Rural Economy Strategy 2011–2015: White Paper – Sustaining and Growing the Rural Economy.

Rural Economy Strategy 2011-2015 White Paper

Sustaining and Growing The Rural Economy

Economic Development Planning and Environment

Contents

Foreword vii

Measuring the contribution of the rural economy to Jersey 2

2 PEOPLE 28 Rural skills, training, advice and education 28

3 ENVIRONMENT 38 Biodiversity issues in the rural economy 38

Rural Economy Strategy 2011-2015 Indicative Budget Forecast 54

Appendices

Contents

List of Policies

Policy PR 1 Performance indicators 3

Policy PE 5 Community Agriculture(CA) or Community Supported Agriculture

31 (CSA)

Contents

List of Figures

Figure 1 Freshly calved heifer. xv

List of Tables

Table 1 Single Area Payment 5

Foreword

Foreword

Foreword

An effective Rural Economy Strategy (RES) for Jersey must deliver a number of things. Firstly, the RES needs to enhance the economic, environmental and social value of the land in which the majority of rural economic activity is undertaken. It must also take into account the needs and requirements of those who use, live and work in the countryside: rural policy must continue to take full account of society's expectations.

Profitability is essential to all businesses. However, the RES must move away from simply gauging its success in terms of costs, output and income. Success needs to be based on increasing productivity in its broadest sense, with measures of environmental and social performance as well as financial indicators. As such, sustainable development in the countryside requires rural businesses and government to consider a triple bottom line' – profit, people and environment.

Some believe that there is a conflict between rural economic growth and the environment.It is true that thereis no such thingas no impact' economicactivity and in order to secure ongoing public support, the rural sector needs to ensure that business continues to be serious about protecting our common environment.

Rural businesses are increasingly and rightly market focused. It is important for rural businesses to remain flexible, so that they can respond to financial pressures and the unpredictability of such markets, taking greater responsibility for their own destinies, through ensuring high standards in risk management, business administration and identifying and filling skills gaps.

Thisapproachiscentraltotheprincipleofsharedresponsibilityintheruraleconomy and requires the States of Jersey and rural businesses to work together, on the understanding that government cannot provide for every eventuality. To achieve this, we must identify the specific needs and target limited public resources to areas where the rural sector can deliver the highest overall productivity and benefit to Jersey in the long-term.

Connétable Len Norman

Assistant Minister for Economic Development

Deputy Rob Duhamel

Assistant Minister for Planning and Environment July 2010

How to use this document

How to use this document

How to use this document

It is not expected that everyone who wishes to comment on the review needs to read the entire document: you do not have to. You may respond to as many or as few of the policies as you wish, but we do want you to take part.

To help, the review has been separated into three sections; profit, people and the environment. Each section sets out policies which are highlighted and numbered so that they can be easily identified. However, they are not prioritised, listed in any particular order, or indeed viewed as comprehensive. As such you can suggest policies or comment on the ones presented.

Your comments and suggestions are needed and valued. This will ensure that the final Rural Economy Strategy (RES) includes the needs and concerns of everyone who has an interest in the countryside.

Making your comments

1. On-line

The easiest way to respond to this document is through the on-line version of the document available at: http://consult.gov.je/portal/ where responses can be completed and submitted. We would encourage as many people as possible to use this way of responding to the proposals.

Strategy document

You can access the document via the web address above and can view and comment on all areas of the document or only those which you are interested in using the comments tabs provided.

2. In writing

You can also submit your comments in writing. If you wish to make a written representation we would ask you to please consider the following points:

state whether you are objecting' or supporting' any particular policy or any other aspect of the review

include your suggested changes and where appropriate state the relevant section or policy number

outline why you consider your suggested changes to be necessary

Please submit your comments in writing to the address or via email (provided over the page).

How to use this document

Timescale

Consultation on this document is between Friday 23 July 2010 and Friday 3 September 2010.

Hard copies

Printed copies of the RES document are available from the States Bookshop Mourier House or the Environment Division at Howard Davis Farm, Trinity . Copies are also availableattheParish Hall s,theLibrary,andtheCustomerServicesCentreatCyril Le Marquand House.

More information

Please remember the more responses we have then the more relevant the final strategy will be to the rural sector.

