Let the farmer out of the pen: Redundancies might do more for agriculture than endless subsidies, writes Simon Gourlay (CORRECTED)

CORRECTION (PUBLISHED 18 MAY 1993) APPENDED TO THIS ARTICLE

STUDYING other farmers' fields from a train window is a pleasant pastime, and travelling from Gloucester to London recently gave me ample opportunity to indulge myself. There seemed to be more fields than usual planted with forage peas; oil seed rape, now a distinctive bright yellow; and linseed, soon to be a pretty shade of pale blue. Every time I looked up and saw a field I winced, reflecting that it was only through the munificence of the taxpayer that they were there at all.

In these times of turbulent government finances, I find myself feeling acutely uncomfortable that it is the taxpayer who is the unwitting and ever more generous paymaster of that increasingly grotesque animal, the Common Agricultural Policy (CAP). For every acre of those crops grown in 1993 the farmer will receive about pounds 150 from the market value of the crop and, after much form-filling, rather more from the public purse. Those crops are extreme examples - some production categories receive no subsidy at all - but by 1994 the taxpayer will be forking out pounds 100 for every acre of productive land in the European Community.

Are such payments in the interests of cheap food, or food security, or are they just symptoms of a system that is lurching towards terminal insanity? Are they value for money? Surely, at least, they must keep farmers happy?

Ask a hundred EC farmers those questions and you will get a hundred different answers, from Frenchmen who will deplore that the CAP is ringing the death knell for their businesses, to some Englishmen almost embarrassed by such largesse. Unable to believe it will last for long, they cheerfully bank the cheques while it does.

Problems with the CAP are not new. Milk and wine lakes appeared in the late Seventies, but were happily ignored, while during the early Eighties political signals to farmers were still on green. But by the end of the decade meat and grain had joined the ranks of surpluses, their disposal costs had rocketed, and with the General Agreement on Tariffs and Trade having to be taken seriously, the word on everyone's lips was 'reform'.

So in 1990 Ray MacSharry, the EC's former agriculture commissioner, set to work, and two and a half years later the Council of Ministers finally agreed on a package that was heralded as containing the reforms to end all reform.

Alas, the result is a truly horrific brew. It embraces nominal moves towards market realities, but couples them with production-related subsidies to be controlled by a veritable quagmire of detailed regulation. It will have an uncertain impact on over-production and will sharply raise EC budgetary costs. The escalation in complexity is frightening: on April Fools day or very soon thereafter every farmer in the land was supposed to have received a 96-page form of which the Soviet bureaucracy in its heyday would have been proud. Fill it in or perish is the order of the day.

Is this really the best way to run an important primary industry? The answer can only be an emphatic no.

The present system still largely pays farmers' subsidies relative to current production. The more they produce, the more subsidy they get. An alternative approach, originally put forward by Professor Tangermann of Gottingen University in Germany, completely breaks that link. He suggests scrapping production subsidies altogether, paying a finite compensation package based on historical production (broadly the equivalent of redundancy), and having totally separate policies and payments for environmental and countryside schemes. Such an approach, called decoupling in the jargon, has much to recommend it.

But could Europe's farmers be persuaded to accept it? They are still very much a political force, and even if Eurocrats were to propose it and politicians were mindful to adopt it, the farmers' implacable opposition would almost certainly kill it. The rapid drop in the number of farmers in recent years has made them suspicious of change. During the past 20 years the number of farmers in Europe has more than halved and many observers think that, whatever happens to agriculture policy, in the next 10 it will at least halve again. Given the age profile of the industry, that may be a conservative estimate.

While five years ago relatively few may have wanted voluntarily to leave agriculture, a recent survey in Somerset showed half the county's farmers wanted to leave the land but were unable to do so. They are locked in.

No doubt some will take fresh hope from the dramatic improvement in prospects following sterling's devaluation and the accompanying sharp drop in interest rates, which, at least in the short term, will be of great benefit to the profitability of UK farming. But few are in doubt that the medium-term prospects are for a progressive tightening of the screw.

Therein lies a tricky dilemma for organisations such as the National Farmers Union. It is difficult for farmers to pursue an alternative policy, the main purpose of which could be read as seeking to push half their members out of their present occupation and, therefore, out of membership.

Even when times are bad, it is tempting to hold out hope that things are going to get better. When times are relatively good, it can be seen as perverse to say that they are going to get bad again, so we'll do our best to get rid of you while the going is good.

But in the interests of those who will ultimately have to go anyway, and of those who will be the survivors, a policy for positive restructuring of the industry would be infinitely preferable to the aimless drift into chaos that currently passes for one.

The writer is president of the National Farmers Union.

CORRECTION

In yesterday's article Sir Simon Gourlay should have been described as the former president of the National Farmers Union. The current president is David Naish. We apologise for the error.

(Photograph omitted)