RDC(3)FOU8

Inquiry into the Future of the Uplands in Wales

Response from The Farmers’ Union of Wales

Dear Alun

Rural Development Sub-Committee inquiry into the future of the uplands in Wales

Please find below the Farmers’ Union of Wales’s submission to the Rural Development Sub-Committee inquiry into the future of the uplands in Wales.

Yours sincerely
Nicholas Fenwick
Director of Agricultural Policy

Farmers’ Union of Wales Submission to the National Assembly for Wales Rural Development Sub-Committee inquiry into the future of the uplands in Wales

Background

1. The particular importance of the Welsh uplands, and the disadvantages faced by upland farming communities, were formally recognised as long ago as 1939, when the Welsh Agricultural Land Sub-Commission described the techniques and structure of Welsh upland farming as being in an “advanced state of dereliction”.

2. As a result, the Hill Farming Act was passed in the immediate post-war period, which provided support for these areas within the framework of the Agricultural Act 1947. The provisions were eventually extended to the upland store cattle and sheep sectors under the terms of the Livestock Rearing Act (1951), and numerous initiatives followed in the 1950s and 1960s as Governments sought to find ways to address the issue of rural de-population.

3. Following the UK’s signing of the Treaty of Rome in 1973, British hill farming support became subsumed within the European legislative framework, and the majority of the current Welsh Less Favoured Area (LFA) was designated as such in 1975, with the final designation in 1984 giving 80% of Welsh land LFA status.

4. Around 30% of Wales’s area comprises habitats that are of particular wildlife value, including 1,019 Sites of Special Scientific Interest (SSSIs). Around 80% of non-tidal land categorised as SSSI is in the LFA, as are the majority of lakes and rivers with equivalent status. The latter comprise some 1,588 km of main rivers and 264 lakes.

5. Of Wales’s agriculturally significant holdings, 63% are Less Favoured Area (LFA) cattle and sheep enterprises. The remainder comprises 14% non-LFA cattle and sheep, 13% dairy, 2% arable enterprises, and other crop or mixed enterprises Welsh Assembly Government Farming Facts and Figures 2008.

6. Of the land that comprises the Welsh LFA, 28% is categorised as Disadvantaged Area (DA), while 72% is Severely Disadvantaged Area (SDA).

7. Between the financial years 2000/01 and 2006/07 net incomes on LFA cattle and sheep farms varied between a minimum of £1,600 in 2001/02 and a maximum of £15,900 in 2003/04. LFA cattle and sheep farm net incomes in the financial year 2007/08 were £12,200 Welsh Assembly Government Statistical Release 191/2008.

8. In the financial years 2006/07 and 2007/08 average net LFA farm incomes were 73% and 110% of net non-LFA farm incomes.

9. In 2008 the average LFA payment in Wales was £2,521, representing 20% of net LFA farm incomes and 13% of net LFA farm profits Net Farm Income is defined as the return to the principal farmer and spouse for their manual and managerial labour. Net farm profit makes no allowances for rent, depreciation of assets, interest payments and hired labour.

10. The farming industry makes an invaluable contribution to the economic, social, environmental and cultural cohesion of rural Wales. Farming also plays a key role in the preservation of Welsh culture, particularly in terms of the Welsh language, which in many areas is primarily preserved in farming communities, having been largely displaced by the English language in towns and villages.

11. Agriculture supports over 10% of full time employees in Wales, and any decline in the industry is likely to affect unemployment rates significantly The Economic Potential of Plants and Animals Not Currently Fully Exploited by the Welsh Agricultural Sector, Central Science Laboratories, 2003 . Given the predominance of upland areas within Wales, the numbers directly and indirectly employed in farming therefore make a crucial contribution towards sustaining rural businesses and communities within upland communities.

12. Within the LFA, population densities and average incomes are well below average UK levels; the Gross Value Added (GVA) per head in Wales is 20% below the UK average, while in areas that are predominantly Less Favoured this figure is closer to 40% Rural Development Plan for Wales 2007-2013 – Situation Analysis.

13. The combination of low population densities, remoteness from markets, and low GVA per head in LFAs severely limit the diversification opportunities that are available to those in upland areas; for example, access to markets that add value to farm produce are minimal within the Welsh LFA, and this is reflected by the fact that commercial outlets, such as supermarkets, within or close to such areas are generally at the lower end of the cost spectrum.

