AGRICULTURAL LIBERALISATION AND ITS

AGRICULTURAL LIBERALISATION AND ITS ENVIRONMENTAL EFFECTS II

Clive Potter, Matt Lobley and Rachel Bull

Environment Department

Wye College University of London

AGRICULTURAL LIBERALISATION AND ITS ENVIRONMENTAL EFFECTS: FINAL REPORT

Table of Contents

List

of

Tables

List of Figures Acknowledgements

iii v vi

EXECUTIVE SUMMARY vii INTRODUCTION 1 CHAPTER 1: POLICY REFORM AND THE PREDICTION OF CHANGE 8 1.1 Introduction 8 1.2 The Economic I pact of Liberalisation 9 1.3 Predicting the Farmer Response 11 1.4 Deducing Environmental Consequences 19

CHAPTER 2: THE STUDY AREAS 22 2.1

Introduction

22

2.2 English Study Area: Diss, East Anglia 22 2.3 Welsh Study Area: Brongest, Ceridigion 29 2.4 Germa Study Area: Swabian Alb, Baden-Wurttemberg 33

2.5 Scottish Study Area: Dalmally, Argyll 39 2.6 Spanish Study Area: Caceres, E tremadura 43

CHAPTER 3: THE FARMING RESPONSE 48 3.1 Introduction 48 3.2 Recent Change and Current Plans 49 3.3 Farmers on Liberahsation 59 3.4 The Farming Response to Liberahsation 62 3.5 Summary 72

CHAPTER 4: ENVIRONMENTAL CONSEQUENCES AND THE 74 CONSERVATION RESPONSE 4.1 Introduction 74 4.2 Categories of Environmental Effects 75 4.3 The Short Term Consequences of Changes to Far ing Practice 78 4.4 The Indirect Consequences of Farm Household Adjustment 84 4.5 Summary 92

CHAPTERS: THE GREEN EUROPE SCENARIO: FARMER RESPONSES 95

AND CONSERVATION EFFECTS 5.1 Introduction 95 5.2 The Retention of Farmers and Land 96

5.3 Who Would Take Up the Payments? 99 5.4

Summary

106


CHAPTER 6: CONCLUSIONS AND POLICY MESSAGES 107 References

113

APPENDIX Appendix 1. Research Methodology and Characteristics of the Sample 117

Appendix 2. Farmer Questionnaire (East Anglia) 123 Appendix 3. Green CAP Scenario (East Anglia) 150


List of Tables Table 1.1 Predicted effect on EU agriculture of multilateral removal of 10 support Ta le 2.1 Farm characteristics - East Anglian study area 24 Table 2.2 Land use by study a ea 24 Table 2.3 Land management change since 1992 in East Anglian study area 25 Table 2.4 Incidence of diversification by study area 25 Table 2.5 Expectation of succession by study area 27 Table 2.6 Farm characteristics - Ceredigion study area 27 Table 2.7 Land m nagement change since 1992 in Ceredigion study area 31 Table 2.8 Economic prospects of farms by study area 34 Table 2.9 Farm characteristics - Swabian Alb study area 34 Table 2.10 Land management change since 1992 in Swabian Alb study area 36 Table 2.11 Current economic status of farm business by study area 3 8 Table 2.12 Farm characteristics - Argyll study area 41 Table 2.13 Land management change since 1992 in Argyll study area 41 Table 2.14 Farm characteristics - Caceres study area 44 Table 2.15 Land management change since 1992 in Caceres study area 44 Table 2.16 Change in total farm income since 1992 by study area 47 Table 3.1 Farm income trends for the sample since 1992 51 Table 3.2 Comp arisen of management changes m de and planned hy 55 respondents Table 3.3 Correlation between past and future change on survey farms 56 Table 3.4 Farm size by recent farm business change 57 Table 3.5 E ected income ranking by study area 57 Table 3.6 Farm business plans for the next 5-10 years by study areas 58 Table 3.7 Comparisons of past and fixture farm business trajectories 59 Table 3.8 Comparison of voluntary and involuntary leaver from fanning 67 Table 3.9 Farm management response of survivors to Full Liberahsation 68 Table 3.10 Nature of farm management responses to Full Liberahsation 71 Table 3.11 Farmer response to Full Liberahsation by study area 71 Table 4.1 Land-use response by farm type 80 Table 4.2 Conservation investment under Full Liberahsation 80 Table 4.3 Intensity of practices by response to Full Liberahsation 86 Table 4.4 Intensity of practices by response to Full Liberahsation - East 87 Anghan study area Table 4.5 Intensity of practices by response to Fxill Liberahsation - 87 Ceredigion study area Table 4.6 Intensity ofpractices by response to Fuh Liberahsation-Argyh 87 study area Table 4.7 Intensity ofpractices by response to Full Liberahsation - Caceres 88 study area Table 4.8 Land retained and given up under Full Liberahsation 89

Table 4.9 The fixtxxre for land which is given up under Fuh Liberahsation 89 Table 4.10 Destination of land given up (by voluntary and involuntary leavers) 93 and not passed to successor by study area Table 5.1 Farmer reaction to Green CAP by study area 97 Table 5.2 Land to be given up by current occupiers by scenario 97


Table 5.3 Future destination for land given up 99 Table 5.4 The sale of land under different scenarios (% of farmed area) 99 Table 5.5 Farmer willingness to enrol in Green CAP 100 Table 5.6 Farmer illingness to enrol in Green CAP by recent farm business 103 Trajectory Table 5.7 Willingness to participate in Green CAP by trend in income and 104

asset values (1992-1997) Table 5.8 Impact of Green CAP on management plans 105


List of Figures

iI Figure 1.1 Figure 2.1

Location of study areas Percentage of farmers wit land in Agri-environmental schemes by study area

6 31

Figure 2.2 Figure 2.3 Figure 3.1 Figure 3.2 Figure 3.3 Figure 3.4 Figure 3.5 Figure 3.6 Figure 3.7 Figure 3.8 Figure 3.9 Figure 3.10 Figure 4.1 Figure 5.1

Age profile by study area

36 38 50 50 51 53 53 61 64 65 67

Breakdown of sa le by income status Recent changes in UK total farm income - a comparison Recent changes in UK farming debt - a comparison Recent changes in asset values in UK farming - a comparison Recent farm business trajectories on survey farms Recent farm business trajectories by study area Attitudes to Full Liberahsation by study area The flow of farmers out of agriculture under the baseline scenario The flow of farmers out of agriculture under Full Liberahsation Farm adjustment strategies of non-reactive farmers Farmer response to Full Liberahsation Land-use response to Full Liberahsation by study area The flow of farmers out of agriculture under a Green CAP

71 80 98

\

v


Acknowledgements We would like to thank Vyv Wood-Gee, A gela Edwards, Rorie Fulton, Patrick Baudoux and Gottfried Katzenwadel for conducting the interviews and Professor Michael Winter for his contribution to the workshops and comments on an earher draft of this report. Thanks are also due to members of the Steering Committee, and particularly to Mark Tilzey for his role as a catalyst for this project. Finally, we would like to express our gratitude to the farmers themselves, without whose forbearance this study would not have been possible.

Wye, June 1998.

vi


EXECUTIVE SUMMARY

1 There as lo g been speculation about the likely social and environmental consequences of a complete withdrawal of agricultural support under the CAP. The contention that the CAP has been one of the major causes of the environmental damage and decline of the last forty years has underpinned campaigns to rebalance agricultural support in favour of the environment and provided a convincing intellectual justification for long term reform. Nevertheless, from an early stage, there has been ambivalence towards the idea that simply dismantling the CAP would redress the balance and a growing sense that agrienvironmental change may be subject to hysteresis - the failure of effects to reverse themselves even as their apparent underlying cause is removed. It is a paradox of the present debate that while the present CAP is clearly unsustainable in its present form, dismantling it quickly and without replacement is coming to be seen as equally problematic from an environmental point of view.

2 With the liberafisation of the CAP now a more reahstic long term possibility in the wake of the Uruguay Round Agriculture Agreement, predictions about how Europe’s countryside would adjust to more open market conditions are of greatly more than academic interest. Indeed, there is already evidence that the hypothesised social and environmental implications have been factored into the policymaking process, forecasts of the ‘desertification’ ofrural Europe being used to justify the need to maintain a ‘European model’ of agriculture beyond the next

WTO Round. In reahty, little is known empirically about the likely sequence of events following agricultural liberafisation; while modelling work has improved knowledge of the way economically rational decision makers might respond to policy change, it cannot identify any systematic variations in the way farm households would respond to the withdrawal of agricultural support. The GB Statutory Countryside Agencies are aware of this, and over the last two years have been co issioning empirical research to assess the environmental consequences of short and long-range CAP refor This report sets out the results from the most recent of these studies, undertaken to gain a better understanding of the farmer


respo se to agricultural liberalisation in different environmental settings across the EU.

3 The specific objective of this research was to carry out an intentions survey of farmers in five countries (England, Wales, Scotland, Germany and Spain) in order to better understand how farmers would respond when co fronted with such sudden and radical policy change. A questionnaire survey of 244 farmers identified current plans and farm family trajectories and then used a form of sensitivity analysis to measure the degree to which these would be adjusted, reinforced or abandoned under conditions of Full Liberalisation. Further analysis explored some of the environmental consequences of the observed tenor and patte of response in different agri-environmental settings. In addition, the presentation of a Green CAP scenario has enabled analysis of the willingness of farmers to take up environmental payments under some fixture rearrangement of the agricultural support syste

4 Five study areas were selected, ranging from an intensive, largely arable landscape in East Anglia to an example of one of the EU s most extensive far ing systems in the dehesa heartland of Extremadura in Caceres, southe Spain. In between there were study areas in Wales (a mixed farming area in Ceredigion), Scotland (a hill farming area in mid-Argyll) and Germany (an area of mixed, part-time farming in

the Swabian Alb).

5 According to the survey results, Full Liberalisation would elicit the follo ing types of farmer response:

• Cost cutting and enterprise restructuring; • Reductions in farm household consumption; • Diversification and a move towards becoming more pluriactive; • Sale of land and other farm assets; • Early retirement, with or without succession; • Exit from farming


6 Of these options, significant numbers of respondents said they would he more

likely to consider (4) to (6) than (1) to (3). In fact, 25% of farmers in the sample predicted they would leave farming within the next ten years if agricultural liberalisation came about. The resulting shake out of farmers and land would be

most decisive in the Welsh and Scottish study areas (60% predicting they would leave far ing), locations where i rmers are most dependent on existing agricultural support, and have fewest opportunities for off farm work or diversification. It would be least pronounced in East Anglia and Spain, where policy change would be met with a more graduated agricultural response. In the German study area, while it was clear that large numbers of farmers would plan to give up farming, it was less obvious that they would give up land. This exception aside, analysis suggest that, overall, as much as 42% of land on survey farms overall would change hands within ten years of the liberahsation of support. For many of the remaining family farmers determined to remain on the land, the initial response to a cost-price squeeze would be to adjust consu ption rather than production, with a small minority contemplating any serious disengagement from agriculture as an income source. It remains unclear how far their atte pts to absorb the economic consequences of the withdrawal of support would ensure long term survival. Indeed, there was evidence from the survey that a further shake out of land is likely to take place in marginal countryside as the rate of succession to existing farms declines.

7 The environmental consequences of all this would be complex, long term and heavily sensitive to context. The following main types of environmental effect were

identified:

• Short term, direct effects: It is clear that there would be some in-field extensification of production driven by the need to cut discretionary expenditure during the initial phase of the transition. But there would also be a cut-back in conservation investment and management of the conservation stock, identified by respondents in the East Anglian study area particularly as an early casualty of the expected squeeze.

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AGRICULTURAL UBHIWJSATION AND 17S ENVIRONMENTAL EFFECTS: FINAL REPORT

Short term, indirect effects: Further into the transition, there would be indirect (and less deter inate) environ ental consequences resulting from the adjustments farmers ake in order to aintain farm household income. Among these would be a trend towards more pluriactivity and there are hints in the data that this would be associated with an extensification of production on farms.

• Long ter , delayed effects: It is likely that there eventually be profound changes in land use and management brought about by longer term farm structural change.If the analysis presented here is correct, these structural changes will eclipse any adjustments de within fields or farms on surviving farms, reallocating land to surviving farms but in locations such as mid-Argyll, Ceredigion, and Caceres, also bringing about transfers of land out of farming altogether. Again, the geographically unevenness of this adjustment is an integral part of the story: while in East Anglia 80% of any land given up is predicted to remain in far i , in Ceredigion 48% is thought likely to move into a non-agricultural use.

8 It is difficult to draw up a balance sheet of the environmental costs and benefits of these dif erent effects. This uncertainty is greatest in relation to the environmental conse uences of large scale structural change, where the relocation of land between farms and land users may create opportunities as well as threats for conservationists. In the East Anglian study area, the disappearance of the few remaining residual farms currently operating in the spaces between larg r holdings, could trigger the further rationahsation of field boundaries and the loss of habitats associated with small scale farms. In the Scottish, Welsh and Spanish study areas, it is a reasonable assumption that there will he a new patte of land holding centred on larger, more extensively managed farms. The likely consequences of this for conservation capital and, in the Scottish case, upland vegetation, require further investigation. Some land may well be bought up by forestry interests or, in the Scottish and Spanish study areas, revert to estate owners with game or forestry interests. The environmental implications of such transfers depend on the form and patte of any new tree planting and the management regimes installed by landlords and new owners.


9 The policy mplications of these findings need to he interpreted with care. For instance, it is probably now politically unreahstic (and may he environmentally undesirable) to argue for the retention of base-line agricultural support in order to underwrite the survival of large munbers of marginal farms. By emphasising the sensitivity of many family farms to the withdrawal of agricultural support, the research also underscores their heavy policy dependance, their econo ic marginality and their vulnerability to the larger technological and cultural forces for restructming which operate beyond policy control. A more reasonable policy stance is one which accepts the inevitability of further structural change in marginal countryside but also identifies limits to this process, beyond which savings fro agricultural support are outweighed by the growing social and environ ental costs of farming decline and rural depopulation. A corrollary to this analysis is the adoption of a precautionary approach to designing alte ative systems of rural support, setting up payment structures which enable many (though probably not all) existing farmers or their replacements to occupy rural land, while also incentivising them to maintain and enhance biodiversity and countryside character. The system must be dynamic and capable of adjustment up or down as the li its of acceptable change are better understood and have been ventilated in public debate.

10 The Green CAP was presented to farmers in the sample in order to assess thenreaction to a system of payments which combined an ele ent of support subject to environmental co pliance with higher tier incentive payments for environmental anagement. It was found to he effective in retaining farmers and land in agriculture, though its purchase was greater in study areas like Argyll with a history of agri-environmental involvement than in Caceres, where decoupled environ ental payments were viewed as a foreign concept. Overall, however, farmers responses suggest that 23% more land is likely to he retained in far ing under a Green CAP than under Full Liherahsation. Of the land given up by the existing generation of farmers, 30% more would pass to a successor and less onto the open market. At the same time, however, farmers’ expectations regarding

comphance requirements were low, with the most willing participants being the

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AGRICULTURAL U HMUSATION AND HS ENVIRONMENTA EFFEC S: FINAL REPORT

farmers who e pected to have to ake the fewest adjustments to their current farming practices. This suggests that, while acceptable as a safety net for vulnerable farms, a tiered system of environmental payments may continue to be resisted if it requires substantial changes to far ing systems and the way land is managed.

11 The research has shed new light on the nature of the farmer reaction to what, by any standards, would be very radical policy change. In this, it elaborates the benchmark scenario within the cu rent debate about long range CAP reform. Neverthless, it is clear that more work remains to be done if polic makers are to have a sound knowledge base for future policy development. A key concept here is likely to be that of li its to acceptable change in both farm structural and land use terms. It is essential that further empirical research is carried out in order to map the relationship between current farming practices, systems and structures and biodiversity and countryside character. Longitudinal research is also needed which can track the sort of agri-environmental transformations mentioned above as they occur. In all these cases, it will be necessary to link the collection of land cover and ecological change data to socioeconomic surveys of the decisions, motives and aspirations of individual land m nagers. There is a particularly strong case for such work taking place within the context of the Government’s Countryside Surveys.


AGRIC LTURAL LIBERALISATION AND ITS ENVIRONMENTAL EFFECTS

INTRODUCTION

Co servationists have been speculating for some ti e about what would happen to the European countryside without the Common Agricultural Policy (CAP). While most commentators no concede that causality is actually rather complex, with important interactions between the CAP, market trends, farming culture and technological change, few demur from the majority view that agricultural policy has been operated in ways which have been enormously damaging to the rural environment (see Potter, 1998; Whitby, 1996). The contention that the CAP has been one of the major causes of the environmental damage and decline of the last forty years has underpinned campaigns to rebalance agricultural support in favour of the environment and provided a convincing intellectual justification for long term reform. Nevertheless, from an early stage, there has been ambivalence towards the idea that simply dismantling the CAP would redress the balance and a growing sense that agri-environmental change may be subject to hysteresis - the failure of effects to reverse themselves even as their apparent underlying cause is removed.

As the conclusion of a seminar convened in the mid 1980s to look into the environmental consequences of long range CAP reform put it, while high prices (have) contributed to environmental damage in the past, it is likely that merely reducing prices will yield a variety of effects, not all of them beneficial for the environment (Haig and Grove-White, 1985, p7). The simplest interpretation of this statement is that a policy-induced cut in the profitability of farming will mean less conservation investment on farms because poorer and more market-exposed farmers

are less likely to carry out the countryside management tasks that are required to keep the conservation resource in good heart. Another is that farmers may actually intensify production in response to a withdrawal of support - the so called ‘perverse supply response’.

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AGRICULTURAL LIBERALISATION AND I S ENVIRONMENTAL EFFECTS: FINAL REPORT

A stronger objection, increasingly widely canvassed in recent years and less easy to challenge, is that withdra ing agricultural support will set in train a process of restructuring which could itself have damaging environmental consequences - the concept of desertification . This latter may seem paradoxical, given the emphasis on the CAP as an instrument of destruction. It is explained by the fact that, while the CAP has fuelled intensification, it has also operated as a farm urvival policy, preserving farm structures (or rather, holding more farmers in the industry than would otherwise be the case). Taking away support and exposing fanners to world m rket forces, could therefore be expected to lead to a shakeout of marginal farms and to changes in the patte and practice of farming which may be detrimental from a conservation point of view.

Until recently, such speculations were largely academic. Despite a great deal of rhetoric about the need to reform the CAP, the fundamental restructuring of support, let alone policy liberahsation, seemed a political impossibility. By default, the attention of conservationists continued to centre on how best to bring about switches of expenditure into environmental programmes on the argin of an essentially productivist system of agricultural support. The emergence in recent years of new exte al sources of pressure on policymakers means that this picture has now cha ged.

The convening in 1999 of a new round of trade talks under the aegis of the World Trade Organisation (WTO) concerned with the international liberalisation of agricultural markets, together with the projected eastward expansion of the European Union in 2002 or 2003, is redefining the limits of acceptable agricultural policy change (Potter, 1998). Full blooded liberahsation, it is true, still looks to be some way off, but it is emerging as an important ‘reference scenario’ against which other WTO-compatible policy reconfigurations are being considered and compared. Indeed, there is evidence that the hypothesised consequences of a sudden and complete withdrawal of agricultural support to farmers have aheady been built into the policymaking process, with the European Commission (EC) making clear its commitment to retaining some level of state support in order to

2


avoid what it believes would otherwise be the desertification of the countryside. To quote the Agriculture Commi sioner The countryside is more than just a physical place on the map. It represents an economic and social model, a constituent part of our European social order. For that reason we cannot stand idly by and watch while the social and environmental balance of our rural areas is being eroded (Fischler,

1998, pi).

Few conservationists would disagree with this judgement. On the other hand, they need to take care that sweeping predictions about the social and environmental consequences of dismantling the CAP are not used to justify the smuggling in of income support schemes under a green disguise. If the gri-environmental and rural development schemes hich replace production ids and price support are merely income support measures for beleaguered farmers, they ill be vulnerable to legal challenge within WTO as blue box measures and therefore likely to be abobshed during the lifetime of the next Agriculture Agreement

(Potter and Ervin, 1998).

At the other extreme, there is the view of many neo-classical economists (see for instance, Anderson, 1992) that the environmental benefits of withdrawing support will be so decisive as to justify only a very lightly engineered system of government support once the CAP has been abolished (chiefly to ensure the continued production of environmental goods that would he under supplied if left to market forces). Neither position has strong empirical support and it is arguable that the latter especially misconstrues the essential nature of the relationship between European f r in and the environment, emphasising pollution benefits at the expense of a decline in the quality of the conservation resource. It seems to be a general feature of this debate that rather strong policy prescriptions are being formulated on the basis of quite weak predictive knowledge. Where efforts have been made to improve the knowledge base, this sometimes takes the form of thought e periments based on expert judgement (see for instance Laurence Gould, 1986), though more frequently modelling work has been employed to make broad predictions about the likely enterprise choice response of farmers to a cost-price squeeze, from which e vironmental effects are deduced (see

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-AGRICUIJFURAL-LIBERALISATIQN-AND ITS ENVIRONMENTAL EFFECTS: FINAL REPORT

Harvey, et al, 1986 a d Jones, et al, 1995).

