Written Evidence Submission to the Welsh Affairs Committee

Written Evidence Submission to the Welsh Affairs Committee

Written Evidence Submission to the Welsh Affairs Committee

Inquiry: Agriculture in Wales post-Brexit

April 2017


1. Brexit presents us with a unique opportunitytodevelop new sustainable land management policies and payment systems in the UK, whichintroduceecologically restorative measures toaddress the debilitating scale of environmental degradation.

2. Leaving the Common Agricultural Policywill allow us to pay for the goods and services provided by the land in Wales, and to develop a land management system that is based on multiple outcomes andfully accountable of the true costs and benefits of environmental sustainability. We must also apply the principles enshrined in Welsh law to all forms of land management, with mechanisms designed to reinforce the benefits the public receive from the countryside. Putting nature at the heart of the system will not only enhance the natural assets that underpin food and timber production, but open up farming and forestry to new funding opportunities.

3. Based on the current devolution settlement, we would assume that any powers repatriated from the EU relating to matters which are currently devolved should remain the competence of the devolved administrations. Subsequently, any UK-wide policies covering agriculture, land (and marine) management and environment (on land or at sea) would need to be agreed jointly by all four countries. A new set of fair and transparent funding arrangements must be agreed upon,with an adequate financial settlement for Wales in order to enable full delivery of new environmental legislation and protection. This needs to go alongside a robust and well-resourced enforcement system based on high minimum environmental standards.

1. As the UK leaves the European Union, where should the responsibility for agricultural policy in Wales lie?

4. Wales has two significant and distinctive laws affectingour natural environment; the Well-being of Future Generations (Wales)Act2015and the Environment (Wales) Act 2016. Together theycreate a strong framework for Wales’ natural environment and wildlife, and recognise thewide-ranging benefits for people.The Welsh Government must be able to determine a sustainable land management policy in the context of its own legislationand be able to integrate these requirements into any new andcollective UK-wide frameworks.Any post-Brexit policy must comply with the requirements of:

a)The duty of Welsh Ministers under section 79 of the Government of Wales Act 2006 to promote sustainable development in the exercise of their functions.

b)The Resilient Wales goal, of the Well-being of Future Generations Act, of maintaining and enhancing a biodiverse natural environment with healthy functioning ecosystems.

c)The Environment (Wales) Act, to maintain and enhance ecosystem resilience and enable the implementation of its place-based approach through the National Natural Resources Policy and Area Statements.

d)The six objectives set in the Nature Recovery Action Plan for Wales (2015) and the Convention on Biological Diversity Aichi target 17.

5. Implemented effectively,this legislationshouldhelp ensure that Walesdelivers increased protection and restoration of our biodiversity, thereby contributing to a sustainable future for Wales’ environment, people and economy.

Devolved Powers and Intergovernmental Cooperation

6. Under current arrangements, agricultural policy is a competence of the devolved administrations. Wales should retain devolved powers over agriculture, environment and land management on the basis of:

a)Ensuring what is put in place is fit for Wales’ needs.

b)Accounting for the differences between legislative frameworks.

c)Maintaining and strengthening the principle of subsidiarity.

7. However, where more ambitious environmental policies can be achieved through collective UK-wide action, it is in the interests of the devolved nations to agree to common standards. While accommodating for the needs of devolution, Wales will therefore benefit from specific forms of cooperation across the UK -working effectively together across UK borders and catchments in a way that sufficiently deals with a variety of transboundary environmental issues, including the protection of habitats, ecosystems and work on river catchments. Any questions arising regarding the distribution of powers must therefore be dealt with by intergovernmental agreements on how to achieve the necessary environmental protections. The mechanisms for negotiations among the four nations should be properly formalised and acted upon. To achieve this, we support the call by CLA Cymru for a “formal platform” to be established whereby the “component parts of the UK...have equal status in developing a holistic UK policy framework”[1].

8. The transboundary nature of many agricultural and environmental issues underpins the case for cross-border UK cooperation. The benefits that have been recognised from EU frameworks, evidenced by the European Commission ‘fitness check’ of the Birds and Habitats Directives, demonstrates the benefits of a level playing field.They have also provided “a more effective way to achieve…conservation objectives…due to the transnational character of nature and the steps required to conserve it”[2]. Wales and the UK must continue to show leadership and cooperate internationally, especially on transboundary issues such as climate change, pests,diseases and the marine environment, which continue to require coordinated action across the UK and beyond. Ideally, there should be the same high baseline of standards in place for European, UK and Welsh waters. Wales must be at the heart of these negotiations along with other devolved administrations.