14. The proportion of the working age population in rural Wales who are working and who are self-employed is 7% higher than in Wales as a whole, which reflects the fact that businesses within the Less Favoured Areas have a high dependency on the agricultural sector5.

15. Upland farming communities, and the support they receive, are therefore essential in terms of the sociological and environmental structure of Wales’s uplands, and any changes that reduce or distort such support represent a threat to those uplands.

What form should future public support for the uplands take (including a consideration of the European Commission’s emerging proposals for the designation of Intermediate Less Favoured Areas)?

16. Less Favoured Areas (LFAs) and previous area classifications have played a key role in sustaining Welsh upland communities and environments for half a century, reducing agricultural land abandonment and the loss of biodiversity in the uplands of Wales, while also stemming rural depopulation.

17. Changes to the LFA scheme therefore have the potential to damage valuable environments, while simultaneously causing upheaval in rural communities. Models that increase economic pressures, either locally or nationally, will reduce the incentive for individuals to continue to manage land, which will in turn have a detrimental impact on delicate natural environments that rely upon the continuity of farming.

18. In June 2008 the Farmers’ Union of Wales considered the potential impact of all four options for a new LFA categorisation criterion, as proposed by the European Commission, in the context of the Tir Mynydd scheme. The Union concluded that those options based upon measures set by the Joint Research Council would be severely detrimental to environments and communities, and would also be costly to implement for Member States. It was also concluded that, in the absence of socio-economic criteria, the ‘Status Quo+’ option would have a detrimental impact on environments and communities.

19. The Union therefore believes that the European Commission should allow the existing LFA criteria to continue, while seeking to find more equitable solutions to the problems identified by the European Court of Auditors.

20. Any changes to the criteria upon which the extent of the Welsh LFA is decided should be minimal, and socio-economic factors should be retained as one of those criteria. In particular, a reduction in the proportion of Welsh land categorised as LFA could have a diverse range of adverse influences on communities and the environment, and would also weaken the framework within which future environmental measures might be applied.

21. Given the importance of the Tir Mynydd Scheme to Wales’s uplands, the FUW welcomed the Rural Development Sub Committee’s Inquiry into the Review of Axis 2 of the Wales Rural Development Plan 2007 – 2013, and its recommendation that “ the Welsh Assembly Government pursues Option 1b in the immediate term ” and “develops appropriate transitional arrangements covering a timescale that will enable the industry to adjust to the changes emerging from the review and to embed the cultural change that will be required within the industry”.

22. The FUW is therefore fundamentally opposed to the Welsh Assembly Government’s decision to abandon the Less Favoured Area scheme in 2010, in favour of Glastir, an all Wales environmental scheme.

23. This decision represents the abandonment of a scheme based on straightforward, long established handicap criteria, involving minimum bureaucracy, that ensures the efficient delivery of monies to Wales’s uplands.

24. The scheme will be superseded by Glastir, the eligibility criteria for which ignore the LFA status of land, and are based upon farmers being able to score a certain number of points, irrespective of the adversities they face due to natural or socioeconomic handicaps.

25. Lengthy contracts between each qualifying business and the Welsh Assembly Government will be drawn up, representing a vast increase in the bureaucracy associated with the distribution of funds within Wales’s uplands for government and farm businesses alike.

26. Notwithstanding the fact that Glastir recipients within the LFA with be eligible for a 20% payment enhancement, the abandonment of LFA payments within Wales will significantly reduce the impact of the Commission’s emerging proposals for the designation of Intermediate Less Favoured Areas.

27. While the FUW is working closely with the Welsh Assembly Government to minimise the impact of Glastir for Wales’s uplands, it maintains the view that LFA support should continue. Thus, the Union believes that public support for the uplands should continue to take the form of a Less Favoured Area Scheme.

How can the uplands be valued for their contribution to the social and economic future of Wales as well as the environment?

28. The FUW believes that the valuation of the uplands’ contribution to the social and economic future of Wales should be based upon:

i. The contribution towards Wales’s food security

ii. The contribution towards retaining indigenous populations and young persons within upland areas, and stemming the depopulation of such areas.

iii. The current and future economic contribution that the uplands make towards other areas of Wales, through the supply of essential commodities such as food and timber, and the added value that this produces for Wales as a whole (for example, the dependence of lowland and urban areas on unfinished upland produce, such as lambs, cattle, and timber)

iv. The contribution to maintaining and enhancing Wales’s wider social and cultural heritage, including the Welsh language

v. The contribution to revenue generated throughout Wales by tourism

vi. The contribution to Wales’s unique landscape and character

How can government policy work with land managers’ needs to achieve the best use of Welsh uplands?