If you have any queries, or require further information, please contact the RES review team:

Rural Economy Section, Howard Davis Farm, La Route de la Trinite, Trinity , JE3 5JP.

email: resreview@gov.je or tel: 01534 441600 Public submissions

Please take into consideration that all comments submitted to States of Jersey public consultations may be made public. If you have a particular wish for confidentially please indicate this clearly when submitting a response.

Introduction

Introduction

Introduction

What is the Rural Economy Strategy?

The Rural Economy Strategy (RES) is a five-year strategy. It is designed to grow the rural economy in line with the objectives of the States Strategic Plan, whilst safeguarding Jersey's countryside, it's character and the environment. The RES recognisesthateconomicsustainabilityof the ruralsectordependson alsoproviding positive environmental and social benefits.

Why review the current Rural Economy Strategy?

TheRESwasadoptedasStatespolicyinJune2005andimplementedon1stJanuary 2006 for a 5 year period ending 31st December 2010. In the RES 2005(1), a

commitment was given to review the RES over the course of 2009, with the view to bringing forward a new strategy for 2011-2015.

The review will help ensure that the changing needs and requirements of the Island's rural economy are reflected and accommodated.

Shaping the countryside

TheIsland'slandscapehasbeenformedbygenerationsoffarming.Itisalandscape of cultural significance which helps support a richness and variety of wildlife that is not matched, area for area, anywhere in Europe and is rightly something to be proud of.

As such, Jersey's countryside is one of its prime assets. Successive tourism surveys haveshowncountrysidequalitytobea principledecisionfactorinchoosingJersey as a destination. Extensive evidence also exists to show that the appearance and ambiance of a location is a significant factor for locating businesses and attracting the quality of staff they need.

1. Rural Economy Strategy: Growing the Rural Economy, 2005. Economic Development and Planning and Environment Departments, States of Jersey.

Key sector analysis

Key sector analysis

Key sector analysis

Rural Economy

Rural Economy is defined as the cumulative revenues from business activity derived from the use of agricultural land and the countryside (i.e. businesses which derive their income from land dependent activity).

Dairy

For hundreds of years, the Jersey cow and associated dairy sector have been inextricablylinkedtotheIsland.Thedairyfoodchainisstillanimportantelement of overall economic activity in Jersey today and also the presence of the dairy industry shapes the views and landscape of Jersey as we know it – being part of the DNA' of the Island.

In recent times, the dairy industry's profitability has been at an historic low, resulting in a low level of on-farm investment. In 2002, the dairy received £0.8m to restructure following the collapse of the mini pot market, resulting in massive over production. The restructuring involved the removal of 4.5 million litres of milkproductionand1,071cowsfromtheIslandherd.Despitethisdropinnumbers, the Island-wide subsidy for cattle farmers was maintained. This meant an increase in support levels per cow, however, the industry has continued to generate an historically low level of profitability.

The 2003 McQueen Report(2) was commissioned by the States to undertake a strategic review of the industry and was instrumental to the development, by the

industry, of the Dairy Industry Recovery Plan entitled the "Road Map to Recovery"(3)which identified key work streams whereby both the Jersey Milk

Marketing Board(4)and the Royal Jersey Agricultural and Horticultural Society(5) took the lead in delivering particular objectives, e.g. dairy relocation and

importation of genetics.

Also adopted in that plan was the concept of an economically sustainable industry being one that achieved an average farm EBITDA (Earnings before Interest, Tax, Depreciation & Amortisation) of 20% of turnover, which at that time became the benchmark target accepted by industry and government.

2. McQueen, D. 2003. The Dairy Industry in Jersey: a Strategic Review
3. The Dairy Industry Recovery Plan: Road Map to Recovery. 2004, Jersey Milk Marketing Board.
4. http://www.jerseydairy.je/home
5. http://www.royaljersey.co.uk

Key sector analysis

In 2007, a further reduction of 500 cows (2 million litres) was undertaken by the industry to bring production in line with market demand. The current viability of the industry still relies on a high level of Government direct aid payments, the Jersey consumer paying a high price compared to the UK and maintenance of a

law(6) licensing the importation of liquid milk. Despite low returns, the adoption of the "Road Map to Recovery" has given a degree of optimism for the future, with

solid plans in place for restructuring the industry into an efficient and profitable concern, which will benefit producers and consumers alike.