Although such work has improved understanding of the likely aggregate farmer response, at least in terms of management changes, it is li ited in its ability to describe the full complexity of the farmer response and thus to identify systematic variations by type or location, variations which may hold the key to assessing environmental effects.

Background to the Research

The starting point for this project is that only empirical research designed to identify and describe how farmers are actually likely to respond to long range policy change can begin to achieve this. In commissioning the work in September 1997, the GB Statutory Countryside Agencies not only wanted to gain a better understanding of what farmers in different environmental settings would do when confronted with radical policy change; they were also anxious to assess their susceptibility to an alternative Green CAP designed to ensure the continued management of the countryside in WTO compatible terms. The project takes the form of a survey of farmers current management and farm household adjustment plans and an analysis of the extent to which these would be amended, adjusted or abandoned in response to policy reform. In what is essentially a sensiti ity analysis of the farmer response to liberalisation, a questionnaire was administered through face to face interviews with 244 farmers. Study areas ha e been selected in England, Wales, Scotland, Germany and Spain to sample different agri-environmental contexts for this response and to present a broader picture of the countryside effects of liberalisation than could be achieved through a survey of UK farmers alone (see figure 1). Further analysis is undertaken to describe the likely broad environmental consequences of these patterns of response in these study areas and to assess the likely i pact of a system of environ ental payments in anticipating and offsetting some of these effects.

4


Research objectives

The objective of the research is to use the farm survey in order to:

1. Define current farming and land management plans based on farmers own policy and market assumptions;

2. Investigate the sensitivity of these plans to the liberalisation of policy, identifying systematic variations in the likely farmer response by study area;

3. Analyse and categorise on this basis the different patterns of response and explore

their likely environmental i plications in the study areas;

4. Reach conclusions about the possible countryside effects of fidl liberalisation and to explore the implications for future policy

5


Figure LI. Location of study areas

Argyll (Dalniall )

Ceredi ion (Brongest)

6


Structure of the Report

The remainder of this report is structured as follows.

Chapter 1 sets out some of the conceptual and methodological issues raised by the study and reviews previous work in this field. It concludes that while empirical studies are likely to offer insi hts not available from predictive modelling, they are prone to sources of bias which must be acknowledged in the interpretation of results. The chapter goes on to set out the stages in the current analysis.

Chapter 2 profiles the five study areas, their main agri-environmental characteristics and the pattern of recent agricultural change.

Chapter 3 draws on results from the farm survey to delve fiuther into an analysis of recent change and to describe current fanning plans. It then proceeds to analyse and categorise the likely farming response to liberalisation in terms of these plans and the variation in this response by study area.

Chapter 4 explores the possible land use and environmental implications of these different dimensions of the farming response.

Chapter 5 presents the alternative Green CAP scenario, analysing the illingness of farmers to take up environmental payments in the wake of the withdrawal of conventional agricultural support.

Finally, hapter 6 draws the strands of the study together and reflects on the lessons which policymaker might draw from the work.

7


CHAPTER 1: POLICY REFORM AND THE PREDICTION OF CHANGE It would mean a retu to the 1930s. Every farmer would have his money in a

jug on the dresser and most of the time the jug would he empty (Ceredigion livestock farmer). I can t really see a free market happening. Could the government afford to let areas like this go out of farming? I’d hope it would not just be survival of the

fittest (Argyll mixed farmer).

1.1 Introduction

Agricultural liberalisation would take farmers, conservationists and policymakers deep into uncharted territory. Not since the first decade of this century have Briti h farmers found themselves operating in a truly open market and German farmers have enjoyed government protection of some description since the early 19th centu y (Tracy, 1989). Post-war conservation strategies and policies, meanwhile, have nearly all been developed against a background of agricultural protection and more or less uninterrapted farming ex ansion. It is a sobering thought that most current conservation policies and institutions, including ESAs, have been developed to manage and offset the environmental consequences of agricultural expansion - a shift towards farming contraction, at least in some locations, would radically alter the far ing context of countryside protection. As has been said, having spent most of the last decade critiquing a CAP rooted in protectionism, conservationists are discovering they need to engage in an entirely different policy debate, in which the eventual abolition of the CAP, not merely its continued reform, is firmly on the agenda (Potter 1996, p. 1).

Attempts to predict the environmental effects of such a transformation in agricultural policy need to proceed through three levels of analysis:

• It is necessary to predict how the withdrawal of government support would affect farmers’ economic environment, both in terms of output and input prices, land values and rents;

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AGRICULTUI14L LIBERALISATION AND FIS ENVIRONMENTAL E FECTS: I-INAL RHPORT

• We need to be able to predict how farmers, individually and collectively, will respond to these changed conditions, disentangling, as far as possible, the policy influence from other determinants of secular farm household adjustment like endogenous technological change and hifting consumer tastes;

• The environmental implications of these managerial and structural responses need to be assessed, e amining changes within existing far and transfers of land and holdings. Let us take each of these in turn.

1.2 The Economic Impact of Liberalisation

The real price and asset value effects of removing current CAP price support are surprisingly hard to judge. Traditionally, commentators have assumed a substantial fall in market prices and asset values, but estimates of the speed of response and the extent of adjustment are little more than educated guesswork. Long run equilibrium values are themselves a function of the farmer supply response in the short and medium term because a reduction in supply in response to initial price cuts is likely to bring about some recovery in world m rket prices after the transition period. Estimates of the price elasticities needed to make this calculation vary widely.

According to the most recent, authoritative estimates fromMAFF (1995) based on a number of quantitative studies, the abolition of price support and production aids under the CAP would cut substantially producer returns for cereals, dairy products, beef and sheep. This is because, while the gap between EU and world market prices for these products is now not as large as it once was, farmers would still suffer from the withdrawal of the direct producer aids with, post the MacSharry reforms, contribute a substantial share of net farm income. MAFF s esti ates (see table 1.1) suggest that the reductions in producer retu s could average 10-15% for cereal enterprises, and 30% and 25% for dairy and beef producers respectively (MAFF, 1995). However, this would be offset in a number of ways:

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, AGRICULTURAL LIBERALISATION AND ITS ENVIRONMENTAL EFFECTS: FINAL REPORT

• Producers can be e pected to respond to reduced returns by economising on inputs and adjusting fixed costs, bringing about so e savings;

• At the same time, land values and rents would likely fall. The precise m gnitude of the reduction in returns and in land values depends on many factors beyond the direct influence of price support policy, including markets trends differentiated by commodity and region, the level of demand for new and competing uses for agricultural land and products, and food consumption patterns. The deter ination

of lending institutions to bring the process on by calling in bad debts will also be a factor;

• Finally, there would be a resurgence of world market prices as reduced European output (particularly for cereals and dairy products) began to af ect commodity balances.

Taking all this into account, MAFF (1995) have drawn together the results of recent studies (see Table 1.1) to estimate the fall in producer returns.

Table 1.1 Predicted effect on EU agriculture of multilateral removal of support % increase in world prices

Cereals Sugar Dairy products Beef and veal

Sheep

Pigs Poultry Source: MAFF, 1995

% faU in EU

% fall in EU

market prices

producer returns

following

per unit of output

multilater l liberalisation 10-20 40-50 40-50 20-30 20-30 5-10 5-10

(after feed) 10-15 25-30 30-35 25-30 10-15 10-15 15-20

45-50 25-30 30-35 40-45 40-45 neg. ne .

For the purposes of the present study, it was decided to present farmers with three simplified scenarios1 embodying some of these assumptions about the degree and

1 An additional scenario based on the Agenda 2000 proposals was also presented to respondents. In almost evei case, however, farmers told us they had already taken these reforms into account in

formulating their existing plans. Consequently, it does not appear in the analysis which follows.

10


economic i pact of policy change. In the cases of scenarios two and three below, a si ple calculation was made to estim te the likely impact on direct policy receipts for individual respondents, while figures were also given for the likely impact on average producer retu s in each case. Respondents were then required to make their own assessment of what this would mean for farm household income. The scenarios were:

1. Baseline: This scenario assumes the continuation of the current CAP market support regimes and the production aids introduced under the MacSharry reforms. All rates of support re ain the same and compulsory set aside is fixed at 5%. Conditions of entry to, and rates of payment under, existing agri-environ ental schemes are assumed to remain unchanged (including MEKA in the German study area);

2. Full Liberali ation: Under this scenario it is assumed that all price support and producer subsidies have been abolished and farmers are producing under world market conditions. For a period of seven years from 1998, transitional adjustment payments are available on a degressive basis. A calculation made at the point of interview indicates the approximate value of such payments to the fanner and a comparison with the value of foregone policy receipts is made;

3. Green CAP: Price support and production aids have been withdrawn, as above, but have simultaneously been replaced with a system of tiered environmental management payments. A basic environmental resource payment is available to all farmers in retu for an agreement to maintain existing habitat and landscape features. Higher tier payments are available to farmers who agree to carry out more ambitious habitat management and restoration, linked to a farm plan

1.3 Predictin the Farmer Response

Full Liberalisation is likely to reduce returns to a degree that is beyond the experience of most farmers and there is little in the recent historical record to give any guide to their likely response. While it is true that UK farming has

11


tech ically been in recession for much of the last fifteen years, this has been a relatively gentle process with few direct casualties and can in no way be seen as a rehearsal for the rigours of liberalisation. Harrison and Tranter (1994) report that the

number of bankruptcies in agriculture had risen from just 50 in 1980 to 250 in 1992.

A gentle cost price squeeze was introduced as a feature of support policy in the UK in the 1950s, exerting a pressure that contributed to the expansionist years that followed

(Winter 1996). UK farm incomes halved between the early 1970s and the early 1980s and then almost halved again by the early 1990s (Harrison and Tranter, 1994). Combined with rising debt, the effect was to place severe financial pressure on some farmers of a type likely to be experienced during the early phases of liberalisation. It is germane to record, therefore, that the overwhelming response of farmers to recession, according to surveys conducted by Harrison and Tranter and, earlier, by Errington and Tranter (1991), was to stay in far ing. Respondents proved remarkably conservative in their responses to the recession, and few were intending to go beyond conventional cost cutting and attempts to increase output from existing enterprises. Of those under greatest financial pressure, more were intending to continue in farming by adding further to their debts than reducing them or by embarking on any more radical restructuring of their businesses or income sources.

In the event, farming fortunes improved decisively in the mid 1990s, taking farmer

further away from the conditions likely to prevail following liberalisation. The combined effect of the MacSharry reforms and devaluation of the pound following the UK s exit from the European Exchange Rate Mechanism in 1992, together with unexpectedly buoyant world cereal prices, worked through the system to bring about a 21% increase in average farm incomes between 1992 and 1996 (Winter et al 1998).

It has been estimated that the net worth of UK far ing increased by 37% during this period (MAFF, 1997). Between 1992 and 1996, cereal farmers benefited from generous area compensation payments for price cuts which had not materialised, partly due to devaluation, partly because world prices were more buoyant than expected following poor grain harvests in the US and elsewhere in the mid 1990s. In May 1996, Hamburg prices for milling wheat were just 13% lower than in 1992 and in

12

AGRICULTURAL IBERALISATION AND ITS ENVIRONMENTAL EFFECTS: FINAL REPOR

the UK, farm gate prices had returned to the same level as in the pre-reform markets in 1992. Of course, in real terms prices also fell a little but the low inflation rate between 1992 and 1996 means that any minor fall in prices for UK and other European cereal farmers was richly over-compensated for by the arable area payments

(Winter et al 1998).

For this reason, studies of the farmer re ponse to the 1992 MacSharry reforms, supposedly the first step on the road to a more decoupled system of agricultural support, tell us little about the likely response to liberalisation. Quite the reverse, in fact. As Winter et al (1998) conclude from their investigation of the effects of the 1992 reforms, many of the most significant changes in farming practice taking place after 1992 are the result of farmers complying with the conditions attached to the new compensation payments (comphance with arable area eligibility rules, stocking rate conditions, etc).

It is difficult to discern any sense of preparation for the ore radical restructuring of support which the MacSharry reforms are supposed ulti ately to bring about. Far from discovering any sort of extensification response amongst cereal farmers, for instance, Winter s team found a significant number of producers responding to rising market prices by intensifying production. An EC study paints a similar picture at a European level (Brouwer and Berkhum, 1996). While the majority of British farmers covered by the survey had not changed the amount of nitrogen they applied to their major crops since 1991/2, where changes had been made there was a general tendency to increase applications. For exam le, nearly a quarter of farmers with wheat had increased their fertihser applications compared to just 11% who had reduced applications (Winter et al 1998). This is consistent with Cambridge University figures which show that winter wheat fertihser applications per hectare were static between 1993 and 1994 but increased from 740 kg per hectare in 1994 to 790 kg in 1995, despite an increase in cost during the same period from £99 to £109 per tonne (Asby and Sturgess 1997). In the livestock sector, Winter et al uncovered a similar story with increased attention to intensive grassland management and a growing use of forage maize. Since 1996, the BSE crisis has significantly and

13


adversely affected the trend towards intensification in the livestock sector but, given the extent to which beef sector has been subject to regulation and intervention in response to the BSE crisis, it hardly provides a particularly relevant exam le of liberalisation even if producer prices have dived sharply.

It is thus necessary to look beyond the EU for e pirical evidence of how farmers are likely to respond to liberalisation. The most commonly cited case is New Zealand, where the Lange government embarked on a radical overhaul of agricultural support in 1984, ef ectively engineering a unilateral liberalisation of farm policy. Alongside the deregulation of financial markets, a 20% devaluation of the currency and the removal of wage and price controls in the wider economy, the government abohshed agricultural subsidies and instructed the state-owned Rural B nk to bring interest rates up to market levels. The effect was to put new Zealand farmers in a tight financial squeeze as incomes fell and debt loadings increased. According to Ministry of Agriculture figures, farm profits and the value of land and livestock virtually halved

within the first year of liberalisation (MAP, 1994).

The immediate response of farmers was to cut back on discretionary farm operating expenditure, to liquidate some assets and to begin to look for alte ative income sources. Government studies show how long term survival depended on the preparedness of farmers to adjust during the first three critical years of transition and suggest that the very few farmers (less than 1%) who left the industry were operators with marginal land and/or high levels of unserviceable debt. Academic studies place a slightly different complexion on events. It is clear, for instance, that, beneath the ofiBcial picture of smooth, managerial adaptation to policy change, the burden of adjustment fell very unevenly on New Zei land farmers and, sixteen years later, has still to work itself fully through the system. Far from sweeping away the least efficient or less competent farmers, for instance, the reforms picked out some of the most innovative producers who had borrowed capital in the early 1980s to finance expansion and found themselves, post-reform, facing declining capital values and rising interest rates (Smith, 1994). It is also becoming apparent that some of the most profound impacts of liberalisation occur only after a lag. The intergenerational transfer

14

AGRIC LTURAL LI ERALISATION AND HS ENVIRONMENTAL EFFECTS: FINAI, REPOIU

of farms has been profoundly affected by bberabsation, with significant numbers of farmers who have managed to survive the immediate transition revising their plans to pass the business on to a successor (Cloke, 1996).

United States experience with the farm crisis of the early 1980s, though not quite of the same order, offers further insights into the responsiveness and adaptability of farmers to a sudden change in their economic environment. Here, it was the combined

effect of high interest rates and falling prices which precipitated a collapse in land values and an acute cost-price squeeze. US studies show that the ini ial reaction of farmers was to make changes to the crop and livestock mix, farmed area and the amount of off farm work. Five years later, however, substantial numbers of farmers

had gone out of business, and many more were pinned down by debts taken on in order to tide them over hard times. As Barlett (1993) discovered fiomher study of mid-west farmers, the really vulnerable were not necessarily the small, economically m rginal farms but the people who had undertaken expansion and borrowed money at the wrong time in the policy cycle. As she concludes: the large scale ambitious farmers that followed the ambitious style into the crisis years ostly ended with suffocating debt loads. Only a few, with very high skills and extraordinary resources, were able to pull out from under the burden. Cautious, debt averse operators, whether medium or large in scale, found themselves better able to withstand the crisis. Some were even able to make money during these years (Barlett, 1993, p210)

To what extent these responses would be repeated in a European context, with its distinct policy environment, resource endowments, farm business trajectories and very

different historical patte s of farmer dependency on support, is hard to judge. The American and New Zealand experiences, while providing some clues about the likely sequence of events following liberalisation and the onset of a financial squeeze (as well as empha ising the importance of di tin ishing between short term and long term responses), suggest that variations in farmer response can only be understood with reference to specific geographical conte ts and policy cycles.

15


If the response of Europea farmers to liberalisation is to be predicted with any accuracy, therefore, it must be based on original research. This means either economic modelling or intentions surveys that are specific to the European situation.

Various attempts have been made to model the response of UK farmers to policy change based on simplified ( weak ) assumptions about farmer beha iou and stylised

representations of the influence of policy in decision making. As Harvey et al (1986) point out, the great merit of linear programming (LP) modelling is that it can provide quantified projections of rational farm business responses to given changes in economic parameters. The study conducted by the Centre for Agricultural Strategy in the mid 1980s, for instance, modelled the effects of different policy scenarios on enterprise gross margins and enterprise mix. This has subsequently been developed

into the Land Use Allocation Model (LUAM) to predict the countryside ef ects of the 1992 reforms on the intensity of arable cropping (Harvey et al, 1992).

A more recent study commissioned by the GB Statutory Countryside Agencies (Doyle, et al, 1997) uses an LP model to predict changes to the enterprise mix, and thus land use patte , on farms in response to policy-driven changes in input-output coefficients. While this work has undoubtedly added to knowledge about how text¬ book profit maximising producers might respond to changes in the relative

profitability of different enterprises, it is limited in its ability to describe how real farmers and their families would actually respond, nor does it say anything about any variations in the farmer response by type or location due to differences in resource endowments, farm structures or farming culture. Significantly, it cannot yield any description of the likely sequence of events following liberalisation (‘comparative static’ analyses like these show the consequences of changes after the system has adjusted to the new economic conditions). Above all, LP models place heavy e hasis on changes to input use and enterprise mix as the chief form of adjustment to policy change, and cannot indicate how much of the f r ing adjustment would fall onto structural change (i.e. a decision to leave farming).

Empirical research, generating a different sort of knowledge, can begin to fill some

16

AGRICU TURAL UMUWJSATION AND H'S ENVIRONMENTAl E FECTS: FINA RHPORT

of these gaps. By describing how farmers might react to a policy change, a surveybased approach can attempt to identify patte s of response that are shared by farmers ith similar attributes, characteristics and histories. It can also go some ay to e plaining why farmers of a particular type react as they do, placing the policy response in the larger context of farm household adjustment and analysing the impact on the longer term development trajectories and survival prospects of farm businesses. Having said that, there have been few attempts to use this approach to investigate how farmers would react to long run policy change. Postal questionnaires recently

co missioned by the National Westminster Bank (NatWest Ba k, 1992) and by the FU (NFU, 1998), for instance, have incidentally looked at the succession plans of UK farmers and the plans of farmers in LFAs, respectively. The Errington and Tranter study referred to above also contains a section on intentions and plans, but does not seek to describe a policy response.

Trying to assess how farmers would respond to a hypothetical policy change is obviously a hazardous enterprise. At a conceptual level, there is the difficulty of isolating the policy influence from other determinants of decision making This is a problem common to all diagnostic studies which atte pt to explain the causes of countryside change (Potter, 1986). The best solution, as Winter et al (1998) conclude, is to seek to capture multiple causahty by identifying i ilar responses over long periods, and relating these to the policy environment, market conditions and the prevailing rate of technological change. At the same time, it is i portant to investigate the responses of farm households rather than si ply farm businesses. Farm may be able to absorb policy shocks, at least for a time, by pursuing various survival strategies designed to diversify income sources or reduce consumption. This could lead to a less direct, more displaced response than might be predicted from modelling work based on the farm business alone.

In the present case, however, there is the additional complication that we are anticipating change rather than reconstructing it. Researchers investigating the causes of past change have enough difficulty eliciting accurate results based on memory - to adopt an approach which requires respondents to think about the future and to situate

17


themselves mentally in a scenario which may be u like anything previously encountered is a considerable methodological challenge. There are likely to be t o main sources of bias here: • There may be hypothetical bias if respondents reply by referring to other farmers rather than their own situation;

• ‘Propaganda bias’ is possible if respondents decide to exaggerate their response and use the survey as a vehicle to express their objection to the idea of withdrawing support.

There is also a danger that respondents will be overly ‘reflexive’ in their responses to questions about difficult or novel ideas, reflecting back the answer they think the interviewer wants to hear. To an extent, respondents also need to he treated like efficient ‘black boxes’, able to assimilate the scenario descriptions, make an instant judgement about what the scenario is likely to mean for their particular farms and then put together a description of their own response.

Many of the above problems can be minimised through good questionnaire design and interview technique. In the present research, considerable care was taken to use a small number of experienced interviewers. A pre-survey briefing was held prior to the survey in order to acquaint interviewers with the objectives of the survey and to

identify potential pitfalls in the administration of the questionnaire (a de-briefing workshop was also held after the survey to receive feedback from the interviewers

and discuss initial findings). The piloted questionnaire was designed to elicit detailed information about recent, planned and hypothetical change to the business and landuse and a judicious combination of‘open’ and ‘closed’ questions allowed the researchers to place individual responses to ‘what if questions in context.