29. The best use of Wales’s uplands can only be achieved given sustainable incomes for those within upland areas. Land managers’ crucial contribution to the economies of upland areas mean that government policy must ensure equitable returns for all services provided by agricultural businesses, both in terms of the environment, and the key areas identified above.

How can a value be put on the natural, ecosystem services provided by the uplands, such as carbon storage and flood management? How can climate change and the potential impacts of climate change be built into the planning for the future of the uplands?

30. Until the November 2008 Health Check agreements, carbon storage, water management, and similar concerns were not specific targets under Pillar 2 of the Common Agricultural Policy, meaning that methods of placing values on such services are still being discussed and developed by bodies such as the Welsh Assembly Government’s Land Use and Climate Change Group.

31. The extensive nature of farming systems in Wales means that large amounts of carbon are stored in the soil, and it is important both to Wales and Welsh farmers that this carbon remains sequestered through the development of measures which encourage active carbon uptake, whilst ensuring the sector retains a critical mass of livestock to contribute both to food security and lower food miles, and to ensure that Wales does not transpose the problems of greenhouse gas emissions elsewhere whilst trying to achieve its own targets.

32. The agricultural sector in Wales already plays an important role in mitigating the affects of climate change through the sequestration of carbon in soils. This not only mitigates agricultural emissions, but also provides a net benefit to other industrial sectors.

33. Whilst the FUW supports the need for the Welsh Assembly Government to look at the contribution Wales can make to mitigating climate change, it is concerned that in making sweeping generalisations about reducing methane through the reduction of livestock, it ignores other issues that have a critical impact on the environment, such as domestic food production.

34. The FUW therefore believes that any values placed upon such services must recognise the full spectrum of positive contributions made by agriculture, such that arbitrary targets do not take precedence over the wider adverse impacts of reducing domestic production.

35. Moreover, any planning for the future of the uplands in terms of negating and addressing the potential impacts of climate change must ensure sustainable economic returns for all those involved in the management of uplands.

What are the roles of farming and forestry in the future of the uplands?

36. As already stated, upland farming plays a key role in the production of food, as well as sustaining the socio-economic, cultural, and environmental structure of Wales’s uplands.

37. Commercial forestry also plays a critical role in supplying essential commodities, while providing major socio-economic and environmental benefits.

38.While the values placed upon these contributions to the uplands, and Wales as a whole, are likely to change in light of emerging evidence (for example, evidence on issues such as climate change), the key roles played by farming and forestry in future should be commodity production, socio-economic and environmental benefits.

What role does common land have in the future of the uplands?

39. Around 8% of Wales’s landmass is registered as common, representing more than 11% of Wales’s forage area. Given that the vast majority of such land is mountainous, the management of common land will play a critical role in the future of Wales’s uplands, particularly for communities in areas where common land is the predominant land type.

40. As with all upland areas, payments made under the Single Payment and Tir Mynydd schemes constitute crucial financial support for communities as a whole.

40. Under the Tir Mynydd scheme, European legislation allows farmers to be paid for the proportion of a common over which their grazing rights exert control. For example, a farmer with the right to turn out 100 sheep on a 1000 hectare common, on which there are 1000 registered grazing rights for sheep, would be entitled to claim Tir Mynydd on 100 hectares.

41. Apart from such apportionment, the eligibility criteria for Tir Mynydd payments on commons are effectively the same as for normal land, and involve minimal bureaucracy.

42. The transition from handicap payments to environmental payments, in the form of Glastir, will require a significant escalation in scheme eligibility criteria for common land, due to EU law.

43. In particular, it is believed that agreements will have to be drawn up between graziers associations and the Welsh Assembly Government, and that these will have to be supported by the majority of graziers on any individual common, as well as by the landowner.

44. It will therefore be the case that a decision not to sign up to Glastir by relatively few commoners would result in large numbers of other graziers becoming ineligible for Glastir payments, resulting in a severe impact on local economies within upland areas.

45. It is therefore crucial that the Welsh Assembly Government implements a scheme that minimises such adverse impacts, while maintaining payment rates that reflect the agricultural and environmental value of Welsh commons.