The relocation of the new, more efficient dairy operation to Howard Davis Farm, the ability to actively seekvalueaddedexportmarketsforarangeofpremium Jersey products and efficiency improvements from imported genetics, brings the possibility of delivering greater returns to farms from the market for milk and milk products. However, it is accepted that building sustainable economic growth takes time and the efficiency improvements from imported genetics will not be fully recognised until 2018.

Figure 1 Freshly calved heifer.

The Jersey Dairy 5 Year Business Plan indicates that by

2011/12 EBITDA could reach 17% (assuming no changes to the current level of government support during this period). This support includes the Single Area Payment (SAP), Quality Milk Payment (QMP) and dairy services support.

Arable

The local arable industry has been heavily reliant on the Jersey Royal potato for much of living memory. Despite the recent decrease in areas planted, early Jersey plantings in 2009 were up 26% at 15,969 vergées, compared with the low point in 2007. This is the highest level since 2002 when 16,141 vergées were planted.

This increased demand for potato production has resulted in strong competition for land, which has driven up both the sale and rental value per vergée and consequently has stifled some of the diversification which was starting to occur from 2007.

The dependence on a single crop, albeit with a strong brand image, creates a problem in other areas, such as continuous cropping. This can lead to a build up of pests and diseases, reduces diversity and more importantly, should there be a crop or market failure, there is no fall back position or alternative crop to minimise the risk and the impact on grower profitability.

6. Import and Export (Control) (Jersey) Law, 1946

Key sector analysis

This reliance on a single crop is also affected by the reduced number of pesticides available, following the EU review of active ingredients and is highlighted by the reduction in herbicides available. The permitted herbicides have serious consequences for the following crops and have an impact on Jersey's limited rotation whereby Jersey Royal potatoes are grown annually followed by either, vegetables, maize or cereals in the same year.

Small fields, hand planting and being an Island community means that production costs and imported materials are higher than the competition (Harbourdues,freightcosts,economiesofscaleetc). Being an Island requires the farming to be of a particularly high standard to protect our limited natural resources and limit the impact caused by fertilisers and pesticides on our water supply.

Figure 2 Planting Jersey However, The Jersey Royal potato remains the Royal Potatoes by hand. backbone of the arable industry, with the potato

protected from foreign imitation, through the grantingof a Protected Designationof Origin (PDO) and CertificationMark in 1996. BoththeJerseyRoyal(Logo)&JerseyRoyal/JerseyRoyals(words)wereregistered as both a certification mark and an ordinary trade mark in 2002.

Other agricultural activities

Recently, increased competition for land as a result of competition within the private sector has raised issues around land controls, agricultural land and how agriculture' is defined.

In Jersey, agricultural land is defined as land being capable of use for agriculture. Of all land, only about 50% falls under the Agricultural Land (Control of Sales and Leases) (Jersey) Law 1974, which conditions and regulates land use, effectively protecting the agriculturalland bank. For land that is not subject to the Agricultural Land (Control of Sales and Leases) (Jersey) Law 1974, there is no control on this other than planning laws.

Currently,themainissuesurroundinglandcontrolisthelossoflandtocommercial horse liveries and orchards. However, in Jersey, these are recognised in law, as bona fide agriculturalactivities. The AgriculturalLand (Control of Sales and Leases) (Jersey)Law 1974doesprotectlandin Jerseyforagriculture,but it doesnotprotect land for specific sectors of agriculture.

To use the law to protect specific sector of the agriculture industry could be seen as government interference within the market place. However, it is vital that planning and land control remain flexible enough to allow the industry to adapt to the needs of their customers in order to remain competitive.

Key sector analysis

Fisheries

In recent years, the local fishing industry has remained stable with no stock collapses. Industry strength can be measured through catch per unit effort, which shows year to year variability.

In 2009,the numberof Jerseylicensedfishingvessels levelled off at 164 after declining each year sincelicensing began in 1997. Although vessel numbers remained static, the number of pots worked decreased to the lowest number recorded (22,284 pots).Thiswasoffsetinpartbyanincreaseinwhelk pots.

Figure 3 Spider Crab, Lobster and Brown Crab.