The conceptual difficulty of isolating a policy influence in farmers’ future behaviour is more problematic. In the present study, it was decided to focus on the extent to which

the hypothetical liberalisation of agricultural support brings about changes in current plans. A key objective of the work is to assess how far, and in what way, policy

18

AGllIC LTURAl, U ER.AUSA TION AND HS ENVIRONMENTA EFF Cl'S: FINA REPORT

change deflects or simply reinforces the management plans and survival strategies of family farmers, but also to judge the ability of farmers to absorb or exploit pobcy change, in the hort term at least. The basic assumption is that farmers are aheady subject to powerful forces in the form of technological change, shifting consumer preferences and changes in the cultural context of farming. Policy effects are thus superimposed upon, and interact with, these trends and can only he understood in context. The aim will thus be to encourage respondents to describe their farming intentions based on current policy assumptions and agricultural policy foresight and then to measure the extent to which these plans would be amended, adjusted or abandoned under conditions of pohcy change. By adopting this form of sensitivity

analysis, it should be possible to identify the situations under which pohcy change elicits the most decisive farmer response but also to identify the (equally significant) cases where there is no apparent pohcy response forthcoming.

1.4 Deducing Environmental Consequences

The final step in the analysis will he to assess some of the environmental consequences of the farmer response in different study area contexts. Again, this is largely unexplored territory. The (rather thin) literature on the environmental consequences of agricultural liberalisation is dominated by arguments from economic theory predicting a net environmental benefit from the withdrawal of agricultural support:

• Studies such as those by Anderson (1992) and Abler and Shortle (1992) concentrate on the potential environmental benefits of a reduction in input use by farmers and tend to underplay the consequences for biodiversity and countryside character of a recession-induced decline in countryside management and the marginahsation (and even removal) of high natural value far in

• Thought experiments such as those undertaken by Lawrence Gould Consultants (1986) for the Nature Conservancy Council are more helpful in this respect by providing a broader picture of the likely consequences of changes to the patte and structure of farming as well as in farming practice. According to this study, it

19


is likely to be the enterprise choice decisions of farmers that will have the greatest environmental consequences over the medium term, ith the further consohdation of specialist cereal production on the best land, a restructuring of the dairy sector

and the effective disappearance of traditional hill sheep farming bringing about radical changes in the appearance and biodiversity of the UK countryside

following liberalisation;

• Modelling exercises such as that carried out by Harvey et al (1986) which sets out to capture the likely countryside ef ects of CAP reform based on predictions of enterprise change and substitution. Having modelled the enterprise choice decisions of farmers under different policy scenarios and thus m de projections of the likely pattern of farming in different UK regions, an aggregate environmental score was calculated based on assumptions about the environmental costs and benefits of different enterprise types and combinations;

• More recently, the Doyle et al (1997) study deduced environmental consequences on the basis of assumptions about the impact of specific changes to the mix and intensity of enterprises on archetypal farms.

This study attempts to explore the likely environmental consequences of different dimensions of the farmer response as revealed by the survey. While no attempt will

be made to quantify this, it should be possible to identify the type of change likely to occur and to speculate on this basis about environmental impact. The e phasis will be

on identifying the types of change and their likely geographical incidence. Critical conce s will be identified for each study area, and these will be returned to in the assessment of environmental effects. Three levels of response will be recognised:

• Direct changes to in field farming practice such as reductions in input use and stocking rates, changes in the crop mix and farm layout. The environmental consequences of these essentially farm management responses are best understood and easiest to predict, though the impact in terms of an improvement or a deterioration in environmental quality depends on baseline conditions;

20

AGRICULTURAL LIBERALISATIQN-AND-lTS ENVmONMENTAL EFFECTS: FINAL REPORT

Indirect changes to land use and intensity resulting from strategies pursued to reduce household consu ption and/or maintain or increase household income. Potentially very profound in their effects on the way land is farmed and farm businesses are configured, these indirect consequences are most difficult to predict in land use terms;

• Long term hifts in land use arising from structural change and the amalgamation of farms.

21


CHAPTER TWO: THE STUDY AREAS

Not much as changed here. I think I ve inherited my father s caution. When incomes were booming everyone else was (expanding) on the strength of next year’s crop. They’ve gone on hohdays, had fancy kitchens put in, and now they’re in trouble (Ceredigion livestock farmer) The farm business will continue to develop as long as enterprises are profitable. I’m considering a big fiee range egg enterprise and might have a development

plot or two (East Anglian arable farmer)

2.1 Introduction

A basic objective of this study is to assess the effects of liberalisation in different locations and environmental settings. The study areas were selected to represent a range of agri-environmental interactions, different degrees of policy dependence and varying levels of historical agricultural change. Time and resources prevented a representative cross section of agri-environmental settings being sampled. However, the study set out to sample a range wide enough to tie the likely farmer response into its geographical context and to explore the resulting environmental consequences.

In principle, the five study areas can be placed on a spectrum of farming intensity, ranging from an intensive, lowland arable landscape in East Anglia through to an exa ple of one of the EU’s most extensive farming systems in the dehesa heartland of Extremadura in southe Spain. In practice, the picture is more complicated, with different time profiles of agricultural and landscape change within the study areas themselves. This chapter describes the study area profiles and defines the baseline of expected agricultural change against which the impact of liberalisation will later be

judged.

2.2 English Study Area: Diss, East An lia

The English study area is a typical example of an agricultural landscape that has been transformed by the intensification of arable production and the post-war decline of the

22


mixed farm. A combination of arable, livestock and dairy farming has given way to a countryside dominated by specialist cereal and general cropping farms, ith just 14% of surveyed holdings now classified as dairy or mixed farms (see table 2.1). A mall, but significant number of specialist pig production units completes the picture. Thi is a broadly rolling landscape, interspersed with very small fragments of woodland and remnants of wet meadowland along the corridor of the river Waveney. According to English Nature s profile of the East Anglian Plain Natural Area and South Norfolk and High Suffolk Claylands Character Area into which the study area falls, this is countryside dominated by arable land use, a broad plateau intersected by streams and river valleys. Sandier soils in the west suitable for vegetable growing (and pig production) give way to heavier soils in the east supporting wheat and sugar beet production.

Arable intensification and the elimination of livestock mean that fields are large (averaging 10 hectares) and semi natural habitats few, with a woodland cover of just 3% for the survey area as a whole. Permanent grassland covers just 6% of the study area, 59% of this found as fragments on arable farms and most of the rest (32%) on mixed farms. On average, just 9% of survey farms is under permanent, unfertihsed grass, woodland or other semi natural vegetation, most of the rest (83%) being accounted for by arable crops. Compared to other study areas (see table 2.2), Diss and the surrounding area has one of the most monolithic land use patte s of land use. It also has one of the most skewed set of farm structures, with 58% of farms being 200 hectares or more in size.

Increasing speciahsation and intensification on ever larger farms is the principal feature of recent agricultural change here. It appears that most hedgerow removal and land unprovement took place during the late 1960s and throughout the 1970s on the survey farms, with the result that recent land use changes are few (just 10% reporting a conversion of grassland to arable and 20% the removal of hedgerows since 1992 see table 2.3). In terms of recent agricultural change, however, 26% of respondents report that their arable enterprise has expanded significantly and become more intensive (36%) since 1992 and 42% have acquired or rented additional land over this

23


period. Indeed, 59% of arable farms can e described as following an expansionary path of farm business development, ith plans for further expansion. Dairying is a declining enterprise in the study area and, compared to the Welsh study area, for

Table 2.1 Farm characteristics - East Anglian study area

% of holdings

Farm size (ha)

Farm type

% of holdings

less than 50

8.0

Arable

82.0

50-99

16.0

Dairy

4.0

100-199

18.0

Livestock

0.0

Over 200

58.0

Pigs & Poultry

4.0

Mixed

10.0

Total

100.0%

100.0%

Source: Farm Survey

Table 2.2 Land use by study area East

Ceredigion

Swabian

Arable

83.2

5.2

37.8

0.0

11.0

Mean whole study area 17.2

Permanent

0.0

0.0

1.6

0.0

0.0

0.0

Temporary grassland

2.9

40.7

7.1

1.6

1.0

3.7

Permanent

6.3

48.1

49.8

6.0

0.0

8.3

1.3

0.0

87.3

83.1

65.3

4.5

2.7

5.1

0.0

4.6

0.2

1.0

0.0

1.5

0.9

0.0

0.0

0.0

3.4

0.0

100.0%

100.0%

100.0%

100.0%

100.0

Argyll

Caceres

Alb

Anglia

crops

grassland 0.2 Rough grazing Woodland 2.9 Unutilised land 4.5 Other 0.0 Total 100.0% Source: Farm Survey

24

AGRICULTURAL LIBERALISATION AND ITS ENVIRONMENTAL EFFECTS: FINA REPORT

Table 2.3 Land management chan e since 1992 in East Anglian study area % of farmers making each change

Land management change

Converted permanent grass to arable Converted arable to permanent grass Planted trees on grassland Planted trees on arable land Increased level of woodland management Reduced level of woodland management Increased level of abitat management Reduced level of habitat management Converted land to non-agricultural use Abandoned land Brought unused land into production Im roved rough grazing Removed hedges Increased fallow area Reduced fallow area Increased fertihser use Reduced fertihser use Increased irrigated area

10.0 4.0

12.0 42.0

34.0 0.0

60.0 2.0 2.0 0.0 2.0 60.0 20.0 0.0 0.0

10.0 34.0 10.0

Other

12.0

Source: Farm Survey

Table 2.4 Incidence of diversification by study area East

Ceredigion

Argyll

Caceres

Alb

An lia Have diversified into nonagricultural enterprise Have not diversified into

Swabian

18.0

4.0

5.9

12.0

7.0

82.0

96.0

94.1

88.0

93.0

100.0%

100.0%

100.0%

100.0%

100.0%

non-agricultural enterprise

Total Source: Farm Survey


example, very few farms of this type are expanding. Not surprisingly, 58% of farmers ith a beef enterprise report a significant re uction in its importance since 1992. Against this trend of further rehance on core arable enterprises, a small but significant number of far ers (18%) in this area report some form of diversification, a much greater number than in any other study area (see table 2.4).

Very few farmers in this study area could envisage earning most of their farm household income fiom anything but farmin (notwithstanding the evidence of diversification just noted). At present, 61% gain three quarters or more of their income fiom agriculture and, of this, 54% comes from cereals and other arable crops.

Most were relatively bulli h about the future, with 60% anticipating fair or good prospects for their businesses. The impression was of a relatively robust agricultural economy, with more business choices available to farmers than in any study area and fewest conce s about levels of debt or liquidity. Reflecting this, 84% still e pected to be farming in the study area in ten years time, compared to 75% for the sample as a whole. However, succession prospects were surprisingly uncertain, only 29% were that their farms would be passed on to a successor (see table 2.5).

So far as future protection, management and enhancement of the conservation resource in this study area is conce ed, the key issues are as follows:

1. The levels of input use and changes to in-field practices associated with changes in crop mix and rotations. Fertiliser application rates and use of farm sprays on chemical hungry crops such as oilseed rape and maize continues at a high level within the study area, eliminating arable weeds, causing water pollution and reducing the biodiversity of headlands and land adjacent to cropped land. It is clear that many farmers (36%) already plan to fine-tune input use and a few said they would be considering a greater use of farmyard manure in future, although there is no indication that fertihser use will ever be cut completely or even reduced dramatically. In addition, without a change in the patte of cropping away fiom m ize and potatoes in vulnerable areas, together with more arable stewardship in

26


Table 2.5 Expectation of succession by study area

Ceredigion

East

Swabian

ArgyU

Ca ceres

Alb

An lia Definitely/probably

19.5

33.3

11.8

22.2

4.7

hasn t a successor Don’t know

19.5

8.3

15.7

8.9

7.0

Too early

31.7

10.5

49.0

17.8

32.6

Definitely/probably

29.3

47.9

23.5

51.1

55.7

100.0%

100.0%

100.0%

100.0%

100.0%

has a successor


Table 2.6 Farm characteristics - Ceredigion study area

Farm size (ha)

% of holdings

Farm type

% of holdings

less than 50

32.0

Arable

0.0

50-99

42.0

Dairy

44.0

100-199

20.0

Livestock

48.0

over 200

6.0

Total

100.0%

Pigs & Poultry

0.0

Mixed

8.0

100.0%

Source: Farm Survey

27

AGRICULTURAL LIBERALISATION AND ITS ENVIRONMENTAL EFFEC S: FINAL REPORT

the fonn of conservation headlands, buffer strips and spring sowing, the impact of any marginal adjustments to application rates is likely to be inimal. Meanwhile, heavy land in the east of the survey area li its the opportunities for switching to spring sown cereals; because of the soil s poor workability in spring, the surveyed farmers were very reluctant to alter this trend.

Reversion from autumn to spring sowing is widely regarded as one of the most environmentally productive changes that can be made to the agrono ic regime of arable farms. It benefits ground nesting birds such as the skylark, and the winter stubbles provide cover and a seed and invertebrate food source for birds, small mammals, and hence also support a range of predators. This strongly suggests a need to encourage enrolment in Arable Stewardship. The type of arable farming practised at present, and the lack of any indication that farmers are moving towards less intensive arable production unaided (none of the farmers in the sample was organic).

2. Trends in farm structures and their implications for the protection and management of the residual conservation resource in the study area. It is likely that, where large blocks of unimproved grassland and native woodland are still found in the study area, these are often found on interstitial far s’ where ixed systems and comparatively extensive practices have been retained due to personal preference or lack of opportunity. If such farms disappear, the conservation effects could be disproportionate to the amount of land affected, particularly if they are the last remaining areas of conservation value. Their survival prospects are is consequently of direct conservation conce . Judging by farmers’ plans, 44% of these farms do not expect to be far ing in ten years time. The corollary is that 20% of the remainder e pect to acquire land during the next ten years. In addition, structural changes resulting in farm amalgam tions also threaten hedgerows and other linear features as fields may be enlarged for further econo ies of scale.

28


3. The management and scope for re-creation of the rassland, woodland and

etland still found on intensively managed farms but which are peripheral to the farming system. Currently highly fragmented, there are already signs that various agri-environmental sche es are persuading farmers in the study area to manage and maintain remaining hedges, woodland and wetland (58% of respondents having already enrolled in a government scheme - see figure 2.2). However, coverage is low just 5% of la d in the study area land cover) and selective in farmer terms (participants tend to be large farm over 200 hectares and are more likely to have expanded or consolidated their fanning operations in the recent past). To what extent the future will see a more widespread and consistent pattern of habitat management and recreation here depends on the willingness and ability of mainstream farmers to invest in creative conservation and habitat management and m ke available the labour and land necessary to achieve this There are some signs that more farmers are planning to undertake habitat management in future. 44% of the East Anglian sample indicated their intention to undertake some sort of countryside management. We were left in little doubt, however, that this depends on reasonable levels of profitability being m intained.

2.3 Welsh Study Area: Brongest, Ceredigion

The area around Brongest is an example of a pastoral landscape centred on dairy and livestock far ing. A place of steep, often heavily wooded valleys, the landscape mosaic is made up of (frequently heavily im roved) pasture, hedges and oak woodland, with most of the natural capital resource contained within residual ancient sessile oak woodland, hedgerows and unimproved species rich grassland. Farms are small (32% are less than 50 hectares), usually owner occupied (54% com ared to 45% for the sample as a whole) and livestock based (see table 2.6). The entire study

area falls within the Less Favoured Area (LFA), with the most marginal and hilly land to the east and south mainly being used for extensive cattle and sheep production and the better land with more improveable pasture for dairy. Livestock farming is the predominant activity, 82% of the Welsh sample had a sheep enterprise and 72% beef. In total, 48% can be classed as livestock farms, with a further 44% dairy farms.

29


Nearly all of the utilised agricultural area (89%) is under grass, 48% of it permanent grass. Although 66% of far s have some woodland present, only 5% of the surveyed area can be described as wooded (table 2.2).

The last twenty years have seen a steady intensification of land management in the area. Dairy e pansion has taken place on the back of investment in buildings and new equipment, grassland improved and hay meadows converted to silage production (40% of respondents report an expansion in their dairy enterprise and 37% an increase in the intensity of production since 1992). This is reflected in the significant increase in improved permanent grassland reported here since the early 1980s. At the same time, though, there is widespread habitat neglect. Woodland is usually entirely unmanaged and grazing by stock is reducing regeneration and destroying under-storey vegetation. Just 12% of respondents with woodland had carried out any sort of woodland management d ning the previous five years. Habitat management was fairly liberally interpreted by respondents here and 30% claimed they had carried out operations like hedgerow management and scrub clearance (table 2.7). Unlike other study areas, awareness of conservation issues and sources of grants and advice was

extremely low, with poor scheme recognition by respondents. Just 10% were receiving any sort of grant aid or payment for conservation management. This co pares to 56% of the Scottish sample and 100% of the German one (see figure 2.2). On poorer, land the trend in stock management has been towards keeping more sheep on tack2, with some reported declines in fertihser use (47% reporting a reduced fertihsation of grassland since 1992).

Economically speaking, the farming community here is heavily dependent on agricultural income so rces and expects to remain so: 66% identify this as their principal income source and 62% still rank agriculture as their most likely principal income source in ten years time. Of present income from f nning, 41% comes from dairy enterprises, 27% from sheep and 30% from beef. Alte ative sources of employment are scarce and opportunities for pluriactivity very low, the main change

2 Where a farmer is paid to use his land to temporarily accommodate and look after another farmer s flock, usually over the winter months.

30

AGRICULTURAL LIBE1ULISATI0N AND ITS ENVIRONMENTAL EFFECTS: FINAL REPORT

Table 2.1 Land management change since 1992 in Ceredigion study area

Land management change

% of farmers making each change

Converted permanent grass to arable Converted arable to permanent grass Planted trees on grassland Planted trees on arable land Increased level of woodland management Reduced level of woodland management Increased level of habitat management Reduced level of habitat management Converted land to non-agricultural use

20.0

Abandoned land

2.0

24.0 8.0 0.0 8.0 2.0 30.0 4.0

0.0

Brought unused land into production Improved rough grazing Removed hedges Increased fallow area Reduced fallow area Increased fertiliser use Reduced fertiliser use Increased irrigated area

2.0

14.0 14.0 0.0 0.0

20.0 32.0 2.0

Other

0.0

Source: Farm Survey

Figure 2.1 - Percentage of farmers with land in Agri-environmental scheme by study area

East Anglia Ceredigion Swabian Alb Argyll Caceres study area

31


in the projected income ranking being due to a substitution of the state pension for agricultural income. There is a sense of the more marginal farmers getting by on low incomes and a frugal lifestyle. While there is some evidence of small dairy farms going out of business, and heirless farmers selling up on retirement, farm structures have remained remarkably stable over the last ten years. Farming fortunes have been strongly affected by peaks and troughs in the milk market and many respondents reported a sharp fall in incomes over the last year. Some argued that the demise of the

Milk Marketing Board and a tightening up in hygiene regulations has had a greater economic impact than the MacSharry reforms. 64% of farmers describe their economic outlook as poor or ‘bad’ (see table 2.8), making Welsh farmers among the most pessimistic of those interviewed for this study. They are also the most elderly, 70% of current operators aged 55 or more and 50% having ruled out succession.

So far as the future protection, management and enhancement of the conservation resource in this study area is conce ed, the key issues are as follows:

1 The willingness and ability of current and incoming farmers to manage the conservation resource, particularly woodland. Most holdings in this study area contain significant amounts of conservation capital of some sort, with a few being important repositories of semi natural grassland. Dairy intensification particularly has meant the steady marginalisation of these features within the farming economy, leading to neglect and undermanagement. It is hard to see any redress through extensification or structural change in the forseeable future. It is clear that there is currently a psychological as well as an economic barrier to the sustainable management of woodland, for instance. Without effective intervention, the quahty of the resource will continue to decline;

2 The further concentration and intensification of dairy production. Past experience suggests that this is accompanied by an increase in te porary grass and a general intensification of grassland management on holdings. Furthermore, the amalgamation of holdings to create large dairy units managed by a core of the more successful farm famihes, by increasing the labour to land ratio, may mean

32

AGRICULTURAL LIBERALISATION AND ITS ENVIRONMENTAL EFFECTS: FI AL REPORT

even less labour time available for countryside management on the economically most viable farms.

2.4 German Study Area: Swabian Alb, Baden-Wiirttemberg

The Swabian Alb contains one of the largest continuous calcareous landscapes in Germany. Our study area, located centrally within the Swabian Jura, is an area of wide valleys and steep hills, with wet and dry grassland, juniper heath, orchards and some dry woodland. This is a marginal area for far ing and the entire study area is an LFA. The dominant farm type is dairy (accounting for 43% of farms in the study area), but there are also some mixed farms combining livestock and some arable production. Indeed, the German study area is easily the most diverse in terms of farm type (see table 2.9). It has the largest concentration of sm ll farms (73% are less than 50 hectares in size). The relationship between far in and the conservation resource is complex, made more so by the way land is held by farming famihes and conditions surrounding the receipt of pensions. State pensions, in fact, are available to farmers from the age of 60 and are conditional on relin uishing control over land. The effect in this study area is to bring forward the timing of inheritance and to create an age structure skewed in favour of younger operators (see figure 2.3).

