Releasing rural prosperity - 1

Paper presented at the 4th annual SCA conference

"Who should run the countryside? Rural Scotland 2006"

Royal Highland Centre, Ingliston, Edinburgh 25th April 2006

James Withers

Deputy Chief Executive, NFU Scotland

Filed 28 May 06
©www.land-care.org.uk

I notice I’ve got the well-renowned graveyard slot after lunch, which I always think suggests one of two things; either that the organisers thought that I was of such quality that I could keep you riveted for the next 15 minutes. Alternatively, they thought you could grab a quick power nap now because you probably won't miss much. The good news is I know which one it is because I’ve seen my presentation; the bad news is that I’m not going to tell you which it is.

So, ‘releasing rural prosperity’ is what I’ve been asked to talk about. It’s one of those phrases that is fantastically vague; I could pretty much talk about anything! So thank you to the conference organisers for that. I suspect we’ve all got our own ideas about what ‘releasing rural prosperity’ means, it’s a phrase that’s well used politically - a bit like ‘sustainable development’ or ‘social inclusion.’ Politicians generally feel better about themselves for using it. If they are trying to achieve it they presume they must be on the right track; and if they produce a strategy document or a blue-print incorporating the words, they presume they are off running to be elected.

James Withers,
Deputy Chief Executive, NFU Scotland,
givng his paper at the 4th annual SCA conference
(To enlarge photo Click Here)
Photo©Kimpton Graphics

But to dig a bit deeper, what does it actually mean to the people living and working in the countryside? To me ‘releasing rural prosperity’ is not just a bit of financial discussion; a prosperous rural sector means that, as well as encouraging and rewarding efficient businesses of high quality, we have to strike a balance between raw economic results and supporting activity - which you can’t necessarily measure bluntly in pounds and pence, but it certainly protects our countryside and maintains our communities.

There are many speakers who will be more qualified than me to talk about wider countryside activity. I am going to focus my brief remarks on the farming industry; how it can contribute to releasing rural prosperity and crucially how do we get the best out of our agriculture industry.

‘Releasing rural prosperity’ conjures up this image of a large reservoir of wealth that’s just waiting to be tapped into. Like an oil reserve waiting to be discovered. It suggests that we’re just waiting for someone to flick the switch for farming and then it’s boom time. Well, there’s an element of truth and a vision of significant potential prosperity, particularly if we look at the core farming activity: the production of food.

We live in this society in which we’ve moved in the space of a lifetime from a real concern over food shortage after the war to now this abundance of choice. In that time we’ve really become a picky bunch of people. The days of contentment of simply having food have now been swept aside by a desire to have right product produced to the right standards at the right time, from the right place; naturally in the right colour and shape and of course we want all of that at the right price. But therein lies Scotland’s opportunity - we can separate ourselves from the pack by appealing to those that want a bit more than just their regular shopping trolley full of food. With terms like ‘carbon footprint’ creeping into our consciousness now, demand for local fresh food produced to high standards has never been greater.

Likewise we live in a country that donates more to animal charities than children’s charities. So animal welfare standards increasingly influence people’s buying decisions. Of course the demand for top-notch standards is not and never will be universal. The Lidls and Aldis of this world will always exist because, for many people, price is and has to be the primary factor in their buying decisions. But Scottish farms undoubtedly have a market for their produce and, most significantly of all, that market is expanding.

But the critical question remains ‘is the market rewarding those that answer this demand for quality?’ The straight and the sad answer at the moment is ‘no’. The farming industry has been lectured at for many years to be more market-focused. There is no doubt that as an industry it has to continually strive to improve its performance; strive for greater efficiency. But the market at the moment, far from creating this incentive for quality, is actually penalising those that try to meet it.

We’ve now got four big supermarkets that effectively have cornered the UK grocery sector. They are locked in such a cutthroat battle for market share that anything goes when it comes to squeezing extra margin or securing a few more customers through their doors. The sad fact is that this has created, too often, a destructive atmosphere in the supply chain where trust and transparency have been replaced now by fear and at worst exploitation. Of course that’s not true in all cases, there are good, genuinely good stories out there about collaborative supply chains that benefit every link in them. But for every good story that comes out we’ll hear a story about Asda, for example, demanding multi-million pound upfront payments just to keep business. Or enforcing buy-one-get-one free deals that the suppliers have to pay for.

There’s no doubt that the supermarkets have recognised the value of differentiation and they know that Scottish farming can deliver that bit extra, and the retail prices reflect that. But at the moment farm-gate prices do not. Indeed the supermarkets now seem to have adopted an approach to farm-gate prices, which appeal to the lowest common denominator. They cry for farm assured produce, higher animal welfare standards, higher environmental standards, yet tell suppliers they will be benchmarked against import prices.