While crustacean pot numbers fell, the tonnage of lobster caught peaked at 176 tonnes (the highest tonnage recorded). Crab landings dipped to a substantially lower level than in 2008. Total shellfish landings were down by 19%, by weight, but within this effort was focused towards higher value species, resulting in an overall 2.3% increase in the value of the shellfish landed.

Overall, wet fish landings decreased by 54%. This drop is in part due to the largest wet fish vessels working outside of Jersey's Territorial Waters and landing elsewhere. The reported landings of seabass were down across all vessel sizes of the fleet.

Aquaculture production continued its upward trend with an increase of just over 5% to top the 1000 tonnes mark. This was primarily led by an increase in Pacific Oyster production. Parts of this sector are still struggling with export and local shore based infrastructure issues. Further to this the industry was beset with oyster mortality problems that have dogged production in France. These issues will make the continued progress of the aquaculture sector more challenging.

Research and monitoring of important stocks continues on whelk, lobster, ormer and ray species. Monitoring of stocks is a vital activity as it provides important data for the determination of conservation and management needs, and how they may be achieved. The work on lobsters showed improved catch per unit effort (CPUE)levelsin2009,however,thewhelkstudysuggestedthatevenfewerjuveniles are coming through, giving cause for concern for the future of this stock.

Dialogue between Jersey and French fishermen and administrators, continues through the Granville Bay Treaty meetings which provide a platform for agreeing fisheries issues in jointly fished waters.

Vision for the Rural Economy

Vision for the Rural Economy

Vision for the Rural Economy

The work of the Rural Economy Strategy review has been guided by a long-term vision for the rural economy in Jersey. We imagine:

1. Aprofitablefarming,fisheriesandfoodsector,thatvaluesskillsdevelopment, can compete in international markets and that values its role as a steward of the environment, providing a good standard of living and opportunities where new entrants can build a career.
2. That through cooperation and collaboration, rural businesses have invested beyond the farm gate, receiving a fair return for the food that they produce.
3. Good communication throughout the food chain, where production, processing and marketing are integrated, operating to high environmental standards, focused to meet consumers demands and with a higher proportion of local produce finding its way into the retail food supply chain.
4. Rural businesses will continue to receive payment from the Government, but only for public goods and services that the public wants and needs. With farmers and landowners being rewarded for planning to deliver good land and environmental management and for providing an attractive countryside.
5. Some diversification in the rural economy beyond food production, but that land and expertise remain available if greater quantities of Jersey-produced food are suddenly needed.
6. The States of Jersey's relationship with the rural economy involves moving away from measures that distort markets towards facilitating and enabling business decisions and removing barriers to productivity.
7. The States of Jersey continues to have a role in creating a market for environmental goods and is responsible for food safety, animal welfare and environmental protection - wherever this is possible, as a facilitator not a regulator.

Vision for the Rural Economy

1 PROFIT

Measuring the contribution of the rural economy to Jersey Performance Indicators

1. A simple measure of the contribution the rural sector makes, in terms of Gross Value Added (GVA) to the economy as a whole, does not take into account the specific social and environmental costs and benefits of economic activity in the countryside.
2. The State of Jersey - A report on the Condition of Jersey's Environment,(7) released in January 2005, set a baseline against which to measure progress on the

implementation of a wide range of policies and legislation in place, to look after the environment. The report identified twelve social and environmental considerations:

Climate change

Air Quality

Globally important biodiversity Land use patterns

Contaminated land

Freshwater quality and availability Marine water quality

Waste management

Local biodiversity

Land management regimes

Key biological populations

Quality of life for Islanders

3. Activities in the rural economy have the potential to impact on all twelve of these environmental perspectives. Each is closely monitored through a system of 40 environment indicators, which were identified on the basis of the pressure and impact of human activity on the environment as agreed in 2005. As well as annual monitoring of these indicators, a complete review of The State of Jersey,

2005'(8) will be conducted in 2010/11.

7. The State of Jersey: a Report on the Condition of Jersey's Environment. Environment and Public Services Committee, 2005. States of Jersey
8. The State of Jersey: a Report on the Condition of Jersey's Environment. Environment and Public Services Committee, 2005. States of Jersey

Policy PR 1

Performance indicators

States of Jersey to ensure that environmental indicators are reviewed and developed to reflect the current impacts of the rural economy on the

environment as part of the review of The State of Jersey, 2005' (9) which will be conducted in 2010/11.