9. The need for a degree of joint working and intra-UK cooperation and alignment of standards will be required for the following reasons:

a)To maintain the integrity of the UK single market and environmental standards – so that the UK has common standards in order to make trade deals with third parties, such as the EU[3], and to ensure that the four nations comply with World Trade Organisation (WTO) rules on agricultural support[4].

b)To maintain intra-UK production and trade and environmentaland health standards.

c)To prevent advantaging farmers in one part of the UK over another[5].

d)To achieve sustainable management of shared natural resources and address trans-boundary objectives, such as air and water quality, climate change and biodiversity conservation. The latter two are also the subject of international treaty obligations for which the UK Government will remain accountable.

e)To prevent a deregulatory ‘race to the bottom’ across the different parts of the UK in the name of short-term economic competitiveness. This applies to regulations such as the Water Framework Directive and Sustainable Use Directive, as opposed to incentives provided through the CAP.

f)Common standardscan also help to facilitate compliance (by avoiding inconsistencies and fragmentation) and avoid serious distortions in competition[6].

2. How should agricultural funding be allocated in Wales post-Brexit?

10. European fundinghas underpinnedmuch of the nature conservation efforts in Walesand maintaining this resource isessential. However,the Common Agricultural Policy (CAP) hashistoricallydriven negative impacts on nature, despite consistent EU funding.The scale of the opportunity to reform the way the UK supports its land managers is significant.

Problems with CAP

11. The CAP has failed to build resilient agriculture[7] as well as failing to protect the environment[8],[9],[10],[11] and despite the ‘greening’ of Pillar 1, the last reform failed to improve the environmental performance by those receiving income support payments[12]. Ecosystems in Wales and across the UK are in poor conditionandthe State of Nature 2016 report has shown that UK species are in crisis and that “intensive management of agricultural land had by far the largest negative impact on nature, across all habitats and species”[13]. Professor Dieter Helm, Chair of the Natural Capital Committee, highlights some of the significant issues with current short-term focused unsustainable land management practices[14]. This view is further supported by the evidence both nationally in Water Framework Directive investigations[15] and internationally[16].Withthe widersocietalgoods and services attained from the natural environment,this is not only bad for wildlife but for the soils and ecosystems on which civilisationdepends.

12. The CAP hasbeen inherentlyfocused on food productionand the provision of income support and currently, only 30% of the direct payment is conditional on meeting ‘green’ farming standards with penalties for non-compliance only going as far as losing that sum. In Wales, over 90% of farming practicesqualified for greening measuresand therefore did not result in the changes required in land use.

13. Funding to the land management sector should be better targeted to tackle environmental sustainabilityissues. The quality and resilience of natural systems such as the soil, the water cycle, pollination services and biological diversity of the landscape should be at the heart of any system of support for farming, with farmers seen as partners in sustaining these systems and sustaining future productivity. Regulations should be clearly related to and underpin outcomes, with 100% of any public payment being conditional on meeting higher but manageable baseline standards for wildlife, soil and water quality. Farmers should be able to make a living without degrading the environment or compromising the ability of future generations to farm. Future land management policies therefore have a vital role in improving the environment by restoring the resilience of our ecosystems.

A New Funding System

14. There needs to be an adequate financial settlement for Wales to enable full delivery of new environmental legislation and protection. A settlement based on the Barnett formula would result in less funding than currently comes to Wales. Consequently, this would be insufficient funding to enable the transition and effective implementation of a sustainable land management policy for the Welsh environment. The Barnett formula does not work for a policy that is inherently about land. No matter where we are in the UK, we will all benefit from more sustainable land management through more wildlife, better water quality and resilience to climate change.

15. Noting the issue of funding, the Environmental Audit Committee report recommended that the UK Government: “ensure fairness and transparency in the allocation of funds, and allow the devolved nations to develop their own funding mechanisms and priorities, as they currently do under the CAP rural development programme, subject to the maintenance of a UK-wide ‘level playing field’ of minimum environmental standards.”[17]

Public Payments for Public Benefits

16. To demonstrate value for money, future agriculture and land use policies across the UK should be based on a principle of public money for public benefits, to secure for society all that the market fails to provide - goods and services for which farmers and land managers currently receive little or no economic benefit. The agricultural and forestry sectors are associated with a wide array of public benefits which are a mix of social and environmental goods increasingly valued by society. Public benefits must be properly defined so that payments can be redistributed according to the full range of benefits to wider society delivered by land managers. They include clean water, flood prevention, biodiverse landscapes, access and recreation, heritage and cultural landscapes, clean air, healthy soils,carbon storage and climate mitigation.But farming and forestry also play an important role in delivering social benefits from vibrant rural economies, animal welfare, food products and renewable energy. 17. Alongside delivery of these public benefits, there should be a move to developing new and innovative supply chains for existing and new quality sustainable products, ensuring farmers get paid a fair price for their products.This will require new skills of land managers and support for innovation.