Traditionally, the predominant farming activity here was the rearing of sheep, pastureland and hay meadows supporting grazing livestock and the production of fodder and transhumance ensuring the management of the plagioclimax juniper heath. Recent decades have seen the abandonment of transhum nce, a shift into more

intensive dairy production and some conversion to arable (the latter chiefly for the purposes of silage maize production).

The result is a decline in the management of heathland and a fragmentation of wet and dry grasslands found on farms. There has also been a steady attrition of the traditional orchards characteristic of this landscape mosaic. Government has responded by imposing a series of restrictions on farming practice in the Alb and all farmers are encouraged to enrol in the MEKA programme (Wilson, 1996). Heathland

33


management remains problematic a d various initiatives have been attempted to prevent encroachment by scrub. Meanwhile, 100% of survey farms are enrolled in the MEKA scheme, the effect of which has been to preserve the current extent of key habitats like woodland and semi-natural grassland, though not necessarily to improve levels of active manage ent (ibid). It is a measure of the generally extensive nature of

farming in the study area (and the ability of MEKA participants to select their own management prescriptions), that nearly all farmers qualified for subsidy without being required to make any adjustment to farming practices.

Table 2.8 Economic prospects of farms by study area

East

Ceredigion

Swabian

Argyll

Ca ceres

Alb

An lia Excellent

0.0

2.2

0.0

0.0

0.0

Good

19.1

4.3

12.3

2.1

47.1

Fair

44.7

23.9

28.6

29.8

35.3

Poor

29.8

30.4

22.4

29.8

11.7

Bad

6.4

39.2

36.7

38.3

5.9

100.0%

100.0%

100.0%

100.0%

100.0%

Total

Source: Farm Survey

Table 2.9 Farm characteristics - Swabian Alb study area

Farm size (ha) % of holdings

Farm type

less than 50

72.5

Arable

11.8

50-99

19.6

Dairy

43.1

100-199

7.9

Livestock

over 200

0.0%

Total

Pigs & Poultry

100.0%

% of holdings

5.9

17.6%

100.0%

Source: Farm Survey

34

AGRICU TURAL LIBERALISATION AND ITS ENVIRONMENTAL EFFECTS FINAL REPOR

The exceptionally high level of part time farming (see figure 2.4) is the defining characteristic of the study area, and one of the explanations for the low rate of recent agricultural change (see table 2.10). Many survey farms have been managed on a part time basis for two generations and present day occupiers are able to find employment in nearby towns. Just 52% of G rman study area farmers are heavily dependent on agriculture for their total household income. Many work full time in the important local automotive and electronics industries, managing their farms in the evenings, at weekends and during vacations. Indeed, 61% have three or more income sources,

typically combining a retu from agriculture with off farm employment and receipts

from MEKA.

All the evidence suggests that this diversity of income sources has created a very stable patte of land holding, with a greater sense of security about the future than in any other study area. 79% regard their cu rent economic situation as good or fair , with just 10% assessing it as bad . This is in marked contrast to farmers in Wales and Scotland (see table 2.11). 22% rank ‘off farm employment as still likely to be their principal income source in ten years time. While the statistics in table 2.5 suggest that succession is very uncertain, this is explained by the large number of young farmers, many of whom have no children or children too young to be identified successors.

So far as future protection,management and enhancement of the conservation

resource in this study area is conce ed, the key issues are as follows:

1 The need to maintain levels of water protection. Extensive groundwater reserves in the limestone aquifers are hi hly sensitive to pollution from agriculture and there has been a succession of government schemes to tackle the proble SchALVO was set up in 1988 to compensate farmers for keeping nitrate levels below thresholds in water protection areas, some of which were located in the Swabian Alb. MEKA has prioritised the maintenance and extension of the permanent grassland area. For the future, changes in far ing practice which make it more difficult to maintain this land use patte could undermine efforts to protect ground water supphes. The loss of MEKA under a liberahsed scenario is likely to

35


u dermine current initiatives, although certain legal restraints will probably mitigate this to a certain extent.

Figure 2.2 A e profile by study area

Table 2.10 Land management change since 1992 in S abian Alb study area % of farmers making each change

Land ana ement chan e

Converted permanent grass to arable Converted arable to permanent grass Planted trees on grassland Planted trees on arable land Increased level of woodland management Reduced level of woodland management Increased level of habitat management Reduced level of habitat management Converted land to non-agricultural use

3.9

15.7 0.0 0.0 0.0 0.0 3.9 3.9 0.0

Abandoned land

0.0

Brought unused land into production Improved rough grazing Removed hedges Increased fallow area Reduced fallow area Increased fertiliser use Reduced fertiliser use Increased irrigated area

2.0 3.9 0.0 2.0 0.0 5.9

27.5 0.0

Other

3.9

Source: Farm Survey

36


2 The difficulty of ensuring the continued management of agriculturally residual habitats that are either unfarmed or unoccupied in a farming sense. Originally there were large areas of do nland and jumper heath, traditionally summer grazed by sheep which were then shepherded to the lowland valleys of the Rhine and Danube for overwintering. The cessation of transhumance together with more recent changes in grazing regimes, means that this important aspect of the Swabian habitat mosaic is under-utihsed and liable to invasion by scrub. Various solutions have been proposed, including a conversion to large scale extensive beef production (see Luick, 1996). At the same time, the agricultural status of woodland remains uncertain. Farming tradition decrees that, even when land is sold or rented out by a retiring farmer, the woodland will be retained as a capital asset, to be passed on to successors when the time comes. It is unclear how

much woodland is held in this way, but our interviewers thought the areas involved were probably significant. From a conservation point of view, the difficulty is identifying ownership in order to incentivise better management.

3 Semi-desertification (afforestation) on land held at a distance by farmers who move from being part time to hobby farmers. This is a relatively recent phenomenon hut one which is increasingly seen as a threat to the open habitats of the Swabian Alb (Kaule and Morgan, 1998). For a variety of cultural and legal reasons, land is rarely sold outright by farmers who decide to give up farming Rather, the title deed is retained but unless it is rented out, the land ceases to be farmed. By planting to conifers, these absentee farmers alter the appearance of the landscape and fragment its open character.

37


Figure 2.3 Breakdo n of sample by inco e status

Study area

Table 2.11 Current economic status of farm businesses by study area3 East

Ceredigion

Swabian

Argyll

Ca ceres

Alb

An lia Good

12.0

14.0

27.5

8.0

48.8

Fair

48.0

26.0

51.0

38.0

41.9

Poor

30.0

30.0

11.7

24.0

9.3

Bad

10.0

30.0

9.8

30.0

0.0

100.0%

100.0%

100.0%

100.0%

100.0%

Total

Source: Farm Survey

3 Defined by respondents at the time of interview.

38


2.5 Scottish Study Area: Dalmally, Argyll

Dalmally and the surrou di g area is classic hill farming country - moorland, rough grazing and bogs on higher ground giving way to small areas of in-bye on the lower slopes and in the glacial valley bottoms. The most important vegetation in this semi¬ wild landscape is the heather moorland, acid grassland and blanket bog which covers all land above an altitude of 330 metres, though the transition to semi-improved in¬ bye land is often blurred, creating a rich mosaic of managed grassland, rocky outcrops and boggy land. Atlantic coast ancient oak woodland is also found at lower altitudes, while in the wettest valley bottoms there is willow scrub. Agriculture is exclusively sheep and cattle production: 80% of survey farms have sheep and cattle enterprises, t pically in the ratio of 80:20, 14% having sheep only. Farms are large and extensive. 78% of survey holdings were 200 hectares or more in size and there were examples of estate holdings in the 25, 000 hectares and above size category (see table 2.12).

Traditional hill sheep and cattle farming plays a central role in maintaining this landscape mosaic. Classically, sheep are hefted onto the moor during the summer and only brought down the prior to lambing. A regime of low stocking densities, good shepherding to prevent localised overgrazing and periodic burning maintains the vigour and diversity of heather moorland vegetation, while off-wintering allows for heather regeneration during critical times of the year. Meanwhile, grazing by beef cattle increases the diversity of vegetation by controlling rushes and bracken. The main output of this system of farming is store lambs and store cattle, sold in the autumn to producers in East Scotland or south of the Borders.

Since the early 1970s, the system has undergone gradual, cu ulative change. Unlike the Southern Uplands, where less extreme climatic conditions have enabled farmers to increase sheep numbers and stocking rates, farmers in Argyll have been constrained in their ability to engineer a significant increase in herd and flock size. Nevertheless, there has been a clear trend towards the improvement of moorland and in-bye land and a wholesale conversion from hay production to silage, much of the former subsidised under the Farm and Horticulture Development Scheme. This trend has

39


continued in the recent past, with 34% of respondents reported having im roved rough grazing since 1992 (table 2.13). The effect has been to reduce the conservation interest of the in-bye, chiefly through drainage, liming, and fertilising (reseeding is less co mon).

Overwintering practices have also changed, and hill parks have begun to make an appearance (whereby blocks of rough grazing on middle ground are fenced and grazed at higher densities and under more controlled conditions than would be possible through the practice of hefting). The effect of the latter is to concentrate stock, create physical barriers to the movement of fauna and make it more likely that higher ground will be undergrazed and undermanaged. Meanwhile, large areas of moorland have been planted to commercial forestry, generally as a result of farmers selling land to forestry companies to release capital. Of the remaining moorland which continues to be grazed, there is evidence of a general decline in shepherding practices (contract shepherding is widespread) and local overgrazing. Burning has also declined, partly because of the fire risk created by adjacent blocks of sitka spruce. At the same time, there is evidence of unsympathetic management of woodland, with many farmers viewing it as a resource for grazing and sheltering stock.

However, a more positive development in recent years has been the advent of the Countryside Premium Scheme, with its incentives for moorland and grassland habitat management, scrub control and wetland conservation. Heavily oversubscribed in the study area, some 15% of the surveyed farm area is presently enrolled, with many of the rest reporting an interest in having land accepted into the scheme.

Argyll farms are the most stable in the sample in terms of recent enterprise change and there is a general sense of farmers ‘holding their breath’ (and probably cutting back on household consumption) until the likely shape of the new CAP has been confirmed. Very few recent changes are reported to the balance or intensity of enterprises, for instance, and compared to the other study areas, there has been relatively little new

40


Table 2.12 Farm characteristics - Argyll study area

Farm size (ha)

% of holdings

% of holdings

Farm type

less than 50

2.0

Arable

0.0

50-99

16.0

Dairy

2.0

100-199

4.0

Livestock

98.0

over 200

78.0

Pigs & Poultry

0.0

Mixed

0.0

Total

100.0%

100.0%

Source: Farm Survey

Table 2.13 Land management change since 1992 in Argyll study area Land management change

% of farmers

Converted permanent grass to arable Converted arable to permanent grass Planted trees on grassland Planted trees on arable land Increased level of woodland management Reduced level of woodland management Increased level of habitat management Reduced level of habitat management Converted land to non-agricultural use Abandoned land Brought unused land into production Im roved rough grazing Removed hedges Increased fallow area Reduced fallow area Increased fertibser use Reduced fertibser use Increased irrigated area

4.0 2.0 20.0 0.0

22.0 0.0

34.0 2.0

8.0 0.0 6.0 34.0 2.0 0.0 0.0

14.0 10.0 0.0

Other

0.0

Source: Farm Survey

41


capital investment or land i prove ent (see table 3.13). Some 66% and 81% report no change in the intensity of sheep and beef production, respectively, since 1992. Many family farms have been hard hit by the BSE crisis, however, 54% reporting their current income position as poor or ‘bad and 52% a fall in asset values since 1992 (see table 2.11). A significant number of farmers have reduced their dependence on agricultural income sources since 1992 (46%), though in many cases this simply reflects the onset of retirement and the availability of the state pension. Even so, off farm employment is more important here than in the Welsh study area and 10% of f r s expected this income source to become more important in fut re. 68% expect still to be farming here in ten years time.

So far as future protection, management and enhancement of the conservation resource in this study area is concerned, the key issues are as follows:

1 The repercussions for countryside management of a continuation of current trends in stock management. It is already clear that a decline in summer grazing and shepherding is creating a more uneven grazing regime and degrading the open habitat which still remains. We can expect more producers to extensify production in this way in order to concentrate stock and resources on better (improved) land capable of yielding a reasonable return. Changes in the mix of beef and sheep on farms could also have important implications for the structure and diversity of vegetation, with a shift towards sheep having subtle but cumulatively i ortant negative impacts on the structure of vegetation and habitat diversity. Meanwhile, the large shooting estates may cut sheep numbers significantly if returns continue to decline. One possibility is that there will be a polarisation in land use between moorland ranched as a residual agricultural resource and lower altitude land fenced into hill parks for more intensive production.

2 The land use implication of the disappearance of marginal hill farms. This possibility has long preoccupied conservationists and policymakers. In this study area it would appear that the most likely destination for any land given up by retiring or leaving farmers would be private forestry companies or shooting estates.

42


It is difficult to be firm about the environ ental consequences of such a reallocation of land uses. In the case of new tree planting, there may be a loss and fragmentation of open habitat but also an increase in the structural diversity of the habitat mosaic, particularly if new planting is sensitively located and includes native pinewood establishment.

2.6 Spanish Study Area: Caceres, Extremadura

Dominated by dehesa, an agro-silvo-pastoral system traditional to the weste Mediterranean basin, the Spanish study area exemplifies so-called high natural value farming. A typical dehesa landscape is either made up of wooded dehesa: regularly spaced holm or cork oaks with an understorey of open grassland, cereal crops or Mediterranean scmb; or has a savannah like appearance: extensive arable and livestock production with areas of matorral (a dense thicket of shrubs, someti es exceeding 2m in height) where grazing and/or cultivation has been abandoned. In this case, some 41% of the surveyed area is wooded dehesa, the remainder being treeless (see table 2.2). Biodiversity is very high. The wooded dehesa upports overwintering passerines, amphibians and reptiles as well as endangered species like the Spanish imperial eagle, black stork and the black vulture. Extensive dryland arable production creates a land use mosaic of cereal crops, fallow land and stubble that is ideal for the little and great bustards and the stone curlew. The farming system itself is an adaptation to the extre ities of climate and poor soils found in this part of centralsouthe Spain, producing sheep, beef, cereals and cork by utihsing rough grazing, tree cover and water conserving arable practices. Consistent with this extensification, holdings in the study area are large: 93% are 200 hectares or more and 60% are over 500 hectares (see table 2.14). While many are managed by owner occupier family farmers (58%), the largest holdings are frequently held by absentee landlords and run by a manager or rented out to tenants under short ter contracts.

Recent years have seen important changes in the patte and intensity of far ing in the Caceres study area. Indeed, from a base of very extensive, mixed far ing, agriculture here has undergone greater change than any other study area. So e 49%

43


of the sample ave embarked on a major enterprise expansion since 1992 and 37% say their farms are now more specialised than before; 25% have brought previously

Table 2.14 Farm characteristics - Caceres study area

Farm size (ha)

% of holdings

% of holdings

Farm type

less than 50

0.0

Arable

0.0

50-99

0.0

Dairy

0.0

100-199

7.0

Livestock

76.7

over 200

93.0

Pigs & Poultry

4.7

Mixed

18.6

Total

100.0%

100.0%

Source: Farm Survey

Table 2.15 Land management change since 1992 in Caceres study area % of farmers

Land management change Converted permanent grass to arable Planted trees on grassland Planted trees on arable land Increased level of woodland management Reduced level of woodland management Increased level of habitat management Reduced level of habitat management Converted land to non-agricultural use

11.6 25.6 9.3

30.2 0.0

18.6 0.0 7.0

Abandoned land

4.7

Brought unused land into production Improved rough grazing Removed hedges Increased fallow area Reduced fallow area Increased fertihser use Reduced fertiliser use

25.6 60.5

Other

16.3

7.0

11.6 14.0 14.0 7.0

Source: Farm Survey

44


unfarmed land i to production and 61% have improved rough grazing (see table 2.15) .

Many of these are individuals who have taken over previously very extensively m naged farms and proceeded to restructure the farming system In most cases this has involved a move away from cereal production in favour of livestock, from sheep to beef and from selling calves to the production of bull beef. Land is fenced, water holes dug and stocked at relatively low densities. Often the motive is to reduce labour costs (many farmers gave this justification for recent changes), but also to realise the higher gross margins available from a more intensive system of production.

The environmental impact of this change is hard to judge, but it seems reasonable to e pect a decline in the quality of the habitat mosaic following the disappearance of long term fallow land and dryland arable cropping. If experience elsewhere is any guide, this trend will also have been accompanied by an increase in stocking rates, a decline in stock management and less controlled grazing of wooded dehesa. It is equal y hard to assess the effectiveness of the Dehesa Law in placing limits on thi process of landscape decline. Primarily designed to revitalise the farming economy and employment, it is also an attempt to conserve tree cover by controlling scrub, ensuring regular pruning and m intaining minimum grazing densities. According to our respondents, it is a popular form of regulation, regarded as an essentially productivist measure which runs with the grain of‘good fanning practice.

Consistent with this picture of recent intensification, Spanish farmers report a marked upturn in farm incomes since 1992. In fact, 72% of the Spanish sample indicate a significant improvement, compared to just 17% of the sample as a whole (see table 2.16) . Similarly, 81% report an increase in asset values. 49% describe their current economic position as ‘good (see table 2.11). Agricultural income is almost entirely

derived from beef and sheep (59% and 35% respectively), with cork oak and pig production contributing a further 12%. At the same time, income from off farm sources seems buoyant, 26% reporting a significant non-agricultural income source.

Spanish farmers were exceptionally bullish about the future, and 98% expected still to

45


be farming in the study area in ten years time.

So far as t e future protection, management and enhancement of the conservation resource in this study area is conce ed, the key issues are as follows:

1 The implications of a further decline in the area of dryland arable farming. Speciahsation has aheady led to greater homogeneity of land use, with a consequential loss of the traditional landscape mosaic and range of habitat types. Many species rely on this mosaic or at least the specific habitats contained within it. Grassland improvement and an increase in stocking, meanwhile, is set to further

erode the infield biodiversity of pasture, though changes in the livestock ix and in methods of grazing control (through fencing) are likely to have the most profound impact. While it is true that fencing and extensive grazing may increase landscape diversity by increasing scrub, it also encomages localised overgrazing. This trend looks set to continue for the foreseeable fixture.

2 Ensuring continued management of habitat integral to the farming system. As mentioned above, changes to the farming system are reducing the variety of habitat types on farms. Neglect and subsequent thinning of dehesa tree cover has been a principal environmental concern. Regulation 2080 is attempting to address this by encoxxraging new planting and improving the management of existing forested land. In addition, the Dehesa Law introduced in 1986 stipulates guidelines for controlling scrub, tree pruning, tree removal and minimum grazing requirements. Uptake of agri-environmental schemes has been very low, and is therefore likely to have consequences for the ability of a Green CAP system of payments to amehorate some of the negative environmental impacts of liberalisation.

46


Table 2.16 Change i total farm income since 1992 by study area East

Ceredigion

Swabian

Argyll

Caceres

Alb

An lia I creased

68.0

14.0

27.5

18.0

72.1

Unchanged

18.0

6.0

25.5

26.0

23.2

Decreased

14.0

80.0

47.0

56.0

4.7

Total

100.0

100.0

100.0

100.0

100.0

Source: Farm Survey

47


CHAPTER THREE: THE FARMING RESPONSE

We re in the top 10% of farmers in the country. If we go, the other 90% ill

have gone first (East Anglian arable farmer) I don’t think there’d be any farming left around here. A lot more trees, but is

that what the tourists want? Would that really help wildlife? (Argyll livestock farmer) Anyone who says he’d expand and intensify doesn’t know what he’s talking about. That’s panic your hear talking. In practice they couldn’t afford to. It wouldn’t save their bacon and it certainly wouldn’t be good for the countryside

(Ceredigion dairy farmer)

3.1 Introduction At any given time in a dynamic industry there will always be businesses that are stable, expanding and contracting (though the proportions in each of these categories may change). Agriculture is no exception and it is one of the challenges of this research to separate out the effects of a potential policy change from other pressures hearing down on farm families - and which are built into their medium and long term plans. There is already a strong sense of impending change in far ing. Recent surveys such as those commissioned by the NFU show that (UK) farmers accept that fundamental reform of the CAP is coming, though many are puzzled by the signals transmitted by Agenda 2000 and few seem actually to he taking action in anticipation of any more drastic change. The analysis of the likely farmer response to liberalisation set out in this chapter proceeds as follows. We begin by reviewing briefly farmers’ current plans, based on their own assessments of future change and levels of pohcy foresight. The analysis looks at medium term management changes and longer term trajectories, comparing responses within and between study areas. This patte defines the baseline against which reactions to Full Liberahsation can be assessed. The analysis goes on to describe the nature of the likely farm m nagement response to liberalisation and the extent to which this would mean abandoning or reinforcing current plans and trajectories. This section further classifies the nature of the response according to whether the main burden of the adjustment falls onto the agricultural

48


business, the farm ousehold or farm structures themselves and proceeds to explore the factors which may determine this (environmentally) critical aspect of the policy reaction.