Rural Economy - links with Europe and the United Kingdom

4. Jersey is neither part of the UK or of the European Union, although it does have a relationship' with the EU which is governed by Protocol 3 to the UK's Act

ofAccession1972 (10).ThismeansthatalthoughJerseyremainsoutsidetheEUand consequently, the Common Agricultural Policy(11), the Island is considered as inside

in relationto tradein goods.This willmost likelyhave impactson the ruraleconomy in the following areas:

Trade in agricultural products Veterinary legislation

Animal health legislation

Plant health legislation Marketing of seeds and seedlings Food legislation

Feeding stuffs legislation Quality and Marketing standards

Policy PR 2

Rural Economy - links with Europe and the United Kingdom

Rural Economy officers to be represented at a newly formed, cross-governmental, Jersey-Brussels Group, that will consider:

Strengthening representation in Brussels

Improving coordination on EU matters in Jersey Protocol 3 Compliance

Future options and opportunities for Jersey and Europe

9. The State of Jersey: a Report on the Condition of Jersey's Environment. Environment and Public Services Committee, 2005. States of Jersey

10 http://www.opsi.gov.uk/acts/acts1972/ukpga_19720068_en_1

11 http://europa.eu/legislation_summaries/agriculture/general_framework/index_en.htm

The European and Mediterranean Plant Protection Organisation (EPPO(12)

5. The European and Mediterranean Plant Protection Organisation (EPPO) is an intergovernmental organisation responsible for European cooperation in plant protection in the European and Mediterranean region. Under the International Plant Protection Convention (IPPC), EPPO is the regional plant protection organisation (RPPO) for Europe.
6. Founded in 1951, EPPO has grown from 15 original members to 50 member countries, including Jersey and nearly every country in the European and Mediterranean region.
7. EPPO serves a valuable source of technical information and training, particularly in recognition, control and eradication of key pests. It also coordinates expertmonitoringandearlywarningsystemsforpotentiallydevastatingcontrolled organisms.
8. An excellent example is the annual Colorado Beetle Campaign, designed to protect Jersey's £25 million potato export industry from the threat of this pest establishing in the Island. The Campaign is a cooperative effort between Jersey, Guernsey, France and the UK.
9. WithoutEPPOmembership,Jerseycouldbeconsidereda 'ThirdCountry'and as such, would have stringent export conditions placed on produce bound for the UK or France, and would also be threatened by the establishment of Colorado Beetle.

Policy PR 3

Links with the European and Mediterranean Plant Protection Organisation (EPPO)

States of Jersey should remain a member of the European Plant Protection Organisation in order to receive the benefits of membership.

Review of support payments and States of Jersey funding

10. The Rural Economy Strategy, 2005 contained key areas of support that included:

The Single Area Payment(13) The Quality Milk Payment

12 http://www.eppo.org/

13 http://www.gov.je/Benefits/Grants/IndustryGrants/Pages/SingleAreaPayment.aspx

The Rural Initiative Scheme(14)

The Countryside Renewal Scheme(15) Jersey Enterprise grants(16)

Marketing support for Jersey products(17)

Single Area Payment

11. The Single Area Payment (SAP) underpins farming activity in Jersey and ensures that the unique character of the countryside is maintained, by purchasing public goods and services. It replaced production led subsidies, decoupling production from subsidy, to discourage crops being grown for the subsidy they received. In this way, SAP continues to encourage market led diversification into crops and livestock, some of which previously received no subsidy.
12. TheSAPiscomparablewithareapaymentsundertheSinglePaymentScheme (SPS) within the United Kingdom.

