English Government to close 25% of small farms

Patrick Wintour, chief political correspondent
Wednesday April 11, 2001
The Guardian

The government plans a major reduction in the number of farms and
farmers as part of a recovery package for British agriculture in the
wake of the foot and mouth outbreak, the Guardian has learned.
Ministers expect that by 2005 as many as 25% of farms - almost all
small ones - will have closed or merged, with 50,000 people forced to
leave the industry.

The Ministry of Agriculture, Fisheries and Food (Maff) is soon due to
publish three major reports analysing the long-term structural crisis
in British farming. The reports, central to the government's strategy
for agriculture published last year, are likely to argue that large
scale farms tend to be more productive, and are more likely to compete
successfully in an increasingly liberalised trade in world food.

Some Blairites would like to see the subsidy regime reformed to reward
good farming practices, but admit the room for manoeuvre is restricted
by EU regimes.

In an attempt to speed up the process of reform in the wake of the
crisis, the agriculture minister, Nick Brown, is expected to propose
an early retirement scheme for those on uneconomic farms. He is also
examining incentives to boost the small number of farmers taking out
insurance against epidemics, and fresh help to persuade farmers to
diversify, including a relaxation of planning regulations.

Maff figures show that many uneconomic farms make more money from
offering bed and breakfast, than from farming.

Mr Brown is already studying reports from the three Maff task forces
on hill farms, the dairy industry and the cost of inputs to farming,
such as energy and capital.

The hill farms task force, chaired by David Arnold Forster, chief
executive of English Nature, calls for subsidies to increase early
retirement and diversify the financially crippled sector. Despite
subsi dies of £33,000 a year, the average income of hill farmers is
only £9,000 a year.

Mr Brown wants to create an industry that more effectively generates
farmer income, rather than simply supporting sheep numbers.

Subsidies based on sheep numbers, poorly policed by Maff, were a cause
of the large sheep movements which rapidly spread the epidemic. One
senior official described the current unregulated sheep regime as
being like the Wild West.

Mr Brown has broadly hinted at a large scale early retirement scheme.
He told MPs on Monday: "The big decision for farmers who have received
a compensation payment is whether to restock the farmholding - or
pause and think very carefully what the future holds for them."

A serious discussion had to occur, he said, about the future support
arrangement for the sheep regime. In 1999, nearly 25% of hill farmers
were older than 60.

Any recovery plan would come on top of the £500m in various
compensation payments to farmers whose animals have been slaughtered.
Before the foot and mouth outbreak, Maff's working papers on the
economic outlook for agriculture already predicted that profitability
would only return if there was a further shift towards larger
enterprises.

Maff predicts that the number of farm workers could fall by 3.5% a
year. As a result, the number of farmers could fall below 300,000 by
2006, a drop of 100,000 since 1994.

The fall in the number of farms, on top of existing trends, could be
15-20%, although some may be merged into larger businesses.

The ministry's figures reveal a tale of unproductive cattle and sheep
farms. In 1999, 75% of the sheep and cattle holdings were responsible
for 98% of output. The largest 10% of holdings are responsible for 35%
of output. Most smallholdings - 17% in 1999 - are in Cumbria, which is
worst hit by foot and mouth.

However, there is likely to be a fierce Whitehall battle over whether
Maff and the interests of agribusiness should be allowed to dominate
any recovery plan. On March 3, Mr Brown announced a full-scale inquiry
into the foot and mouth crisis, including the implications of
increased world travel, the globalisation of trade and the effect of
modern farming on disease control.

Maff believes it set a clear direction for future policy in its
Strategy for Farming document last spring. Since then, however, the
environment minister, Michael Meacher, has caused consternation by
urging a wider inquiry, amounting to a royal commission, on the future
of farming. Downing Street favours a brief external inquiry looking at
the underlying issues.