3.2 Recent Change and Current Plans

It is nnmediately clear from the survey data that farming fortunes have generally u proved in the recent past but that farmers are currently planning to carry out many fewer business and land use changes in future. 59% of the sample report an increase or no change in farm income since 1992, with just 15% indicating a significant fall in farm income over this period. As figure 3.1 shows, these proportions suggest a much more favourable picture than that discovered by Enington and Tranter (1991) relating

to the 1986-1989 period (figures valid for the UK only). Changes in the level of debt (which may be just as much a symptom of farming e pansion as recession) are broadly co parable (see figure 3.2), with 28% reporting an increase in debt and just 16% a significant increase over the period. Asset values are also generally buoyant, with 76% reporting no change or an increase since 1992 (see figure 3.3). This is reflected in evidence of business ex ansion over the period, 33% of respondents having acquired land since 1992 and 52% undertaken significant capital investment.

Having said that, the pattern of change is very uneven by sector and by study area. The most marked trend is towards an e pansion in arable production, with 43% of those with an arable enterprise saying that it is now larger than it was in 1992. Dairy and sheep enterprises are on average much more stable: 44% and 41% are unchanged in size or intensity since 1992. Beef production is the most varied, with 44% reporting an increase but 13% a reduction in the scale of their enterprise since 1992. This is reflected in income assessments and the study area profiles. Of those respondents reporting a stable or increasing farm income, 25% manage arable farms, while of those reporting a significant reduction, 55% operate livestock farms. By study area, 30% and 28% of the stable or increasing income farms are located in the English and Spanish study areas respectively, with 44% and 31% of all those reporting a reduction being found in the Welsh and Scottish study areas respectively

49


Figure 3.1 Recent chan es in UK total farm income - a comparison

No change decreased decreased

slightly significantly Change in total UK farm inco e

Figure 3.2 Recent changes in UK farming debt - a comparison

(ft k. 1

E

a ** o

Total debt Overdraft long term - V

e - E&T debt - E&T

survey survey survey

recent changes in UKfarm business debt

50


Figure 3.3 Recent changes in a set values in UK farming - a comparison

Unchanged/risen Decreased Decreased

slightly significantly change in asset value surve

Table 3.1 Farm income trends for the sample since 1992 Unchanged/risen /

East Anglia Ceredigion Swabian Alb Argyll Caceres

Total

Decreased slightly

Decreased

si nificantly 30.1 15.3

11.1 30.6 22.2

44.6 30.8

18.9

30.6

20.0

7.0

4.6

28.7

5.5

0.0

100.0%

100.0%

100.0%

Source: Farm Survey

51


(see tables. 1). Indeed, further analysis reveals that declining farm income is most strongly associated with dairy and livestock farming, ith a declining asset base correlated with livestock farms4.

Following Bryden et al (1992) re pondents were categorised according to the patte of farm household adjustment since 1988, focusing on the degree of engagement or disengagement from agriculture as a main income source. The purpose of this analysis is to distinguish situations in which capital and farm household resources are being moved into agriculture (engagement) from those in which the degree of com itment to agriculture is declining, either intentionally (because the farm household is beco ing more pluriactive) or by default (usually due to the farmer s semiretirement). Respondents were categorised according to trends in income source and patte s of investment and labour time co it ent.

Looking at figure 3.4 it is clear that:

• Half (50%) of the sample are still engagers in the Bryden et al (1992) sense, taking decisions to expand or streamline the core farm business with a view to maintaining or increasing its income earning potential. This decision making

pattern is most likely to have been followed in East Anglia, Ceredigion and Caceres, albeit in different agricultural contexts and with varying degrees of success (see figure 3.5);

• About 30% of the sample overall exhibit a stable or holding pattern of decision making, having undertaken few significant changes to the organisation or capacity of the business in the recent past. In the Scottish study area, where 39% of farmers fall into this category, it is likely that this is enforced stasis, brought about by lack of opportunity rather than choice. Evidence for this comes from the fact that the majority of stable businesses here have undertaken very little new

4 In fact, there is evidence that farm incomes in the Welsh study area declined sharply shortly after the survey was completed due to the collapse in milk prices and falls in lamb and beef prices respectively.

52


Figure 3.4 Recent farm business trajectories on survey farms

recent farm business trajectory

Figure 3.5 Recent farm business trajectories by study area1

0Withdrawtng 1 Swabian Alb not sho n due to incomplete data.

53

AGRICULTURAL LIBERALISATION AND ITS ENVIRONMENTAL EFF CTS: FINAL REPORT

capital investment since the late 1970s. For other cases, stability may simply describe a resting stage in farm development after or before periods of expansion

(see Potter and Lobley, 1996). In this sense, it is significant that 80% of stabilisers in the Spanish study area report undertaking some form of intensification or expansion since the 1970s, suggesting that many have completed major programmes of investment and restructuring on their farms;

• Just 12% of the sample is actively disengaging from agriculture as an income source, due either to diversification or the seeking out of off farm employment. Unsurprisingly, disengagers are most likely to be found in the German study area, where 45% are classified as part time farms, though there are significant inorities in Scotland and Wales. As might be expected, the defining characteristic of this group is declining dependence on agriculture as a primary income source: on average, farmers in this category derive 41% of income from non agricultural enterprises on the farm or from off farm e ployment compared to the sa ple average of 20%;

• Finally there are situations in hich the farmer is drawing down the business with view to retirement or getting out of farming. Almost 10% of the sample falls into this category, and ithdrawers are most likely to be found in the Welsh study area, where there is the largest concentration of elderly farmers and retirees. Not only are current withdrawers significantly more likely to be 55 or over (89%), they are also much more likely than farmers in any other grouping to be operating very small farms (56%).

Comparing past change with changes planned (see table 3.2), it is clear that, regardless of business trajectory, farmers are already anticipating recession and have made plans to cut costs and cut out unprofitable enterprises. What is impressive, however, is the essentially conservative nature of these planned changes based on farmers own assumptions about policy change and market trends. Of the 75% of the sample who believe they will still be in farming in ten years time, 70% still expect to derive the majority of their household inco e from farming and only 19% are

54

AGRICULTURAL LIBERALISATION AND ITS ENVIRONMENTAL EFFECTS: FINAL REPOR

actively contemplating seeking off farm employment or diversification into nonagricultural enterprises. O the other hand, 50% a ticipate they will have had to take some action to increase their farmed area to spread fixed costs or to reduce labour and other operating costs directly. It is widely expected that capital investment will be reduced, with 25% fewer farmers planning to undertake significant capital investment over the next five to ten years. Farmers also appear to be planning to cut back on woodland planting and habitat management on quite a sig ificant scale (see analysis of this trend in chapter 4 below). A clear finding is that those farmers who have undertaken most change in the past are most likely to be contemplating change in future (see table 3.3), reflecting the fact that the most entrepreneurial, dynamic, high change farms tend to have more business options and viable enterprise substitutions available to them in planning the future.

Table 3.2 Comparison of management change made and planned by respondents

% taking action since

% planning action for

1992

next 5-10 years

Acquire land Cut enterprise Introduce enterprise Significant capital investment Change to grass/arable mix Increase fertihser Decrease fertiliser

33.2 20.9 18.0

27.1 13.6 16.1

51.6

20.8

22.9 12.7 22.5

13.1

Change irrigation

2.0

3.8

Bring unused land into production Convert land to non agricult ral use Release land Abandon land Tree planting Change in woodland management Change habitat mana ement

7.0

1.7

3.3

0.8

6.1

5.9

7.6

10.6

1.2

3.4

20.4

11.0

18.4 31.1

12.7

9.3

Source: Farm Survey

Further confirmation for this comes from table 3.4, which suggests that larger farms are most likely to have undertaken a management change (22% of high change farms are 200 hectares or more in size compared to 22% % of the no change category).

55


Table 3.3 Correlation between past and future change on survey farms

PAST High

Moderate

Low

F U

Low

21.3

48.1

60.0

T

Moderate

43.8

39.4

32.0

High

34.8

12.5

8.0

Total

100.0%

100.0%

100.0%

U R E

Source: Farm Survey

Agai , study area differences are instructive. The German and Spanish study areas stand out as the exception so far as income source is concerned, with 29% and 35% of farmers here anticipating that agriculture ill no longer be their main source of income in ten years time. Welsh farmers also anticipate a change in their income ranking, but chiefly because of an increasing contribution made by the state pension after semi-retirement (see table 3.5). Generally, plans to adjust and streamline the agricultu al business predominate (table 3.6). Farmers in the East Anglian study area, having undertaken considerable capital inve t ent in the recent past, are most likely to be fine tuning in future. They are also the most li ely to be reducing fertiliser use and introducing a more profitable enterprise. Welsh farmers in the sample are the most likely to be planning to give up land, while Spanish farmers are the most likely to be seeking to acquire land and undertake further capital inve tment. The large number of farmers in the German study area also planning to acquire land shown in the table tend to be larger dairy farms operated by younger farmers.

Viewed in terms of planned farm household adjustment, continued engagement with agriculture is overwhelmingly the most common strategy being followed by survey farmers in all study areas (table 3.7). Where a hift to

disengage from agriculture in evident, as in the English study area (24%), it is associated with younger operators of smaller farms (60% of disengagers in the East Anglian sample are under 45 and operated far s in the s all farm size category compared to 31% and 38% for the East Anglian sample as a whole). That said, the income and farm asset profile of this group of young disengagers is identical to that of

56


engagers in this study area, implying that any planned disengagement would be a voluntary process, rather than a reaction to an income decline.

Table 3.4 Farm size by recent farm business change

High chan e

Low chan e

No chan e

less than 50 hectares

12.1

21.3

61.1

50-99 hectares

15.4

23.1

16.7

100-199 hectares

12.1

12.0

8.3

over 200 hectares

60.4

43.6

13.9

100.0%

100.0%

100.0%


Table 3.5 Expected income ranking by study area1 East

Ceredigion

1

Agriculture Non-ag enterprises

(1)

Swabian

Caceres

1

(1)

1

(1)

1

(1)

1

(1)

7

(7)

4

(1)

6

(5) 6

(6)

2

(2)

2

(2)

5

(3)

5

(5)

3

(6)

7

(7)

4

(4)

3

(3)

8 8 _C8)

(8)

8

(8)

1

(1)

4

(3) 3

(4)

4

(7)

6

(4)

(6)

6

(5)

5

Whole sample

3

(3)

(on farm) Non ag.

Argyll

Alb

Anglia

6

(4)

Enterprises (off

farm) Off farm work Investments

Pension

2 5 7

Environment & forestry

3

Other

8

(2) (7) (4) (6) (8)

2

(2)

3

(3)

2

(2) 7 4 6 8

(3)

5

(4)

5

(7)

(4)

8

(8)

4

(5)

(7)

2

(2)

7

(6)

(7)

7

Source: Farm Survey 1 Current ranking sho n in brackets.

57

(6)


Table 3.6 Farm business plans for the ne t 5-10 years by study area East

Ceredigion

Whole area

12.5 10.4 12.5

42.9

6.4

51.5 21.2 24.2

19.0

28.4 14.2 17.9

0.0

4.3

0.0

0.0

2.4

1.4

4.2

8.5

9.1

0.0

21.4 21.4

8.3

27.1 18.8 27.1

Cut enterprise Introduce enterprise Other enterprise change Change grass/arable mix Tree planting Wood clearance Change in woodland

Caceres

Alb

An lia Acquire land

S abian Argyll

17.0 12.8

9.5

10.4

8.5

0.0

16.7

11.9

0.0

0.0

0.0

2.1

4.8

1.4

14.6

12.8

0.0

16.7

2.4

10.1

0.0

0.0

0.0

0.0

9.5

1.8

Abandon land

0.0

2.1

0.0

8.3

2.4

2.8

Convert land to non agricultural use

2.1

0.0

0.0

2.1

0.0

0.9

Change in fallow/rotation 2.1

2.1

0.0

0.0

4.8

1.8

Increase fertihser Increase stocking rates Reduce fertihser Reduce stocking rates

18.2

2.1

37.2

12.8

0.0

14.9 17.0

-

4.2

-

7.5

25.0

6.4

0.0

4.2

14.3

10.6

2.1

2.1

-

20.8

-

8.2

Change irrigation Change habitat

16.7 18.8

2.1

0.0

0.0

0.0

4.1

6.4

0.0

31.3

7.1

13.8

0.0

2.1

0.0

8.3

0.0

2.3

management

Bring unused land into production

0.0

management

Other land management change Capital investment Sale of non land assets Release land Join marketing scheme

25.0

10.6

33.3

6.3

40.5

22.0

0.0

4.3

0.0

6.3

0.0

2.3

0.0

12.8

0.0

10.4

2.4

5.5

2.1

2.1

6.1

6.3

13.3

Join co-op

4.2

2.1

15.2

4.2

52.4 42.9

Other business change Increase ft labour Increase pt labour Increase contract labour Increase family labour Reduce labour Other labour chan e

2.1

0.0

3.0

2.1

0.0

1.4

0.0

4.3

0.0

4.2

23.8

6.0 3.4

12.8

0.0

0.0

6.1

6.3

-

0.0

4.3

3.0

4.2

-

2.8

14.6 18.8

12.8

9.1

8.3

2.1

51.5

0.0

14.3 35.7

11.9 19.3

0.0

0.0

3.0

0.0

0.0

0.5

Source: Farm Survey Note: indicates missing data.

58


Table 3.7 Comparisons of past and future far business trajectories

PAST Engaging Engaging

F U

Disengaging

Disengaging

Withdrawing Stable

Total

44.2

10.5

5.3

40.0

100.0%

9.1

31.8

22.7

36.4

100.0%

11.8

11.8

41.1

35.3

100.0%

17.0

7.5

22.7

52.8

100.0%

T

U Withdrawing

R E Stable Source: Farm Survey

3.3 Farmers on Liberalisation

Presented with t e possibility of full policy liberalisation, respondents reacted ith varying degrees of enthusiasm or dread. A very small proportion of respondents viewed liberalisation as an opportunity, anticipating new market opportunities and a more mobile land m rket which would create chances to buy or rent additional land. As these respondents put it:

There d be fewer producers and less meat on the market and that would enable well placed farmers (like me) to benefit from the situation (Caceres livestock farmer) The cost of renting land would fall which would allow me to expand the farm and reduce stocking densities and my feed bill (Caceres livestock farmer) Tt would cause a significant fall in receipts but there is likely to be a settling out of input prices. We’d work it out ..Would hope to expand in fact (East Anglian arable farmer) “With the free market you have to take the good and the bad. With upported prices you get used to being buffered against market variations. In principle we’d be better off without subsidies, though we must have a level playing field in Europe (East Anglian arable farmer)

Much more common, however, was a sense that, to survive, the farmer would have to batten down the hatches’ and weather the stor ’. A co on perception amongst

59


this group was that the withdrawal of support would be followed by a period of tra sition, leading eventually to a more stable econo ic environment:

It s so difficult to know what would happen. In New Zealand things certainly were hard to begin with but it seems fine now. I would like to think we could

keep the land and I’d get a job off the farm (Argyll livestock farmer)

We’d be hit by the area payment cut, reductions in cereal prices and sugar beet prices. But there is no room to change things around so we’d just have to bear the loss ...We might let it out - it’s hard to say - but I’d try not to sell as long as I’m not losing money (East Anglian arable farmer)

Others were much more bleak in their assessment, pointing out that they could find themselves trapped in farming by falling land and asset values and limited employment opportunities outside farming. Some thought they might be able to ‘hang on’ but that

what they would be doing with the land could barely be described as family far ing:

the obvious time to leave farming was the last two years. I decided not to and to carry on ... but this scenario may make me get a contract farmer to take it

over and I will do something else. But I would not sell the farm (East Anglian arable farmer)

I don’t see any point in selling the land...selling would be a last desperate bid to survive. But at the same time, I can’t see me farming. If I’m struggling now,

how on earth do I keep going at this kind of loss? Who knows how I’d be living... (Argyll livestock farmer) ‘ e would want to stay living here. It’s a home and a way of life, not just a business. I can’t see us ever moving from here but with that kind of loss I can’t see us farming either.... Agricultu e would become a hobby, we would be

dependent on finding off-farm employment (Argyll livestock farmer) This is all we’ve ever done - it’s our life and I really can’t see us giving it up no

matter what (Argyll livestock farmer) Finally, there were those who would go out of far in A few worried about the prospects for their successors and again contemplated ‘hanging on’ until the succession could be decided; others pointed out that there would be little to pass in assets or earnin potential once liberalisation had run its course:

60


Much as we d rather keep on farming, I don’t possibly see how we could. We wouldn’t give up the farm until we had no choice but it would be all or

nothing (Argyll livestock farmer) “We’d try to survive as long as we could but with those sort of prices I don't see it being more than a year or two, no atter how good we are at farming

(Ceredigion dairy farmer) hat would be the point in carrying on? Transitional payments for a few years would only defer the day we’re forced to give up. We’d try and stay here but

who knows what would happen to the l nd. Who would buy it? (Argyll livestock farmer). Comparing these responses by study area (figure 3.6) shows that English and Spanish farmers are the most bullish about their ability to exploit the opportunities liberalisation will present, Scottish farmers most stoical in their belief that they can weather the storm and Welsh farmers most pessimistic about their future in farming (the large number of East Anglian farmers in this last category ore likely to be elderly farmers declaring their intention to hand over to a successor than m instream farmers announcing an intention to quit). Further analysis will reveal how far these expressions of behef are reflected in the actions farmers actually plan to take in response to liberalisation.

Figure 3.6 Attitudes to Full Liberalisation by study area

East Anglia Ceredigion Argyll Caceres study area

Note: Swabian Alb not sho n due to incomplete data.


3.4 The Farming Response to Liber lisation

Further analysis of farm survey data shows that the liberalisation of the CAP would elicit a highly complex farmer response. Large umbers of farmers otherwise e pecting still to be engaged in far ing in ten years time would leave agriculture. At the other extreme, however, a minority beheve they would remain in farmin and continue with current plans. In between are the farmers who would react to liberalisation by amending, adjusting or abandoning existing plans.

Baseline Scenario

The leavers are the most clearly defined grouping and the easiest to deal with analytically. Figure 3.7 shows the expected flow of farmers out of agriculture in the study areas over the next ten years under the baseline scenario. Of the 25% who expect to be leaving farming anyway over this period, 49% are elderly farmers ith successors and 23% without a successor who plan to sell or relet the far out of fa ily control. The latter are essentially the farmers on a withdrawing trajectory identified above and tend on average to manage smaller, more marginal farms (44% are below 50 hectares). Significant numbers occupy small dairy f rm and are concentrated in the Welsh or Scottish study areas. Farmers in this group who lack successors are particularly well defined, being strongly associated with small farms which (at least some) farmers have decided are no longer sufificiently viable to support a successor.

Full Liberalisation

Figure 3.8 shows how the patte of farm exit would change following liberalisation, ith a doubling in the number of farmers leaving agriculture. These ‘involuntary leavers’, making up 25% of the sample, are very different to those who are going to leave agriculture anyway, managing farm businesses that are much closer to the average for the sample as a whole in terms of size and income status (see table 3.8). They are no more likely to be on a withdrawing trajectory out of agriculture prior to

62


the policy change tha the rest of the sample. Indeed, 50% of farmers in this category have been increasing their engagement with agriculture in recent years and only 7% are classified as withdrawers.

A significant nu ber are farmers who would retire earlier than planned, however, and of these 24% say they would now no longer pass their farm onto a successor. Others would be the casualties of a policy change which came at the wrong time in their farm family or business cycle. For instance, several farmers in this category are highly geared producers who have just completed a programme of capital investment on their farms; they predict the cost-price squeeze brought on by liberalisation would drive them out of business.

At the other end of the spectrum are the 7% of fa mers who not only expect to be in business in ten years time but also beheve they will still be following current plans. Within this group of non reactive farmers, the majority (69%) are concentrated in the English study area and some 60% have been increasing their engagement with agriculture in recent years. 33% beheve they now manage businesses that are already well adjusted to the conditions likely to prevail after liberalisation and look forward to the challenges of a more open world market:

We’d make very little change on this farm because we depend so little on government support and expect to do so less in future whatever the policy

(East Anglian arable farmer) A small number of ‘engaging’ farmers beheve their plans for agricultural e pansion and intensification would still go through, and see hberahsation more as an opportunity than a threat. In general, farmers in this grouping are the successful disengagers or engagers in the sample, more likely than the average either to have reduced their dependence on agricultural income or experienced an increase in farm income in recent years.