Table 1 Single Area Payment

13. The receipt of the SAP is conditional (i.e. if payment conditions are not met applicants may receive a reduced payment or even lose the SAP entirely) on farmersmeetingcertainstandardsandlevelsofenvironmentalperformance(known as cross compliance), including relevant legislation, Codes of Good Agricultural and Environmental Practice (CGAEP), the provision of annual financial returns and the submission of an annual Farm Manure and Waste Management Plan.
14. The aim of the SAP therefore is to:

Purchase, on behalf of the public, a baseline level of environmental protection for soil, water and key habitats

Underpin a minimum level of agricultural activity, in recognition that the way the rural landscape and countryside looks is in large part a by-product of

14 http://www.gov.je/Benefits/Grants/IndustryGrants/Pages/RuralInitiativeScheme.aspx 15 http://www.gov.je/Benefits/Grants/Environmental/Pages/CountrysideRenewalFunding.aspx 16 http://enterprise.jersey.com

17 http://www.genuinejersey.com

farmingactivityandthattherewouldbeahighercostinprovidingthisbenefit by other means

Encourage farmers to produce products that are required by the market and in so doing so, reduce the need for public support ProvideanareapaymentthatissimilartothatreceivedbyEUandUKfarmers, so that Jerseyfarmersare not put at a competitivedisadvantagein their export markets

Policy PR 4

Single Area Payment

States of Jersey to extend cross compliance measures to include the requirement to produce an Environment Plan. In addition, States of Jersey to compare rural sector funding in Jersey with support available within the EU. This will include a review of:

The rationale and benefits of a Single Area Payment in Jersey

Options for modulation of area payments into broader rural development measures

Levels of environmental compliance

Industry assuranceschemes to audit levelsof environmentalperformance with a view to, where possible, avoiding duplication in the Environment

Plan Organic farming

15. Organic farming has an important contribution to make alongside other sustainable farming methods, as it seeks to work with natural processes, instead of controlling them to achieve a sustainable production system with limited use of external inputs. The potential for pollution and other environmental damage is lessened, as organic farming avoids the use of artificial fertilisers and synthetic pesticides. It instead emphasises the role of crop rotation, in helping to maintain soil fertility and to combat pests and disease problems, and relies on the use of fertility building crops and natural fertilisers, such as animal manures.
16. There is some evidence from the UK, and elsewhere, that organic farming is good for certain wildlife and may address some of the reasons for declines in some species, although no specific evidence exists for Jersey.

Policy PR 5

Organic farming

States of Jersey to undertake an analysis of the benefits of organic farming in Jersey and to subsequently, review levels of support and mechanisms to encourage greater market focus. In the interim, components in the Countryside RenewalSchemewillberetainedandtheRuralInitiativeSchemewillcontinue to provide support for market research and business innovation in the organic sector.

Quality Milk Payment

17. The Quality Milk Payment (QMP) is designed to provide additional temporary financial support to the dairy industry, in response to low levels of profitability. The need for the QMP was also justified in recognition of the importance of iconic grazing animals to the landscape and the historical and social importance of the

Jersey cow to the Island. The 2005 McQueen report (18), together with the industry's Woodacre Report (19), prompted the Jersey Milk Marketing Board (JMMB) to formulate and implement the "Road Map to Recovery"(20) (endorsed by the Promar Report (21)and the Corporate Services Scrutiny Panel) which required the following:

Use the asset value of the Five Oaks Dairy to build a new, efficient dairy and reduce debt

Bring milk supply in line with market demand

Improve on farm efficiency and profitability (mainly through the importation of bovine semen) Turnmilksuppliesthatexceedtherequirementsoftheliquidmilkmarketinto profitable high value export products, such as cream, cheese and skimmed

milk

18. In recognition that the industry recovery plan would take time to deliver the above benefits, the Rural Economy Strategy, 2005 set the QMP at approximately £195 per cow from 2005 to 2007 and then proposed a slow reduction to £155 per cow by 2010, as the benefits of new genetics and the new dairy became available

18 McQueen, D. 2005. Review of Jersey legislation relevant to trade in the diary

and livestock sectors and related control issues.

19 Woodacre, B. 2003. Dairy Industry Profitability.

20 The Dairy Industry Recovery Plan: Road Map to Recovery. 2004, Jersey Milk

Marketing Board.

21 Promar International, 2006. A Sustainable Dairy Industry in Jersey. Report

prepared for the States of Jersey.

to the industry. Due to delays in processing the legislation(22) to allow the importation of bovine semen and in building the new dairy at Howard Davis Farm,

it has become necessary to maintain QMP at approximately £180 per cow from 2008 to 2010 because of continued low profitability in the industry (see Table 2).

Table 2 Dairy Industry Costing Scheme (2005-2009)

NB. The industry Woodacre Report set a target EBITDA for dairy farms of 20% per annum as being necessary to allow for capital repayment and future dairy farm reinvestment.