18. It is no longer economically sensible or forward thinking to treat the environment as something separate to the economy; the Welsh Government in its approach to the sustainable use of natural resources is starting to recognise this. A future scheme must put an end to the externalisation of environmental costs, as this compromises the ability of land managers to deliver sustainable land management, costs society more in the longer term and will continue to degrade the natural environment and the services society derives from it. Public monies must support a green economy that internalises the environmental costs of land management impacts, utilising the ‘polluter pays’ principle to uphold high baseline standards, whilst providing optional outcome-based incentives for land managers to reward them for going beyond these minimum requirements[18]. We must invest in the restoration of ecological resilience to deliver the greatest public benefit across all the devolved nations.

19. The way in which any replacement funding is allocated will be critical in terms of the extent to which it enables the effective implementation of such policies in line with environmental needs across the four nations[19].

20. A certain level of public funding will continue to be required to ensure governments and taxpayers retain a stake in any new system beyond simply regulation. Resources to recover nature must be retainedboth in terms of funding and staffing within statutory organisations and governments.We must optimise the use of public money in delivering public benefits, aligning the needs of land managers with good social and environmental outcomes: farmers that provide the most public benefit (or best outcomes for society) should receive the most from any public funding streams.

21. In order for farmers and farming practices to shift towards a longer-term, ecologically and economically sustainable system, the economics of the system will have to shift. Pillar 1 payments in their current form stifle innovation and are unsustainable andshould not be taken forward into future support mechanisms.

22. Instead, there is an increasing role to be played by agri-environment schemes and, ultimately, the growth of new market systems that reward land managers with payments for environmental goods and ecosystem services. WEL believes Pillar 2 style public paymentsthat provideannual payments for environmental outcomes should be the focus of public money and market mechanisms likePayments for Ecosystem Services (PES schemes)[20]. Government, industry and corporate backing for this will help to mainstream this new system[21].

23. Oral evidence provided by Professor Dieter Helm to the UK Parliament’s Environment Audit Committee demonstrates how the value of our naturalcapital must be incorporated into the economy as soon as possible[22]. Professor Ian Hodge, Professor of Land Economy of Cambridge University, to the​ UK’s EU Energy and Environment Sub-Committee (Lords Select Committee) also explains how other sectors do not necessarily value commodities based on complex valuationsbut are paid for based on theiroverall ability to achieve a desirable outcome[23].

A Reasonable Transition Period

24. There must be a fair transition period towards new arrangements at a pace that provides sufficient time for farmers and land managers to adapt and for new policies to be piloted. This is particularly important for the most economically vulnerable, such as those in the extensive livestock sector. This sector is typically associated with the uplands, where theyare often farming in marginal areas but which are of high environmental and cultural value, including values pertaining to landscape and recreation. Due care must be taken to ensure a transition that does not lead to a detrimental loss of farmers and the land management skills they have, particularly those on marginal land where a longer transition may be required to build upon the wider values of extensive farming, and diversification of the uplands, including infrastructure and skillsfunding and training for local people[24].There will be a need to build public understanding of these requirements.

25. However, the conservation of biodiversity and protection and enhancement of environmental benefits requires long-term investment that creates business security for land managers. Many farmers have already made great commitments under existing AES, therefore it is also important that a successor scheme is put in place quickly enough to provide continuity of management and income security.

3. How should European legislation relating to agriculture be transposed into UK law under the Great Repeal Bill? Which elements should be repealed, amended, or devolved?

26. The Great Repeal Bill should carry over the environmental principles in the Treaty on the Functioning of the EU. EU principles should underpin future intra-UK cooperation on agriculture, specifically the ‘polluter pays’ and precautionary principles, which are highly relevant to agriculture and its impact on the environment.Existing regulatory baselines must be safeguardedand built upon including:

a)The preservation of existing legislation

b)The flexibility for new devolved legislation to meet devolved requirements

c)Building well-resourced institutionalarrangements for statutory regulation and enforcementbased on high minimum standards.

27. The EU has developed world-leading legislation on a range of issues, which have helped tackle water and air pollution, protected endangered species, protected our pollinators through bans on dangerous pesticides and cleaned up our beaches.Depending on the outcome of the upcoming negotiations between the UK and the EU, it seems likely that the UK will no longer be bound by at least some key elements of the EU environmental acquis (e.g. the Birds and Habitats Directives and some aspectsof the Water Framework and Marine Strategy Framework Directives). Yet in Wales, as in the other UK countries, these Directives (through the ‘Natura 2000’ network)provide vital protection for rare and vulnerable species and habitats and have played a critical role in dramatically reducing losses and acting as a focus for action in the recovery of threatened species.

28. Given the proven effectiveness of these Directives where properly implemented, a priority for the UK should be to effectively retain these high standards of legislative environmental protection in domestic law post-Brexit. This will be vital in order to ensure the conservation of our shared natural heritage for future generations and to effectively deliver on Wales’ commitments under international agreements such as the Convention on Biological Diversity, the Bern and Bonn Conventions, the Ramsar Convention, the Ospar Convention, the Aarhus Convention and the UN Framework Convention on Climate Change.