I would probably want to expand, pick up more land if it is relatively cheap. I will not keep up environmental activities if under pressure and I may have to intensify arable production. I’d be more ruthless - it would necessitate the complete exploitation of available land resources (East Anglian arable farmer)

63


Figure 3.7 The flow of farmers out of agriculture under the baseline scenario

Exit with replacement

57%

64


Figure 3.8 The flow of farmers out of agriculture under Full Liberalisation

Exit with replacement (37%)

Exit without replacement (63%)

Business as usual (15%)

Agricultural response (48%)

Farm household response (3r%)

65 1


1 might take opportu ity to get more land if prices do fall. I would look for opportunities to convert land to a non-agricult ral use, if it would pay (East Anglian arable farmer) The predominant response among the remaining 43% of farmers who thought they would still be farming in ten years time and anticipated having to make a response to the cost-price squeeze brought on by liberalisation, would be to cut costs, change enterprise mix or sell assets (see table 3.9). The most co on immediate reaction across the board was to cut back on discretionary expenditure, particularly spending on fertilisers and farm sprays (78% more farmers indicated they would do this under the Full Liberalisation scenario than otherwise). Savings in labour costs were also identified by 37% of farmers. This accords with the New Zealand experience of a widespread cut back in discretionary expenditure during the early stages of adjustment. Other, implicitly short term reactions, included cutting out an unprofitable enterprise and introducing a more profitable one (54% more farmers doing this under Full Liberalisation). The most likely enterprise change was to cut beef, followed by sheep. There were few significant changes to the crop mix anticipated on our arable survey farms. These obvious economies and substitutions aside, a distinction can be drawn between farmers who felt that a sufficient reaction to Full Liberalisation would be to shelve or abandon planned investment and enterprise expansion and those who would have to seek savings by cutting back on farm household consumption and actually liquidating assets. As might be e pected, the largest concentration of farmers abandoning expansionist plans is found in the Spanish study areas, where, as we have just seen, more businesses are on engaging trajectories (40% of farmers here compared to just 20% in Wales and 2% in Germany). Even so, the number of farmers king this response is absolutely small, suggesting that liberalisation will have less impact on farmers who are moving up than those moving do n. Farmers forced into a more defensive posture and belonging to the latter group, are much more likely to be found in Wales and Scotland (see table 3.10). For many respondents this was the default response to Full Liberalisation

66


Figure 3.9 Farm adjustment strategies of non-reactive farmers

Engaging Withdraviing Stable Recent farm business trajectory

Table 3.8 Comparison of voluntary and involuntary leavers from farming

Size of holdin Very small

Involuntary leavers

Voluntary leavers

Small Medium

16.1 21.0 22.6

Large Total

40.3

10.0

100.0

100.0

54.8

43.3

Recent change in income Unchanged/risen Decreased slightly Decreased significantly Total

41.7 30.0

18.3

21.0

18.4

24.2 100.0

38.3

Source: Farm Survey

67

100.0


Table 3.9 Farm management response of survivors to Full Liberalisation Future plans % of farmers Reduce fertihser 44.1 Reduce stocking rates 37.7 Reduce labour costs 36.6 Acquire land 28.0 Join marketing scheme 26.9 Cut enterprise 25.8 Introduce enterprise 23.7 Join co-op

20.4

Change grass/arable mix Tree planting Capital investment Release land Change in woodland management Convert land to non-agricultural use Increase family labour

17.2 14.0 12.9 11.8 11.8 9.7 9.7

Change in fallow/rotation

9.7

Increase fertihser

9.7

Abandon land

9.7

Increase stocking rates Change habitat m nagement Sell non land assets Bring unused land into production Change in irrigation Increase frill time labour Wood clearance

8.2 6.5 5.4 5.4 5.4 4.3 3.2

Increase part-time labour

1.5

Increase contract labour

1.5

Source: Farm Survey

- the one that would be considered by farmers with little remaining scope to cut costs or opportunity to increase income from farming but who were still determined to remain in farming. Unlike individuals already planning to disengage from farming through diversification or seeking an off farm job, farmers in this category would be forced into seeking an off farm job in order to stay in farmin . In any of these cases, it is clear that an agricultural response would soon shade into a farm household response as members of the farm household are called on to make sacrifices and perhaps contribute more of their own labour time in order to keep the farm business afloat. In 26% of cases, respondents said they would aim to diversify their income source by seeking employment off the farm, though few could be specific about what this would entail.

68


Categories of Response

In order to be able to compare more systematically these emerging farm household responses against the other categories of response discussed above, a new typology was created which distinguishes between the following medium term farmer response:

1 a structural response (the farmer decides to leave farming); 2 a business as usual response (the farmer stays in farming with only inor modifications to current plans); 3 an agricultural response (the farmer stays in farming and the burden of adjustment falls onto the farm business); 4 a farm household response (the farmer stays in farming but seeks to diversify sources of non agricultural income and/or attempts to absorb a decline in agricultural retu s by reducing consumption).

Figure 3.10 confirms the foregoing discussion in showing that, under this classification, by far the most common response to Full Liberalisation would be to get out of farming (50%). We already know that about half of these are planning to leave anyway. Once farmers m king a structural response and the 7% continuing with business as usual are taken out of the sample, the main burden of adjustment

appears to fall onto the farm business (56%) followed by the farm household (44%). As table 3.11 shows, there are important difierences in this patte of adjustment by study area. It is clear that the main burden of adjustment following liberalisation would fall onto farm structures in Scotland and Wales, with 60% of farmers in these locations leaving farming within ten years. Of those who remain in farming here, Welsh farmers are most likely either to attempt to absorb the inevitable drop in farm income within the farm household, having fewest agricultural options available to them in this dairy producing area, or attempt an agricultural response, typically a further extensification of production.

I d like to think we could survive no matter what. People would be even keener on cattle which don’t require huge inputs and similarly hardy native sheep, which is what we are all about producing. We’re able to tighten our belts further, no borrowing and weather the storm until prices rally round gain.

69


As the w ole family has established ancillary sources of income to enable them to stay in the glen, I d hope we could survive but with greater emphasis on farm

diversification (Argyll livestock farmer) Scottish farmers are more evenly divided between making an agricultural and a farm household response, many of them planning to switch out of beef and others hopeful that they, their spouses or offspring will be able to find off farm employment in order to keep the family name on the land. As this farmer put it:

As long as we’re not actually losing money we will continue and there is a possibility we could share farm or contract farm the land. I’ll try to keep going and tighten the belt, not willing to give up. This is because I love the farm but it’s also linked with my tenant’s status. We have nothing to sell and would have to find a new home if we left the farm .

As we have already seen, farmers in Spain and in England are more likely than farmers in any other study area to be able to continue with current plans or would attempt to

absorb the adjustment ithin the farm business (46% and 44% falling into these two categories combined). While significant numbers of farmers would still be leaving farming here, they tend to be much more at pical of the study area as a whole than lea ers in Scotland and Wales, with those uitting agriculture in England being more likely to occupy small farms than those that remain.

70


Table 3.10 Nature of farm management responses to Full Liber lisation East Anglian % adopting defensive

Ceredigion

Swabian

Argyll

Caceres

Alb

32.0

48.0

3.9

52.0

39.5

14.0

20.0

12.0

2.0

39.5

reaction

% abandoning existing plans for expansion and investment Source: Farm Survey

Figure 3.10 Farmer response to Full Liberalisation

adjustment

cjustment household usual adjustment fanner response

Table 3.11 Farmer response to Full Liberalisation by study area

East Anglia Ceredigion

S abian

Argyll

Caceres

Alb Agricultural adjustment Far household adjustment Structural adjustment Business as

Usual Total

22.0

22.0

7.9

16.0

44.2

22.0

14.0

2.6

22.0

25.6

34.0

60.0

86.9

60.0

27.9

22.0

4.0

2.6

2.0

2.3

100.0

100.0

100.0

100.0

100.0

Source: Farm Survey

I

71

AGRICULTURAL LIBERALISATION AND ITS ENVIRONMENTAL EFFEC S: FINAL REPORT

3.5 Summary

To summarise this discussion, of the five study areas investigated here, arguably the

most vulnerable to Full Liberalisation would be Ceredigion, ith its relatively specialised agricultural economy and limited opportunities for diversification or off farm employment. Not only would more farmers give up farming here, many more of them than elsewhere would give up land too and there would be a strong successor effect as sons and daughters decided not to take over the business on father s retirement.

At the opposite pole is the East Anglian study area, where the freedom to farm’ mentality was most commonly expressed and continuity of existing farm structures seemed most assured. Many of the more bulli h arable producers here felt they were already becoming decoupled from price support and were most confident in their ability to absorb any required adjustment within their agricultural business. Future farming change, they said, would more likely be driven by market pressures and technological change than policy reform.

Somewhere in between can be found the Scottish, German and Spanish study areas. Argyll farmers are close to the Welsh in the tenor of their re ponse to policy change, with many of them contemplating going out of far ing altogether rather than attempting to adjust within the farm family to a declining income and fallin asset values. Rather more Scottish than Welsh farmers felt they would be able to exploit farm household resources (including fa ily labour time) to save the business, however, and there was more confidence that income could be restored by king adjustments to agricultural enterprises on the far

The response of farmers in the Swabian Alb to policy change is probably the hardest to fatho A high level of pluriactivity amongst existing farmers would suggest a farming community already well buffered against the rigours of liberalisation and thus one likely to make the least marked response, hi the event, a very high proportion indicated they would get out of farming, and very few thought they would continue in

72


their present state. Further reflection suggests that respondents probably intended to follow the pattern of the past by giving up farming as an occupation, but retaining the title deed to land. If so, the i plication is more semi-desertification of the type described above. Spanish farmers are much nearer in their responses to East Anglian farmers than to those in the Welsh study area. Many of them have reorganised their farming operations in recent years and are the most likely to have to abandon plans for expansion in response to a policy change.

73


CHAPTER FOUR: ENVIRONMENTAL CONSEQUENCES AND THE CONSERVATION RESPONSE

1 couldn t bear to see someone else farming here and I’m buggered if they’re

going to plant it with Sitka Spruce ithout a fight from me (Argyll livestock farmer) All you can do around here is produce livestock. If that becomes unprofitable it would be a disaster (Caceres livestock farmer)

4.1 Introduction

We can now begin to speculate about the most likely sequence of events follo ing the withdrawal of agricultural support. This is likely to occur in three stages:

• A An Immediate Shake-Out of Land and Farmers

• To begin with, the survey evidence suggests that there would be a shake out of land and farmers. The shake out would be decisive, with twice as any farmers leaving farming and significantly more of them choosing to give up land rather than pass it on to a successor than would otherwise be the case

• B Cost Cuttin and Enterprise Change

• Among the surviving farmers, there would be a widespread move during the initial stages of the transition to cut costs and, in some cases, to rebalance enterprises. Many family farmers beheve they would be able to absorb the effects of pohcy change simply by cutting back on consumption and accepting a lower standard of

living;

74


• C Restructuring and Long Term Structural Change

• As the transition proceeds, however, the limit to cost cutting and other economies whill be reached and, on at least a proportion of holdings, restructuring will occur as arginalised farmers or their successors go out of fanning. Meanwhile, the response of continuing farmers will become increasingly differentiated and less agriculturally dominated. A significant proportion of those who do continue will only he able to occupy land as family farmers by disengaging from mainstream agriculture in some way, chiefly by becoming more economically pluriactive . In other cases, elderley farmers who would otherwise have retired in favour of a successor will remain in place, winding down the business and simplifying labour requirements. A rather smaller, self selecting group will be able to exploit the new business opportunities of a more market orientated agriculture and an increasingly mobile land market by actually becoming more engaged in agricultural production and marketing. At the same time, new types of land holdings will emerge, including new m ni estates, owned by incoming farm occupiers but managed under contract by professional farmers. Further changes to the pattern of farmmg will follow as this differentiation of structures works its way through the syste Land will move between farms, but also increasingly in marginal areas, out of farming, as agriculture finally settles down into its postliberalisation e uilibrium state.

4.2 Categories of Environmental Effects

Environmentally speaking, this chronology has a number of implications. It suggests that there will be immediate, indirect and delayed environmental consequences linked to different dimensions of the far ing response.

75


Short Term, Direct Environmental Consequences

Cost cutting and the rebalancing of agricultural enterprises in the short term ay be associated with the extensification or intensification of production and changes to the pattern of cropping and grazing as well as input and labour use. It may also squeeze resources out of countryside management, leaving less labour time available for hedgerow maintenance, the fencing and management of oodland, and the m riad other interventions necessary to maintain the conservation resource in good heart. The precise environmental impact of these agricultural adjustments will depend on baseline conditions (including current standards of countryside management and the quahty of the conservation resource), the type and direction of enterprise substitutions m de and the extent of any extensification or intensification carried out.

Short Term, Indirect Environmental Consequences

Further into the transition, the strategies which surviving farmers told us they would put in place to maintain or increase household income (see the typology on p. 68) will have indirect (and probably less determinate) consequences for the intensity of production and the availability of labour time for countryside management. Pluriactivity associated with a farm household response is widely thought to lead to less intensive utihsation of the land resource (see G sson and Errington, 1993), though much depends on the motivation behind it. In some cases, the additional income generated from off far em loyment, for instance, may actually he used to finance farm expansion and reorganisation. On the other hand, a witch to the less labour intensive agricultural management which regular off farm employment may require, could alter the grazing or cropping regime in environmentally undesirable ways. Meanwhile, marginahsed farmers attempting to absorb a cut in incomes and effectively on a long trajectory out of farming, may embark on a very deep extensification of production and a winding down of farm assets, again with complex and indirect environmental effects. At the opposite extreme are the farmers in a position to actively exploit the increased freedom to farm which Full

76

AGRICULTURAL LIBER LISATION AND ITS ENVIRONMENTAL EFFECTS: FINAL REPORT

Liberalisation u doubtedly creates. While an analysis of the fidl implications of this dimension of fixture farming change was beyond the scope of this study, it shoidd be noted that secular changes in product demand and the vertical integration of these new super-farms ithin the international food system, will bring about important changes to in-field farming practice and will precipitate fixrther structural change in arable heartland countryside particularly. Long Term, Delayed Environmental Consequences

Finally, there are the environmental changes which may only become apparent after a long delay. The rather dramatic shake-out of land predicted by our study ill have profound environmental consequences, transferring land into the hands of expansionist farmers but also, on the e tensive margin, into non-agricultural uses such

as forestry and hunting. A ong these is likely to be a hift towards more extensive manage ent of land, ith changes to grazing regimes and the management of semi¬ natural vegetation (see discussion below). While it is apparent from the farmer response that si nificant amounts of land would change hands early on in the transition, the full extent of this shake out of land and farming kill will not fully become clear until the current generation of farmers reaches retirement and their successors decide whether or not to remain in farming. Judging by the number of elderly farmers in the sample who said a decision would be deferred until their successor was ready to take over, the shake out, when it comes, could be very

substantial indeed in marginal countryside. If, by this date, new land market conditions mean that more land moves out of an agricultural use than into the hands of other farmers, the environ ental consequences of such a long term shake out of land woxdd be all the more significant.

Let us now look at these three different sources of environmental change in more detail.

77


4.3 The Short Term Consequences of Changes to Far ing Practice

On the farms w ic should manage to survive the period of i itial structural adjustment, a series of short term adjustments to farming practice can he expected to give way to longer term strategies for farm household survival (or withdrawal from agriculture). Focusing initially on the way farmers in field’ practices would change in response to policy change, we asked farmers whether they thought a move to Full Liberahsation would encourage them to change the intensity of production on their holdings. The dominant response was extensification across the sample (48%), but with Scottish and Spanish farmers expecting to make the most clear- cut response (see figure 4.1).

Livestock Extensification

58% of livestock farmers anticipated that they would react to Full Liberalisation by e tensifying production (see table 4.1), reducing stocking densities and cutting back on fertihser use and supplementary feed costs. In 33% of cases this would be connected to a move out of beef in favour of sheep, while in 35% of cases it would be associated with a move out of sheep in favour of beef or an alternative enterprise. In the present case, it is clear in Wales that Full Liberalisation would accelerate the trend (see chapter 2) towards taking sheep on tack and moving to a generally more extensive sheep production system, though much would depend on the relative profitability of dairy, sheep and beef In Scotland, extensification was seen much more directly as a cost cutting measure, with 70% predicting they would reduce fertihser use and 87% stocking densities. Farmers in the Spanish study area adopting an extensifying response are even more likely than their Scottish counterparts to move out of sheep, 57% predicting that they would take this course of action.

Arable Extensification

Most arable farmers, by contrast, expected to make no change to the intensity of production (50%), with 29% extensifying and 17% actually intensifying. It was

78

Al T/ 'T J7 T7 TT? AT 7 TliT D AT 7 A TT/ r TT H'Q T?\ji/7T*/~ \T'i fT? Trr at T?r?r?T?r~ Tici r j at r>T r>/-\Tyr' Ol j-u-, ji±j± i\nL,ioni ikJJ\ Aj\i 11 Jv YiKishMr.fa 1 Ai, rrii l . riNAi. tihrURl

evident from their responses that few could identify many additional cost savings from reductions in fertihser use, though 30% thought their use of farm sprays would decline under conditions of Full Liberahsation. In fact, the predominant response in the East Anglian study area is of a relatively small response to policy change in terms of farming practice overall, with just a few cases where existing mixed farmers predicted they would convert wholly to an arable system, converting grass to arable.

Economies of Countryside Management

On the other hand, farmers of all types were quick to identify economies in countryside m nagement, with 28% of farmers in the sample as a whole predicting a cut back in woodland or habitat management.(see table 4.2). To what extent this was the farming community speaking on message to propagandise the undesirable effects of Full Liberahsation is unclear. Significantly, however, any more arable farmers gave this prediction than livestock producers (20% compared to 7%) and there was a particularly decisive threatened withdrawal from investment in conservation management in the East Anglian study area. As these two arable farmers put it:

‘ o keep the business going we’d have to m nage it very carefully. Things would be very tight. I’d have little, if anything, to put into environmental things. The countryside would definitely suffer ‘I’d take a tough approach. I’d be prepared to plough up grassland. I certainly won’t have the resources to plant trees or manage woodland

The consequences though are likely to be most severe in the Welsh study area, where there already appears to be a great lack of awareness of the conservation resource found on far s and no concept of its potential income-earning potential.

Any loss of environmental payments under Full Liberahsation would be particularly badly felt in the Scottish and German study areas, though it was unclear how precisely the abolition of MEKA would actually impact on conservation practices.

79


Figure 4.1 Land-use response to Full Liberalisation by study area

70 60 50 V)

E

40

s 0

30-

s*

20 10-

0-

East Anglia Ceredigion Argyll

Caceres

Study area

Note: The German study area is excluded due to incomplete data

Table 4.1 Land-use response by farm type Arable

Intensify Extensify Mixed

16.7 28.6

No cha ge

Total

Dairy

Livestock

Pigs & Poultry 20.0 80.0

Mixed

14.2 57.5 9.4

0.0

50.0

15.4 38.5 15.4 30.7

18.9

0.0

17.6 47.1 11.8 23.5

100.0%

100.0%

100.0%

100.0%

100.0%

4.7

Source: Farm Survey

Table 4.2 Conservation investment under Full Liberalisation Change in conservation investment

% of farmers

Woodland management

21.8

Habitat management

6.5

Source: Farm Survey

80


Enviro mental Implic tions

The environmental i pact of any initial extensification and intensification of roduction is very hard to judge, particularly given the rather dichotomous response in terms of input use. Some 17% of arable farmers said they would intensify production under free market conditions, while a all nu ber of livestock and dairy farmers in the Welsh sa ple said they would intensify by increasing fertihser applications on grassland. Many more, however, said they would extensify. The environmental consequences are far from clear cut. It is likely, for instance, that a

reduction in fertiliser use on arable farms of the magnitude being canvassed here would have a negligible impact on leaching and thus on nitrate levels in ground and surface waters (Burch, et al, 1998). On the other hand, the return of set aside land to arable production - immediately identified by 94% of East Anglian farmers as their first reaction to a liberalisation of policy - would remove potentially effective grass buffers, sediment traps and nutrient sinks from the far , increasing the pollution risk. Depending on the time of ploughing, cultivation may lead to a serious release of nitrogen (see Rose and Harris, 1994). Loss of set aside would also remo e winter stubbles, unharvested crops and grain which provide winter shelter and a food source, respectively (see discussion in chapter 2). Indeed, arable stewardship , defined in its widest sense to include practices such as rotations, conservation of headlands and spring sowing, would seem likely to decline steeply under free market conditions on many farms. In East Anglia, 13% of our sample indicated that they would probably change their fallowing and/or rotation practices under Full Liberahsation.

Meanwhile, changes in cropping patte s (not identified in the survey), by substituting ore chemical-intensive crops with high leaching potential for less intensive and more environmentally protective ones, could cancel out any arginal benefits which obtain elsewhere. The magnitude of the implications for the nitrate problem in the Swabian Alb will hinge on the fate of present legal restrictions on fertihser use and any relaxations resulting from the abolition of MEKA (it is a oot point how far agricultural policy liberalisation would be accompanied by a drawing down of environmental regulations - there is a good case for expecting state regulation actually

81


to increase to meet a rising public demand for safe food and high quahty rural environments. This was not directly factored into our Full Liberahsation scenario, so the likely synergistic consequences can only be hinted at here). The environmental impact of any reduction in pesticide use is particularly hard to judge. As Falconer (1998) observes, eli inatin environmental contamination from pesticides is a more complicated matter than simply reducing usage intensity or the aggregate area treated; price-induced economies in applications of active ingredients may fall well short of the changes in the agronomic regi e of the farm that are really required to have an impact.

