture desperately needs change. To quote the Lib-Dem manifesto, reform is long overdue. That reform has not happened is a major contributor to the decline of British agriculture. Yet, rather than admit there is no realistic mechanism for reform, politicians posture and prance, pretending they can do something that simply cannot and will not happen, deluding themselves and the nation. Agricultural policy has thus been paralysed, locked in a time-warp from which there is no escape.

By that measure, the true destroyers of British agriculture are our own politicians, those smug, self-satisfied denizens of Westminster who venture into the real world only at election times, and then retreat in alarm as they discover the degree of utter contempt in which they are held. In the real world, which they so assiduously avoid, variously up to fifty-two percent of the British population has expressed a desire to leave the EU. In that world, it is readily acknowledged that, before the fate of farming can be decided, the issue of our membership of the European Union must be settled. It must be recognised that the real choice for farming is between a limited, inadequate, tardy and wholly unsatisfactory sham ‘reform’ which solves nothing and creates still more problems, or a ‘clean sheet of paper’ exercise that could only be implemented on our withdrawal from the EU.

Maybe those politicians and others who support CAP the fantasy of ‘reform’ do not have blood on their hands through the act of plunging their daggers in the body of agriculture. But, in cravenly supporting the lie than there can be any progress as long as the UK is locked into membership of the EU, they bear direct responsibility for the decline of agriculture. Those who continue to subscribe to the fantasy, despite multiple and continued evidence of failure, are dangerous. It is their fantasy which has paralysed the body politic, staving off that which is glaringly obvious to anyone not trapped in the rosy-hued bubble of self-deception, that reform of the CAP is simply not an option.