19. In 2010, all the elements of the Road Map to Recovery' have been put in place, with the new Dairy Industry 5-year Plan, predicting significant improvements inprofitability,withoptimismconcerningtheexporttradeforlivestockandadded value milk products to the UK.
20. Imported pure Jersey bull semen has been widely used, with the first calves being born in June 2009. These calves will not enter the dairy herds until 2011 and thefulleffectsofsemenimportationwillnotbefullyapparentuntil2018.Inshort, the dairy industry has turned the corner and is now looking forward to a sustainable and profitable future.

22 Artificial Insemination of Domestic Animals (Bovine Semen) (Jersey) Order

2008

24 EBITDA = Earnings Before Interest, Tax, Depreciation & Amortisation

23 Annual Milk Year runs from Ist April to 31st March

Policy PR 6

Quality Milk Payment

The following Quality Milk Payment support levels are proposed for the Rural Economy Strategy 2011 to 2015:

Maintenance of the current Quality Milk Payment support level (£180 per cow per annum) for a two year period 2011 to 2012

A reduction in Quality Milk Payment support level by 10% in 2013 (representingaroll-upofthe2,3and5%ComprehensiveSpendingReview reductions for 2011, 2012 and 2013)

A further reduction in Quality Milk Payment of 15% per annum from 2014 to 2018, with the complete removal of Quality Milk Payment by 2019, this date being 10 years after the importation of international bull semen, when its full effects should have been realised

Total Quality Milk Payment annual support 2011 to 2018 to be calculated on the number of cows held in each herd in 2008 (approximately 3,075 cows). This base year will exclude any increased cow numbers that may be required to provide the growth in milk supply for the dairy product

export market

Reductions in Quality Milk Payment, will be re-directed into rural development activity (e.g. Rural Initiative Scheme)

To safeguard the Jersey cow in her Island home the receipt of Quality Milk Payment to be limited to those herds which register their milking cows in the pedigree Jersey herd book administered by the Royal Jersey

Agricultural and Horticultural Society(25)

Quality Milk Payment conditionality to be based on dairy hygiene inspections, animal welfare requirements, efficient use of animal manures and the production of an Environment Plan

Dairy industry will be required to provide independent evidence of appropriate cost control mechanisms

YEAR PERANNUMREDUCTION% (26) QMP £ VALUE PER COW 2011 0 180

2012 0 180

2013 10 162

2014 15 135

25 http://www.royaljersey.co.uk

26 Percentage reduction calculated on 2011 Quality Milk Payment

YEAR PERANNUMREDUCTION% (26) QMP £ VALUE PER COW 2015 15 108

2016 15 81

2017 15 54

2018 15 27

2019 15 0

Table 3 Reduction of Quality Milk Payment from 2011-2019 Dairy Services

21. In 2010, the Economic Development Department (EDD) agreed a Service LevelAgreement(SLA)withtheRoyalJerseyAgriculturalandHorticulturalSociety (RJA&HS) for the provision of an artificial insemination, bull proving and milk recording service to the dairy industry. This contract runs for four years with an annual budget of £233,000 in 2010 rising to approximately £250,000 in 2013.
22. The SLA recognises that the above services are a vital part of a modern dairy industry and that dairy farmers' current profitability would be compromised by full cost recovery. In addition, to operate the service, the RJA&HS have been obliged to employ staff on fixed term contracts in order to attract people with appropriate skills.
23. Infuture,demandfortheseservicesissettodiminishasbusinessesacquire the skills to undertake their own breeding and recording needs. It is clear that there will come a time when demand for a central dairy services provision will reduce to a level where the cost of maintaining it will not be justified.

Policy PR 7

Dairy services

States of Jersey to discontinue public support for artificial insemination, bull proving and milk recording services beyond 2013.

26 Percentage reduction calculated on 2011 Quality Milk Payment

Dairy Industry Costing Scheme (DICS)

24. The Dairy Industry Costing Scheme (DICS) is operated under a three year SLAagreedbetween EDD and the JMMBsignedin 2008. The termsof this agreement include a grant of £9,000 per annum to assist the JMMB in employing a qualified farm secretary to collect, input and maintain financial information for farmers supplying milk to Jersey Dairy.
25. The above information is held on a computerised recording system and made available confidentially, via a web link, to an EDD officer to enable up-to-date financialinformationtobecompiledforindividualfarmers,industryrepresentatives and States Departments.