Paradoxically, in Spain it would be the further elimination of arable enterprises rather than any e tensification of production as such that would have the greatest environmental impact. As we have seen in chapter 2, the defining feature of recent agricultural change here has been the decline of traditional mixed farming in favour of speciahsed livestock enterprises. Of those who expected to remain in farming following Full Liberahsation, 33% of Spanish respondents with a dryland cereal enterprise still intact indicated that they would go out of arable in favour of a more extensive beef or sheep system. Permanent pasture is thus likely to advance at the expense of the traditional mosaic of grassland interspersed with dryland arable plots (with their mix of cover crops, fallows and stubble), with implications for characteristic steppe-land birds such as the great bustard (Ostis bustard) and stone curlew (Burhinus oedicremus) and species of bird such as Montagu s harrier {Circus pygargus) which hunt over cultivated dehesa.

In terms of the extensification in livestock production indicated by the survey, it is unclear how far a mar inal withdrawal of stock reported in the Scottish and Welsh study areas would directly benefit the conservation resource. Within the Scottish study area, overgrazing is less an issue than in other parts of the Highlands and, while a reduction in stocking rates may well bring about an improved regeneration of heather moorland, it is difficult to predict where and to what e tent

this would yield significant biodiversity benefits. With a long term withdrawal of stock, changes to the habitat mosaic will become evident, including increased

82


woodland regeneration where seed sources exist. If liberalisation accelerates the trend towards the creation of hill parks highlighted in chapter 2, it may have further land use conse uences, possibly accentuating localised overgrazing and encouraging the abandonment of higher ground, again with changes to the structural diversity of vegetation in these locations. Previous research by Ashworth, et. al (1997) points to the profound impact on vegetation and biodiversity of a decline in shepherding and the withdrawal of stock.

In Wales, a reduction in livestock numbers of the small magnit e considered by our respondents would do very little to ease overgrazing of the unfenced woodland typically found here. Even if stock numbers were at a low enough level not to damage woodland or hedges, there would still remain the problem of lack of management to contend with. While reduced grazing pressure would probably initially allow regrowth and regeneration, habitat quality would still face long term decline due to neglect. Greater benefits could accrue from a withdrawal of some stock from the over-grazed pasture found in Ceredigion, though the de-stocking anticipated by respondents would probably be too small to generate any significant conservation benefits. A reduced intensity of grazing might yield some improvements in the species diversity of unimproved grassland along the coastal strip, but probably not elsewhere (Jones, G 1998, Personal Communication)

On the other hand, changes to the grazing regime hinted at by respondents in both Scotland and Wales could be positively detrimental from a conservation point of view. If, as many respondents appear to expect, retu ns on beef production continue to fall, and beef production becomes significantly less profitable than sheep under Full Liberahsation, a substitution of sheep for beef in the Scottish study area would eliminate an important management tool as far as sward structure and bracken control is conce ed. The latter would advance at the expense of rough gra ing while the grassland itself would come to be dominated by Molinia, and in wetter places, Juncus. As Ashworth et. al (1997) observe, Any change from cattle to sheep in many upland situations may lead to a wide range of impacts on habitats and landscapes, many of which are detrimental . At the same time, a reduction in

83


shepherding and stock management to save on labour costs, by encouraging the congregation of stock at a limited number of feeding points, could actually create a localised overgrazing problem where none existed before.

In the Spanish and Swabian Alb study areas, any shift into more e tensive livestock rearing within the large enclosures now typically found here would exacerbate the problems of scrub invasion (in areas previously grazed by sheep but avoided by cattle) and localised overgrazing that have appeared in recent years. Studies show that this form of extensification is of mixed benefit to the environment. The patches of scrub and woodland created could provide additional habitat diversity in an otherwise homogenous landscape, dominated by permanent pasture. Additionally, quite distinct communities of fauna inhabit scrubby dehesa compared to grazed areas. However, as mentioned earlier, the livestock concentration in some areas tends to be accompanied by the gradual erosion of tree cover in the most productive areas.

In the Swabian Alb, it is very unlikely that traditional sheep transhumance will return, but extensive beef production has been seen by some commentators as a feasible option for maintaining downland and juniper heath. Liberalisation, by making such an enterprise shift more likely, may bring about habitat management benefits in this sense, though it could be stymied by the fragmented pattern of farm and field ownership which make movements of stock more difficult to manage.

4.4 The Indirect Consequences of Farm Household Adjustment

The strategies far ers told us they would pursue in order to maintain or increase household income over the longer term go well beyond cost cutting and enterprise change. The reader will recall that respondents were classified according to whether the burden of adjustment falls onto the agricultural business, the farm household or structural change. As we have said above, it is probably not feasible to predict how a decision to become pluriactive, for example, may affect land use and farming practice, since the permutations are so numerous and the environmental i pact so indeterminate. As Thomson, et. al (1993) observe, It cannot be expected that farm

84


income change will be associated ith a decline/increase in the quahty and quantity of natural heritage assets in a simple linear relationship. There are likely to be thresholds which, once reached, will have a significant effect on management of farmland. These thresholds will differ between farm households. Table 4.3, however, offers some clues about how the intensity of farming practice could change with the adoption of different survival or exit strategies on family farms. As can be seen, for the sample as a whole the largest group (25%) is made up of farmers who plan to leave farming within the next ten years but who would also extensify production. (The small number planning to leave f r ing but also to intensify were mostly farmers who were planning to retire in favour of a successor, whom, it was expected, would ‘need’ to intensify in order to survive.) This confirms what one might expect: that farmers on a trajectory out of farming are likely to be winding down the farm and its assets, a process that can be described as a form of deep e tensification. It is the most i portant combination in the Welsh and Scottish study areas, accounting for 30% and 36% of all farmers in these locations (see tables 4.4-4.7). Some 17% of Spanish farmers would also follow this trajectory.

One can only speculate about what this winding-down is likely to mean for habitats and the management of the landscape. It seems reasonable to assume that the withdrawal of labo and a simplification of livestock management and grazing regimes on livestock farms would have consequences for the regeneration of heather moorland and the maintenance of habitats on farms in the Scottish study area, for instance. This may be beneficial environmentally if it allows the restoration of overgrazed moorland but such gains need to be balanced against a reduced availability of labour time for tasks such as woodland management and field boundary repair. In the Welsh study area this last effect is likely to compound an already chronic under¬ management of the conservation resource found on farms

In the East Anglian study area, by contrast, the most likely scenario is for a stand still in land management and structural terms. The numbers are less clearly patte ed here, but 18% of farmers expect to remain in farmin and to make no change to the intensity of production on their farms. This reflects the fact that farmers feel they are

85


better prepared for policy change in this study area, with little desire or need to change current plans (just 8% would intensify production and make an agricultural adjustment). It is interesting that in the Spanish study area, farmers seeking a farm

household solution to their difficulties are just as likely to be extensifying production as those planning to leave farming. Indeed, of all farmers making a farm household

adjustment, 63% would expect to extensify production, just 8% would intensify, with 5% making no change. This gives some support to the hypothesis that pluriactive farms are more likely to be extensively managed, though it is clear from farmers responses that this is interpreted in terms of the labour input as well as the intensity with which land is farmed.

4.5 The Delayed Environmental Consequences of the Shake Out of Land

The message from the survey that the farmin response would, in one sense, be all or nothing is reflected in tables 4.8 and 4.9, which give a breakdown of the areas of land likely to be given up by farmers under conditions of Full Liberahsation. According to these numbers, almost half of the land area on survey farms would eventually be given up by existing farmers, 25% in favour of successors

but 74% to be sold or relet. Fully 71% of this total would be given up by involuntary leavers (i.e., farmers who would otherwise stay in farming deciding to give up land because of the withdrawal of support). Even allowing for some exaggeration on the part of farmers, this represents a very significant movement of agricultural land triggered by policy change. Table 4.3 Intensity of practices by response to Full Liberabsation

Total

Agricultural adjustment

Farm household adjustment

Structural adjustment

Intensify

8.2

1.5

5.6

0.0

15.3

Extensify

9.2

12.8

24.5

2.0

48.5

Mixed

3.6

2.0

3.1

0.5

9.2

No change

4.6

4.1

12.3

5.1

27.0

25.5

20.4

46.4

7.7

100.0

Total

Source: Farm Survey

86

Business as

Usual


Table 4.4 Intensity of practice by re ponse to Full Liberalisation - East Anglian study area

Agricultural Farm household Structural Business Total adjustment adjustment as Usual adjustment

Intensify

8.0

6.0

6.0

0.0

20.0

Extensify

2.0

10.0

10.0

4.0

26.0

Mixed

2.0

2.0

2.0

0.0

6.0

No change

10.0

4.0

16.0

18.0

48.0

Total

22.0

22.0

34.0

22.0

100.0%

Source: Farm Survey

Table 4.5 Intensity of practices by response to Full Liberalisation - Ceredigion study area

Total



Intensify

8.0

0.0

4.0

0.0

12.0

Extensify

6.0

6.0

30.0

4.0

46.0

Mixed

4.0

4.0

4.0

0.0

12.0

No change

4.0

4.0

22.0

0.0

30.0

22.0

14.0

60.0

4.0

100.0

Total


Business as Usual

Source: Farm Survey

Table 4.6 Intensity of practice by response to Full Liberalisation - Argyll study area



Intensify

4.0

0.0

10.0

0.0

14.0

Extensify

10.0

18.0

36,0

0.0

64.0

Mixed

2.0

0.0

6.0

0.0

8.0

No change

0.0

4.0

8.0

2.0

14.0

16.0

22.0

60.0

2.0

100.0

Total

Source: Farm Survey

87


Business

Total

as Usual


Table 4.7 Intensity of practice by response to Full Liberalisation - Caceres study area Agricultural Farm household Structural Business Total adjustment adjustment as Usual adjustment 14.3 0.0 2.4 0.0 Intensify 16.7

Extensify

19.0

19.0

16.7

0.0

54.8

Mixed

7.1

2.4

0.0

2.4

11.9

No change

4.8

4.8

7.1

0.0

16.7

26.2

26.2

2.4

100.0

Total

45.2 Source: Farm Survey

The most marked shift would occur in Wales and in Scotland, where 61% and 52% respectively of the land on survey farms would he given up by farmers going out of farming. German farmers are also highly unstable in these terms, with 63% indicating they would release land under these circumstances. In the English and Spanish study areas 72% and 71% respectively of the farmed area would remain with current operators.

The environmental impact of all this will depend on the nature of the land given up (for example, whether it has previously been farmed intensively or extensively, is habitat rich or habitat poor), who takes up the land and what they do with it. We cannot answer the first question from the survey with much precision, though it is a reasonable assumption that many involuntary leavers in marginal areas will be farmers on the economic edge of farming. It is an empirical question whether such holdings have more or less conservation capital than the average. We can say more about the

likely destination of land and the alternative uses to which it would be put under Full Liberahsation. Certainly our respondents were in little doubt about the likely outcome:

I don t think there’d be any more farming around here. A lot more trees, probably. I d hate to see the land left to go wild - unfarmed, it would go to

rushes and bracken. Would that really help wildlife? (Argyll livestock farmer)

88

AGRICULTURAL LIBERALISATION AND S ENVIRONMENTAL EFFECTS: FINAL REPORT

I think very big contractors would sweep thro gh doing all the work, everything would be tied to bigger areas and units. The look of the countryside would inevitably change. There d be no time or oney for care (East Anglian arable farmer) The only farming would be shooting estates keeping sheep to manage the hill for stalking. I think a lot of farmers would be forced to sell to hobby farmers as a toy for their spare time. I can see Seil as a co uter area - we ve already got

a street light and a golf course! (Argyll livestock farmer) It would move to ranching. All big farms and no small farms and the few farmers there were wouldn’t have ti e to look after the land properly. Hedges would go, fences would collapse, animal welfare would deteriorate and the grassland wouldn’t be so intensively managed or well looked after (Ceredigion dairy farmer)

Table 4.8 Land retained and given up under Full Liberalisation Fate of land Land to be retained by

Hectares

% of surveyed area

71290

58%

52131

42%

123421

100%

current occupier

Land to be given up by current occupier


Table 4.9 The future for land which is given up under Full Liberalisation Fate of land

Hectares

% of surveyed area

Pass to successor

12872

25

Sell

13081

25

Pass to manager

25615

49

562

1

Other Source: Fa m Survey

89


Hunting would predominate, along ith rural tourism. Small and medium sized farms would disappear and only the large ones would be able to continue (Caceres livestock farmer). According to respondents, 74% of the land given up could be expected to be bought or rented by other farmers, which suggests a process of amalgamation within more successful farming units and a further concentr tion of land and resources in fewer and fewer hand (see table 4.9). Of itself, this will have import nt environmental effects. In the Scottish study area, a further move on the part of amalgamating farmers towards a ranching system of production is likely to mean a continuing decline in the quahty of rough grazing, with a reduction in s er grazing of the moor and even the removal of stock altogether. As discussed earher, the actual effect will depend on the absolute stocking density to begin with and the degree of shepherding currently undertaken. If grazing pressure falls too low, the result could be accelerated decline in moorland and acid grassland leading to scrub and the loss of open habitat critical for moorland birds such as black grouse (Lyrurus tetrix) and hen harrier Circus cyaneus).

Meanwhile, on the lower ground, grassland management could intensify as farmers endeavour to step up silage production and cut down on supplementary feed costs and the costs of overwintering their hoggs on the Argyll islands by keeping their stock at home and overwintering them on the in-bye (see discussion of extensification effects below). In Ceredigion, the rationahsation of dairy production into larger (and possibly more extensively managed) units could mean changes to the layout of farm and changes to grassland management, while the cannibahsation of the remaining interstitial farms by larger units in the East Anglian study area could see the re oval of the last remaining habitat rich mixed farms in this locality as expanding farms rationalise and homogenise farm layout and field structures. Significant amounts of land would be returned to landlords by tenanted farmers in so e study areas. In Argyll, 56% of leavers expected their land to revert to estates. Thi could mean important changes in land management practices, particularly if land is taken back in hand by some of the large shooting estates found here. A net environmental gain might be achieved provided proper management of rough grazing and moorland for grouse shooting was undertaken, and in bye land was maintained ith appropriate

90


levels of grazing. I t e Caceres study area, the further expansion of existing farms is likely to be associated with the fencing of grazing plots and some intensification of land management.

Land-Use Transfers

Transfers of land into non agricultural uses become more likely as time oes by, with depressed land values and rents encouraging opportunistic purchase by forestry co panies, shooting estates and hunting entrepreneurs. Land would also be bought up by incoming hobby farmers in some areas, leading to the creation of new mini estates where the farmhouse is occupied by the landowner but the land is farmed under contract by professional farmers. If farmers’ predictions are taken as a guide, a shift in land use out of farming is far more likely to happen in Ceredigion, Argyll and Caceres than in the Swabian Alb and East Anglia (see table 4.10). Indeed, of land not directly handed on to a successor by retiring farmers, 80% is expected to stay in farming in East Anglia, while 48% of it is expected to ove into a non agricultural use in Ceredigion. In the Scottish and German study areas the afforestation of land is an ever present possibility, albeit via different routes.

In Argyll, opportunistic land purchase and afforestation by private forestry companies may seriously diminish the area of open habitat and a decline in game species like red grouse (Lagopus lagopus scoticus) and black grouse Lyrurus tetrix) and raptors such as the hen hamer {Circus cycmeus), merlin Falco subuteo) and golden eagle Aquila chrysaetos). The experience of the past is that this will mean further fragmentation of the open moor and acid grassland. German farmers, while the most likely to leave farming, could actually still retain ownership should they decide to take up full time employment elsewhere. Again, if the patte of the past is repeated, large blocks of open land would be planted to conifers through a process of‘semi-desertification’, breaking up the landscape and seriously depleting remaining uni roved grassland and ju per heath. In Caceres, the conversion of dehesa land to deer hunting was ' widely mentioned by our respondents. The result would be a definite change in the structure of the vegetation, with the loss of arable areas and some permanent pasture

91


and the development of ore extensive areas of scrub and dense woodland. Accom anying this, the erection of deer fences would limit the movement of fauna and restrict public access. Overstocking with deer could degrade pasture and the tree cover in wooded dehesa. Significantly, land abandonment (full desertification) was only mentioned as a significant possibility by farmers in this study area.

4.5 Summary Taken together, these results suggest that, once underway, the process of agricultural adjustment could be very difficult to manage in environmental terms, with consequences that are immediate and traceable to a particular set of managerial responses but also indirect and connected to farm household adjustments which only fidly reveal themselves after a long delay. Extensification emerges as a problem tic process. It can be defined in both a shallow and deep sense, the former an infield phenomenon of the short term, the latter taking place on farms that are on trajectories out of far ing, where it may have environmental benefits as well as costs (the latter especially if it is expressed as a running down of the conservation capital found on such farms). There can be no doubt that by withdra ing agricultural support, policymakers would be shaping a countryside, particularly in marginal areas, of fewer farms and larger holdings, and one in which many traditional systems of farming and land management will have disappeared. To the extent that the protection of biodiversity and countryside character requires the continuation of current farming styles and structures, this may be undesirable in environmental terms. On the other hand, it may yield compensating biodiversity benefits in some locations, creating new sorts of habitat mosaics and a different landscape character. Certainly it is the contextdependant nature of environmental effects which emerges as a i portant conclusion fiom this analysis. Summarising by study area, these are:

• On arable farms in the English study area, the response would be predo inantly managerial. Cost cutting will likely produce a decline in arable stewardship and a reduction in the management of peripheral conservation features here, but farms expect to make only m rginal adjustments to input use. There was little expectation of any significant structural change, with 72% of the utihsed agricultural area remaining in the hands of current operators;

92


Table 4.10 Destination of land given up (by voluntary and involuntary leavers) and not pas ed to successor by study area

East Anglia Ceredigion Swabian Alb Argyll Caceres Fate of land Voluntary

Involuntary

Voluntary

Involuntary

Voluntary

Involuntary

Voluntary

leaver

leaver

leaver

Leaver

leaver

leaver

leaver

Involuntary leaver

Voluntary

Involuntary

leaver

leaver

Returned to land owner

35.1

9.0

4.4

0.0

16.1

100

70.0

62.7

0.0

0.0

Sold/letto

64.9

18.9

58.4

32.0

58.1

0.0

2.0

0.0

0.0

0.0

0.0

0.0

37.2

68.0

0.0

0.0

28.0

37.3

0.0

57.5

Other

0.0

72.1

0.0

0.0

25.8

0.0

0.0

0.0

0.0

42.5

Total

100

100

100

100

100

100

100

100

100

100

local farmer Sold - non

agricultural use

Source: Farm Survey

93


• Farmers in the Spanish study area, on t e other hand, felt that they would have more scope to eliminate enterprises that are currently only marginally profitable under the CAP. Environmental consequences would follow from a further shift out of dryland arable far ing in favour of extensive beef and sheep production. Over the longer term, respondents predicted more dramatic land-use shifts, out of farming and into hunting, with an increase in scmb and woodland;

• Land-use change in the German study area is expected to result from the decision by most farmers here to give up farming as an income source. Surprisingly sensitive in their reaction to a withdrawal of support (including the elimination of MEKA), respondents predicted an accelerating trend towards afforestation and abandonment of land as part-time operators effectively shut down their holdings and seek employment elsewhere. This semi-desertification is expected to lead to a loss of open habitat and significant change to landscape character in the study area;

• Farmers in the Scottish study area also pointed to the likelihood that holdings would be wound-down and farming practices extensified, with 52% of land being given up by operators getting out of farming. Extensification and changes to the grazing regime here would have a co lex impact on vegetation and biodiversity and the creation of more hill parks, whereby stock are concentrated in fenced enclosures on the better land, cannot be ruled out. Over the longer term, further shifts out of farming and into forestry were predicted alongside a reversion of currently farmed land to estates;

• Finally, it was in the Welsh study area that the likely far ing response and environmental consequences of Full Liberahsation would be least graduated and most decisive. Respondents here felt they had little scope to absorb such a policy shock and predicted that 61% of land would change hands as a result. A further concentration of land in the hands of some of the larger dairy operators seems most likely, with implications for farm lay-out and grassland management. The outlook for conservation of the aheady under managed woodland in the study area looks bleak as labour costs are further reduced and far in declines.

94


CHAPTER FIVE: THE GREEN EUROPE SCENARIO: FARMER

RESPONSES AND CONSERVATION EFFECTS

The idea of being paid to grow co tryside repels me. I d rather quit (Caceres livestock farmer) T only hope we survive because we’re prepared to follow agri-environ ental schemes. But then they wouldn’t have us in Countryside Premium Scheme, so

who knows? (Argyll livestock farmer)

5.1 Introduction We said at the start of this report that liberalisation of the CAP had assu ed the status of a reference scenario in discussions about European rural policy reform. Full liberalisation might never actually occur, but its hypothetical environmental and social conse uences are already part of the policy equation, factored into policy thinking and anticipated in reform proposals being put forward by commentators. There is now wide acceptance that some sort of government support to farmers will have to remain after conventional price support and production aids have disappeared.