Taking the pig industry as an example, the real danger is you have a sector there that has led the way in efficiency, biosecurity, and production standards yet finds itself run out of town by a buying policy which is based on cheapest cost and that usually means imports of lower standard produce.

Now, I don’t say that in any way as an argument for lowering our standards. Our argument, politically and commercially, is to ensure that high standards are rewarded. Our argument is not with foreign producers who don’t have to meet the same rules and regulations. Indeed, they are the ones that provide the platform upon which we can differentiate ourselves. However, we surely have a valid complaint when we meet the higher standards demanded and that are expected, but we are not financially rewarded for that. Worse still, our foreign competitors, in particular those businesses that are not going the extra mile on standards and therefore have lower costs, actually find themselves in a stronger position.

We know supermarkets operate in this ruthless economic environment, and boy have they flourished. £2.25 billion as Struan said, is the annual profit of Tesco’s as they announced this morning. And Tesco and the like are one of the business success stories of the decade, so let’s not take away from that completely. But while size has brought these people power, it must also bring them responsibility, and that responsibility is not being exercised fully at present. The great irony to me is that the supermarket empire has been built on this promise of choice, yet their success has created an atmosphere in which abuses of power are too frequent, unspoken of by vulnerable suppliers who are squeezed to the point of closure. In other words, the system is now in real danger of reducing consumer choice; the very attribute supermarkets have prided themselves on. It is clear the market is failing. Not entirely, but it's failing a large chunk of farmers and the food industry. Crucially that means it will fail consumers. A full Office of Fair Trading (OFT) review of the grocery market is now essential.

So if we reward quality, and that’s the first step to releasing rural prosperity, step two must be to find a better balance in our regulatory system, and that is clearly missing at present. With a set of regulations that would grace the scripts of 'Yes, Minister' it seems the old adage that Brussels was the real haven of ludicrous legislation is now well wide of the mark. In the old days we could all have a good laugh at Brussels bureaucrats telling us how straight cucumber can be and that Yorkshire puddings had to be within a certain distance of Harrogate. That madness has now crossed the channel and started coming home. We find Defra, the Scottish Executive Environment Protection Agency (SEPA) - or whoever it may be - telling us that field stones are commercial waste requiring a landfill license. Who is it that set targets for a renewable fuel, then a fortnight later told renderers they have to revert back to using heavy oil instead of tallow. Those rules might raise a smirk but there is a serious principal at stake. A ‘regulate at all costs’ attitude, particularly on environmental legislation is at the point where it may do environmental harm by reducing land management activity.

Now, no one in the farming industry can abdicate their responsibility for land. We are producing food and we are managing the countryside, so there will always be a level of regulation. But, if we are going to be regulated, for goodness sakes let it be demonstrated that we have public benefit at the end of it. I fail to see how charging a vegetable grower £3000 from the 30th September to abstract water in an area where water quality is okay, can possibly be in the public benefit. Surely, in a nation where we are trying to turn a pie and pint diet into one where vegetables make more than just a cameo appearance, we should not be creating disincentives for vegetable production.

The UK and Scotland has responsibilities to implement EU legislation, but we have to take advantage of the flexibility that is within it. And for goodness sake let’s not worry constantly about Brussels’ reaction to what we do. If we’ve got science behind us to justify implementation, then let’s have the guts to take it to Brussels and fight our case. At the moment NFUS, along with other groups, do that: but too often the UK government and the Scottish Executive meekly bow to what they presume is inflexible Brussels dictat.

So we must demand the return of common sense to our regulatory system. NFU Scotland has proposed a new model, in the form of a six-step process, for dealing with new legislation. Ultimately we can all have a good bleat about regulation - every industry does it - but we can’t just moan about red tape. We need to recognise there will always be a level of regulation. The crucial step is to be positive for the industry to come up with a solution itself to deal with the excesses. None of the elements of this model is earth-shattering stuff; you would think it would be just common sense.

In a nutshell, when an EU directive lands on government’s desk it should be the start of serious work to identify if and where there are issues to be addressed in the first place. We then have to consider a range of options to deal with it: it doesn’t just have to be regulation. Voluntary codes, incentive based schemes, can all deliver far better results. And then industry needs to be meaningfully consulted. That doesn’t mean just parachuting a few people onto a stakeholder group, because it looks like you’re an open and transparent government; it means being involved in genuine consultation. And if there are going to be charges at the end of this, competent work has to be done to show there will be public benefit delivered in return.

So, if we have sorted out regulation and we have sorted out the supermarkets, there is one final step to releasing rural prosperity. The point I’d like to make is in relation to the future of financial support for the countryside.