The proposal for a system of tiered environmental payments (see, for example, Buckwell, et al, 1997), recognises this, and justifies a baseline payment to farmers partly as a safety net for high natural value f rming systems. When transition payments expire, it is argued, they should give way to a new sort of permanent policy entitlement which will have a defensive as well as an incentivising function, operating to keep certain vulnerable types of farming systems in place as well as paying directly for more conservation on farms.

The objective in presenting our Green CAP scenario5 to farmers was to test their reaction to this new type of subsidy in the context of a withdrawal of conventional production support. The idea was to see how farmers would react to Full

5 The four components of the policy were: removal of all existing price support and direct payments; a legally enforced code of good agricultural practice; a basic tier of environmental payments, calculated according to the area of conservation reserve on the farm; and the ‘hi her tier’ payments, available for undertaking further habitat creation and access work are outlined in Appendix 3 (The East Anglian example).

95


Liberalisation first before goi g on to explore reactions to the idea that some government upport could be retained after all, but only as tiered environmental payments subject to conditions of entry and receipt. Respondents were asked how they would view such an arrangement, whether they would take up the payments and, if so, how this might change their fixture plans. The analysis of these responses is presented in this chapter.

5.2 The Retention of Farmers and Land

Reaction to such a radical greening of government support was predictably very mixed. There was a significant minority who either welcomed the idea unreservedly or said they would obey the signal government would be sending to farmers through such a system. The majority said they would take up the payments, provided they were not too restrictive. A few predicted they would rather quit than accept what they saw as the advancing bureaucracy of a green CAP. Judging by farmers’ plans under a Green Europe scenario, however, this last reaction would not be widespread. Many more farmers and significantly more land would be retained in farming than would otherwise be the case (see figure 5.1), suggesting that the defensive objectives of a Green CAP would be relatively easily achieved. As table 5.1 suggests, the availability of a perm nent hectarage payment would offer a lifeline to livestock farmers in the Scottish study area particularly and would, at the very least, delay a decision to leave farming elsewhere. Com ared to the situation under Full Liberahsation, 16% more farmers would stay in agriculture and 20% more successors could be expected to take over the farm on the present occupier’s retirement (though there would still be 9% more leaving farming than under the baseline scenario).

In terms of the shake out of land, 23% more land would be retained on existing farms under Green CAP than under Full Liberalisation (although this still represents 9% less land retained than under the baseline scenario - see table 5.2). Not only would more land be retained by existing farmers, but where land is released, 30% more would pass to a successor than under Full Liberahsation and only half the amount would be offered on the open rket (table 5.3). Focusing on the land which

96


would be released for sale in the sample (and therefore the most likely to pass out of an agricultural use), table 5.4 suggests that the retention effect of a Green CAP would vary across the study areas. Al ost 26% of the farmed area in the Welsh sample would be sold under a Green CAP compared to just 0.1% of the area farmed by respondents in Argyll that would be offered for sale. Taken together with the 42% of Welsh farmers who thought they would still be leaving farming under a Green CAP, this suggests a smaller purchase on land use in this area than anywhere else. In net terms, however,

Table 5.1 Farmer reaction to Green CAP by study area East

Ceredigion

Swabian

Argyll

Ca ceres

Alb

An lia Leave farming

28.0

42.0

47.1

30.0

18.6

Remain but not enrol in

20.0

6.0

9.8

4.0

23.3

52.0

52.0

43.1

66.0

58.1

100.0

100.0

100.0

100.0

100.0

schemes

Remain and comply with scheme conditions


Table 5.2 Land to be given up by current occupiers by scenario

Full Liberalisation

Baseline

Green CAP

Land to be retained 108228

88% 71290

58% 99845

81%

Land to be given up 15193

12% 52131

42% 23576

19%

Total 123421

100% 123421 100%

Source: Farm Survey

97

123421 100%


Figure 6.1 The flow of farmers out of agriculture under a Green CAP





Remain in farming but (18%) not enrole in scheme

Remain and comply with (82%) scheme conditions

98


Table 5.3 Future destination for land given up Baseline

;

ha

% of land

Full Liberalis tion ha % of land

iven up

Green CAP ha % ofland

given up

given up

Pass to successor

9207

61%

12872 25%

12404

55%

SeU

864

6%

13081 25%

2869

12%

Pass to manager

4273 28%

25615 49%

7435 31%

Other

850

562 1%

750

6%

4%

Source: Farm Survey

Table 5.4 The sale of land under different scenarios (% of farmed area)

East

Ceredigion

Swabian

Argyll

Caceres

Total

Alb

An lia Baseline

2.2

9.6

0.0

0.2

0.0

0.7

Full Lib.

14.1

47.0

5.7

12.2

2.9

10.6

Green CAP

5.2

25.6

0.0

0.1

2.6

2.3

Source: Farm Survey

the retentio effect is weakest in Caceres, ith only 0.3% more land retained u der Green CAP co pared to Full Liberahsation.

5.3 Who Would Take Up the Pay ents?

As table 5.5 shows, the willingness of farmers to actually take up the payments divides quite clearly along geographical lines. Of the 66% of the sample who expect still to be farmin in ten years time under a Green CAP, 35% described themselves as very willing to enrol in the baseline environmental scheme. Argyll farmers appear to be the most enthusiastic about green payments, 94% expressing themselves very willing or willing to enter the scheme. As they put it:

99

AGRICULTURAL LIBERALISATION AMD ITS ENVIRONMENTAL EFFECTS: FINAL REPORT

It suits this part of t e world. It actually pays us to do what we re already doing anyway. Being reahstic, we are park keepers in this part of the world If that’s what the government wants us to do in this area then fine, provided we get paid realistically to keep farming we shall happily take what we can and keep looking after the countryside as we do now. I don’t see myself as a parkkeeper, I’m still a livestock producer, but I admit I don’t see things now in the same fight as I did ten years ago. Basically, farming and park-keeping are now going hand in hand. What we’re called doesn’t really matter

There are a number of explanations for this constructive attitude, but previous exposure to, and familiarity with, the current Countryside Pre iu Scheme was an important factor. It is also worth mentioning that Argyll farmers could expect to be significant beneficiaries of such a system:

‘I think it’s a lot more sensible than the current system. We should be allowed to take our foot off the production pedal and concentrate on quality instead of uantity. If the whole country would have access to a CPS type scheme it would be a wholly good thing .

Spanish and East Anglian farmers were more equivocal by comparison, 29% and 28% respectively being unlikely or positively unwilling to enrol. Many of the East Angfians displayed the same bullish attitude to Green CAP as to Full Liberalisation, arguing that, while the idea of green payments might be good in principle, it was

Table 5.5 Farmer willingness to enrol in Green CAP

East

Ceredigion

Very willing

Swabian

Argyll

Caceres

Alb

An lia

Whole sample

2.8

44.8

14.8

60.0

48.6

34.6

Willing

69.4

44.8

66.7

34.3

22.8

46.9

Unwilling

27.8

10.4

18.5

5.7

28.6

18.5

100.0%

100.0%

100.0%

100.0%

100.0%

Total

100.0

%

Source: Farm Survey

100


nlikely to apply to them. Ot ers were illing to enrol land into schemes provided they matched their current farming system and did not entail too much bureaucracy:

It’s fine, but not for me. This is a capital intensive business and we need high returns. If the business develops as I hope I will not need green payments I don’t like it. I don’t want to be a park keeper and we can compete and are efficient. I prefer to plan my own destiny

I’m prepared to invest, if necessary, but it depends on schemes and rewards. This (meaning tiered payments under Green CAP) would be much more to my liking. I’d have control over my own land and could design my own environmental plan .

Some Spanish farmers were positively bemused at the thought of being paid to farm for nature, arguing that, if government subsidises agriculture, it should continue to be

for the production of food (34% of the Spani h sample thought that subsidies should still be coupled to output).These farmers were furthest away in their thinking from a Green CAP and arguably would be the most difficult to draw into any scheme:

Support should be linked to production - what’s the point in supporting a farmer to do anything else but produce? “It’s better to support agriculture than environmental goods. This land is for producing food, not ‘pure nat re’. How would Spain feed itself?

The reaction of farmers in the German study area is the hardest to ex lain. Only 15%

would be very willing to enrol and 18% thought their participation was unlikely or would be ruled out, adding up to the most lukewarm response after East Anglian and Spanish farmers. This is odd given that current exposure to the philosophy and procedures of environmental payments is higher here than in any other study area (100% of farmers being enrolled in the MEKA scheme). It may be an indictment of MEKA that sensitisation to environmental payments is so low that so few current participants regarded it as a prototype for future support and even fewer were willin to carry over their participation into a more ambitious environmental scheme. The majority of surviving Welsh farmers thought they would enter the scheme, though

101

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their level of enthusiasm was noticeably less than that of their Scottish counterparts. As one Ceredigion farmer expressed it:

I m not against it provided the changes are gradual enough to enable us to adapt. The logic is fair, but it would have to he on a whole farm basis

On the other hand, a sm ll but significant number (10%) thought they would be unlikely to have anything to do with environmental payments, even against the background of a more liberalised CAP:

I think it would be the worst thing that could happen. I’ve had experience of ESAs in England. If you don’t fertilise the in-bye it’s not even worth cutting the grass - surely that doesn’t suit anyone?

It would be rubbish. Look what’s happened around here, all that money paid out to do nothing. We should (continue) to be paid to farm

Table 5.6 offers some further expl nations for this variation in response between study areas. It shows that the farmers least likely to be interested in environmental payments are those withdrawing from agriculture. For withdrawers, usually elderly farmers on a trajectory out of farming, the ten year environmental contracts on offer under a Green CAP held few attractions, bringing with them the likelihood of more labour intensive management at a time when the farm was being wound down. For the rest, there is no significant difference in the propensity of engagers, disengagers or stable farmers to enrol in Green CAP. A closer look at recent trends in the incomes and asset values of those most likely to be enrolling in the scheme, however, suggests that farmers generally would still see environmental schemes as pri arily an useful additional income source (see table 5.7). This shows that of those most wilhng to enrol, 36% have suffered a significant decrease in income and 25% a significant reduction in asset values since 1992, com ared to just 10% of farmers who would not enrol. The numbers are not decisive, but they indicate that ush factors would still be more important than pull so far as participation in a tiered system of green pay ents is conce ed.

102


Finally, table 5.8 i dicates how respondents thought their land management would need to change under a Green CAP. While it was not possible in the current survey to explore in detail how far different types of farmer would need to travel in management terms in order to qualify for environmental payments, these figures give some indication of farmers own assumptions about environmental payment schemes and compfiance requirements.

First, the reduced rate of enterprise restructuring, land acquisition and labour shedding under Green CAP suggests that many do regard the payments as likely to be sufficiently large as to obviate the need for radical adaptations to a more liberal policy environment.

Second, the rather small additional amount of extensification farmers appear to think they would need to make under a Green CAP indicated in column 2, may reflect an assumption that existing plans can be more readily slotted into a Green CAP than to a

policy of Full Liberahsation (though the last two columns of the table do suggest that those expected to undertake the most extensification are those most willin to enrol). As these two farmers very receptive to the general idea of green payments each

candidly put it:

It would make the difference between survival and leaving (but) there d be no real difference to the way we actually farm: some tinkering with nu bers and fencing around the woodland, but mainly lightening the stock we carry on the

land Table 5.6 Farmer willingness to enrol in Green CAP by recent farm business trajectory

Very willing

En a in 36.8

Disen aging Withdrawing 40.9 17.6

Stable

Unclassified

24.5

50.0

Willing

41.1

45.5

35.4

45.3

16.7

Unwilling

22.1

13.6

47.0

30.2

33.3

100.0%

100.0%

100.0%

100.0%

100.0%

Total

Source: Farm Survey

103

AUKI ULTUKAL LIBERALISATION AND ITS ENVIRONMENTAL EFFECTS: FINAL REPORT

Table 5.7 Willingness to participate in Green CAP by trend in income and asset

values (1992-1997)

Farm income

Very willing

Willing

Unwilling

53.6

64.5

73.3

10.7

11.8

16.7

35.7

23.7

10.0

67.9

82.9

83.3

7.1

3.9

6.7

25.0

13.2

10.0

unchanged/risen Farm income declined

slightly Farm income declined

significantly Asset value unchanged/risen Asset values declined

slightly Asset values declined

significantly Source: Farm Survey

104


Table 5.8 Impact of Green CAP on management plans

Full Liberahsation

Green

CAP (all those remaining

Those enrolling

Those not

land in

enrollin

scheme

land in

in farmin )

scheme

30.6 24.0 23.1 11.7 15.7 13.2

24.7 16.0 13.6

24.2 15.2 12.9

6.2

5.3

16.0 19.8

11.4 21.2

26.7 20.0 16.7 10.0 36.7 13.3

2.5

1.9

2.3

0.0

9.9

22.8

26.5

6.7

4.1

2.5

3.0

0.0

Abandon land

7.4

4.9

4.5

6.7

Convert land to no-ag use

7.4

9.3

8.3

Change in fallow/rotation Increase fertihser

8.3

10.5

9.1

8.3

9.3

7.6

13.3 16.7 16.7

6.7

2.9

3.4

0.0

37.2 32.0

32.7 38.8

34.8 43.2

23.3 13.3

Acquire land Cut enterprise Introduce enterprise Other enterprise change Change to grass/arable mix Tree planting Wood clearance

Change in woodland management

Bring unused land into production

Increase stocking rates

Reduce fertihser Reduce stocking rates Change irrigation Change habitat management Other land anagement change Significant capital invest. Sale of non-land assets Release land Join marketing scheme Join co-op

3.1

3.0

3.3

5.8

46.3

50.8

26.7

0.8

3.7

4.5

0.0

14.9

19.1

18.2

23.3

4.1

4.3

3.8

6.7

9.9

4.3

4.5

3.3

24.0 17.4

20.4

16.7 14.4

36.7 30.0

Other business change Increase FT labour Increase PT labour Increase contract labour

Increase family labour Reduce labour

4.1

0.8

1.2

1.5

0.0

3.3

11.7

12.1

10.0

2.2

8.5

9.2

5.0

1.1

10.1 16.0 26.5

11.9 15.9 25.8

16.7 30.0

11.6 36.4

Source: Farm Survey

105

17.3

0.0

TV ATTnxi A irt ATj-,x T7T7T7T7T~ E>C,/iX Pri jiun± JLy Jv mTTV vjs T?\jyTT?n\!\JT?'bJT ij.k> j->1 i r x Sh-/ x'JZy i . rV.i t?t\t lv ii AT . f\r.r\

Provided it paid fanners to keep farming, then it s fi e by me. It s not so different to the cu ent situation. So many farmers around here depend on environmental payments anyway

5.4 Summary

It can (and has) been argued that the first objective of a Green CAP should be to preserve existing farm structures and farming systems in locations where the joint production of agricultural and environmental goods is important (Tilzey, 1997). Judging by these results, farmers in marginal areas would have few inhibitions in taking up hectarage-based environmental resource management payments in the

context of a liberalised CAP, regarding them as an adjusted version of the current system of upland support rather than a quahtatively different t pe of government support. This mentahty has advantages and drawbacks so far as the GB Countryside Agencies are concerned. According to our respondents, it is clear that the sort of payment structure being proposed under the Green CAP scenario would enable greater numbers of livestock producers to stay in business than would otherwise be the case under Full Liherahsation.

Regarded by farmers themselves as a safety net, the system would provide some guarantee of income, lengthen time horizons and may prevent the downward spiral of failing confidence and declining rates of farmer succession hinted at in chapter 4. In this way, it would retain very much more land in farming and possibly prevent some of the more dramatic shills in land use described in that chapter. On the other hand, it may be difficult to persuade farmers that the purpose of government support has changed, and that these are environmental payments rather than income supports. The rather slight adjustments which the most receptive farmers expect to have to make to farming practice under a Green CAP are at odds with the idea of a radically new system of support.

106

AGRICULTURAL LIBERALISATION A D ITS ENVIRONMENTAL EFFECTS: FINAL REPORT

CHAPTER SIX: CONCLUSIONS AND POLICY MESSAGES

I ve never eard of Agenda 2000. We’ve heard of the dome, is it anything to

do with that? I would love to be paid to take all the stock off and use the land for amenity value, it’s the most viable option and would be far better for us and our land. It’s also most likely to come about because it’s what will appeal to the voters

(Argyll livestock farmer) “The reason we’re all so dependent at present, why we can’t plan ahead and can’t do what we want is because we’re so feared it will go to a free market, but

I’d not be too disappointed with a green CAP ( Argyll livestock farmer) “I don’t like the idea of the government supporting lame ducks and all this gross over-capitahsation in new tractors etc, so in principle I’m all for the free market, but it would surely push too many farmers over the brink, which wouldn’t really be in anyone’s interest (Ceredigion dairy farmer)

Agricultural support, at least in the protectionist form of price guarantees and border protection, is very unlikely to be available to farmers five years hence. In negotiating the transition to a more decoupled ‘ policy regime, the GB Countryside Agencies need to be better informed about the likely environmental consequences of the fidl liberalisation of agricultural policy, if only as a benchmark against which to measure, assess and promote other, politically more reahstic, reform strategies. The primary purpose of this research project was to investigate how farmers, individually and in regional groupings, would respond if confronted with the withdrawal of conventional production subsidies and ex osure to world markets. A further aim was to identify some of environmental repercussions of this farmer response. In these terms, the ai

conclusions from the work are as follows:

The Farmer Re ponse

Not surprisingly, farmers generally take a pessimistic view of agricultural liberalisation, all but the most ex ansionist and well positioned equating the withdrawal of support with a significant dimunution in income and a slump in asset

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AGRICULTURAL LIBERALISATION AMD ITS ENVIRONMENTAL EFFECTS: FINAL REPORT

values. WMe there wo ld be great reluctance on the part of many to give up land and farms, a very significant minority (25%) predicted their ow departure from farming within ten years. Only a small fraction of these e forced leavers (11%) would be farmers retiring early in favour of a successor. Far from emphasising the adaptability of family farmers and the likelihood of a graduated business response, the survey results underline the lack of alter ative income sources or business opportunities in many locations, the most co only reported household response being to cut consumption rather than seek out opportunities for pluriactivity and diversification. A sahent finding was the apparent speed with which land will move out of the hands of currrent occupiers in study areas such as Argyll and Ceredigion, where 61% and 52% respectively of the land on survey farms would he given up by farmers getting out of agriculture. By contrast, and indicative of the wide geographical variation in response, 71% of land is expected to remain in the hands of existing farm famihes in a more favourably configured area like East Anglia.

Environmental Consequences

The land use and environmental consequences of this ‘all or nothing response will be long term and run in different directions, some beneficial, others much less so in biodiversity and countryside character terms. Benefits may well accrue from the more extensive utihsation of land on holdings where there is scope for making economies in input use. We found evidence of an ‘extensification response’ on many, but by no

means all, survey farms. Our judgement, however, is that this in-field extensification of production and its spin-offs in terms of reduced farm chemical use and lower stocking rates, is likely to be outweighed by the implications of a general decline in countryside management in the short term and by changes to farm structures in the longer term.

In the lowlands, the maintenance of conservation capital will suffer, unless there is a continuing game or forestry interest to incentivise it, as farmers econo ise on their management and upkeep of headlands, field boundaries and woodland. In the uplands, the windin down of holdings by farmers planning to treat their farms as a source of

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retirement income rather tha pass it on to a successor, will likely further erode any incentive to maintain landscape features or habitat. In addition, transfers of land out of the hands of current occupiers into those of other, expansionist farmers could br ng about further rationahsation of farm layout and changes to grazing practices. Having said that, uncertainty is very much the point. It is particularly difficult to draw up a balance sheet of the possible environmental gains and losses associated with farm structural change since it is impossible to predict from this distance how the land would be reallocated and to what extent very extensive utihsation of the land resource would bring about changes to habitat mosaics and vegetation structure. A reasonable assumption is that there will be an acceleration in the amalgamation of holdings as a new patte of more extensively managed businesses centred on large units establishes itself. The consequences of this restructuring for the management of upland vegetation and the maintenance of landscape features requires further investigation

(see below) but may well be detrimental if it is associated with the ranching of stock and the withdrawal of shepherding. Some land, possibly in significant hectarages, would be bought up by forestry interests or, in the case of tenanted land, revert to estate owners with forestry and game interests. Conservationists may regard this process as an opportunity or a threat, depending on the form and patte of any new planting and the management regimes installed by gaming and hunting estates.

The Messages for Policymakers

Policymakers will need to ask themselves whether change of this type and of these magnitudes is likely to promote or retard biodiversity protection objectives in the countryside of the future. The chief message from thi work is that, while liberalisation may open up new opportunities for the refashioning and rebalancing of land use, particularly in upland areas, it must be regarded as a high risk strategy so far as the maintenance of a multifunctional countryside is concerned. A very conservative interpretation of the re ults would be to argue that current farm structures need to be preserved wherever possible if irreplaceable management regimes and nonsubstitutable countryside management skills are to be sustained. More reahstic is the view that further structural change is inevitable, partly for reasons beyond policy

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