For years now the CAP has been a good political football: no more so than last year, 2005. We had the G8 conference, the Make Poverty History campaign, and the EU budget negotiations, all of which combined to create a hugely intense debate on the future of CAP reform - bizarrely only eighteen months after we’d had the original debate on the actual reform process.

The key question for us is ‘how do we create a support structure that we can justify to Joe Taxpayer and which also provides the platform upon which other rural areas can thrive?’ We have to be honest with ourselves as well, and recognise the elements that the CAP have unfairly damaged the developing world. For example we can no longer justify export subsidies, although we should remember that we are not a major exporting country. A lot of the myths surrounding CAP and the criticisms cannot be levelled at Scotland. We spent an afternoon with journalists during the G8 conference, African journalists, and talked them through the support that Scottish farms get. They had absolutely no concerns about it at all. That is the secret for future support. We have to create a balance which supports our own rural communities in this country without hampering the development of those elsewhere.

To give the Executive credit where credit is due it has recognised the pivotal role that agriculture plays within our rural communities. By supporting ongoing farming activity, you secure rural development benefits well beyond the farm gate. Three weeks ago - as Tony (Andrews) said at the start of the session today – our debate began on the next rural development plan. This will probably be worth about £135 million a year to Scotland. Support to less favoured areas will have to remain a central part of that package. If rural development means supporting jobs that will have benefits for people, their communities and the wider countryside, then the success of the less favoured areas (LFA) scheme is a good model to work on.

But apart from LFA support, the rest of rural development money has largely meant agri- environment schemes to date. They are obviously important, but we need to approach the next rural development plan from a broader perspective. That means considering measures to improve competitiveness of farm businesses, and even looking at options to encourage the next generation of farmers.

As with any debate on how we spend hundreds of millions of pounds, there’s going to be intense arguments. But I’m in no doubt that one of the best rural development vehicles you will ever get is a sustainable farm unit. If the core farming business can wash it’s face, economic activity, environmental stewardship, and dare I say it ‘social inclusion’ will all flow from it.

So, to conclude; we will release rural prosperity by creating a framework within which good businesses are awarded and supported appropriately. And this harks back to the theme of the whole conference ‘who should run the countryside?’ You have to let the experts do the job, those that have the skill and the talent to work the land need the freedom and reward to do so. Government has to provide that framework but also has to strike a better balance between giving the freedom to people to do that and providing the necessary safe guards that there will always be.

The Scottish agricultural industry has the ingredients for real success. Before we all think of the doom and gloom of prices and of regulation, and throw ourselves out the nearest window, we need to remember there are real success stories out there. Later this afternoon I think you are going to hear from Jay Crawford, who was recognised through our Young Achiever Award, proof that there is promise not only in this generation of farmers but in the next. Also, we have to remember the attributes working in our favour: we are producing quality, healthy local food that is increasingly in demand. We have got an environmental story which should not be about defending ourselves but about promoting our work. We have got an industry which remains the backbone of many of our most fragile areas. Other industries would kill to have that platform to build on.

But those attributes are a complete waste of time if we don’t tell the wider world about them.

That means that as an industry we need to be better at talking to our consumers - to tax payers - about what we can deliver and what we are delivering for them. If we achieve that on our part, and if political action is then taken to ensure the market operates properly, and if good businesses do not face death by unnecessary regulation, I think we can look forward to years of opportunity.

Thank you.

Acknowledgements and Disclaimer

Land-Care is grateful to Tony Andrews, CEO Scottish Countryside Alliance, and to Dick Playfair of Playfair Walker for the invitation to attend the conference in a media capacity, the opportunity to participate in both formal and informal discussion, and for their help in providing Land-Care with transcripts of the papers presented.

No responsibility for errors or omissions in the transcription process can be taken by SCA, Playfair Walker or Land-Care.

Kimpton Graphics is a division of Land-Care.

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Releasing rural prosperity - 1

Paper presented at the 4th annual SCA conference

"Who should run the countryside? Rural Scotland 2006"

Royal Highland Centre, Ingliston, Edinburgh 25th April 2006

James Withers

Deputy Chief Executive, NFU Scotland

Filed 28 May 06
©www.land-care.org.uk

©www.land-care.org.uk

Further reading recommended by Land-Care

Acknowledgements and Disclaimer

MENU

Releasing rural prosperity - 1

Paper presented at the 4th annual SCA conference

"Who should run the countryside? Rural Scotland 2006"

Royal Highland Centre, Ingliston, Edinburgh 25th April 2006

James Withers

Deputy Chief Executive, NFU Scotland

Filed 28 May 06 ©www.land-care.org.uk

©www.land-care.org.uk

Further reading recommended by Land-Care

Acknowledgements and Disclaimer

Filed 28 May 06
©www.land-care.org.uk