Policy PR 8

Dairy Industry Costing Scheme (DICS)

The Service Level Agreement agreed with the Jersey Milk Marketing Board finishes on the 31st March 2011 and it is proposed that a new Service Level Agreement is agreed for 2012 to 2014, in order to allow both the industry and Government to monitor dairy industry profitability.

Jersey Milk Marketing Board(27)

26. TheJerseyMilkMarketingBoard(JMMB)wasestablishedin1954.Sincethat time, much has changed, both in and off the Island. In the mid 1950s there were some 1,000 dairy holdings, compared to 29 working dairy farms today. On a wider basis,nationalmarketingboardshavebeendisbandedacrosstheworld,asaresult of being seen as anti-competitive and favouring the producer rather than the consumer.
27. All milk producers in Jersey are currently under an obligation to supply their milk to the JMMB, which is considered to be inconsistent with competition legislation.

27 http://www.jerseydairy.je/home

Policy PR 9

Jersey Milk Marketing Board

A statutory reorganisation of the Jersey Milk Marketing Board is intended to address the conflict which exists between the legislation under which the Jersey Milk Marketing Board was created in 1954, and the Competition (Jersey) Law 2005.

Rural Initiative Scheme (RIS)

28. TheRuralInitiativeScheme(RIS)isdesignedtopromotegrowthintherural economybysupportingdiversification,enterprise,energyefficiencyandinnovation. Prior to 2005 there had been a decline in agricultural land use and land rental values and the profitability of the entire agricultural industry was at a low level. Eventhe potatoindustrywas goingthrougha fundamentalrestructuringprogramme which saw the emergence of one dominant marketing group and many smaller businesses leaving the industry.
29. Newventureswereenvisagedtobeessentialinreversingtheabovedecline in land use. It was clear then, that agricultural businesses trying to diversify would:

pose a high investment risk when seeking bank loans

be carrying a high level of debt owing to poor profitability levels lack sufficient equity against which to secure borrowing

30. RISsupportfornewbusinessinnovationswas/isbasedonapprovedbusiness plans which demonstrate that new and existing businesses will:

Develop new markets and services

Add value and reduce costs

Improve productivity

Enhance employment and improve skills

Not displace existing Jersey businesses

Not have an adverse impact on the environment

Table 4 Rural Initiative Scheme grants 2006-2009

31. The range of ventures in receipt of RIS grants include:

Costs of researching new opportunities

Promotional activities including Chelsea Flower Show/Fish Festival etc. Marketing and packaging of local products

Precision equipment for new and existing crops

Equipment to enable local meats, fruit and vegetables to be used in value added products

Processing facilities for the local fishing industry

Processing equipment for small and large scale dairy businesses

Facilities to reduce the energy and production costs involved in crop drying and storage

Green energy generation equipment

Development of the local honey bee industry

Help with start up costs for other new entrants to the agricultural industry

32. The effect of RIS grants on the 58 applicants receiving monies from 2006 to 2009 has been monitored. Of the ten funded research projects three have progressed to an enterprise grant and one to an industry-wide grant, two are still ongoingwiththeremainingthreeprovingunviable. Oftheremaining48supported projects, over 80% have proved successful in delivering their business plans, significantly contributing to growth in the rural economy over the course of the RES 2006-2010.

33. Over the past two years private investments of over £20m have been made towards potato grading, packingand marketingfacilities,a new dairyat Howard Davis Farm and other small business developments. This has transformed the demand for agricultural land with competition increasing rental values to very high levels leading to concerns over the maintenance and diminishing size of the agricultural land bank.

Figure 4 Me and the

Farmer: Local businesses 1.34 Today,theruralsectorisfacingnewchallenges have benefitted from including:

funding from the Rural

Initiative Scheme. Climatechangemitigationandadaptation.Thisrequires investment in energy generation (anaerobic digestion),

energy efficiency, fossil fuel reduction, machinery and equipment replacement

and greenhouse gas reduction measures

The need for the fishing industry to develop higher value export markets and processed products, the use of sustainable fishing gear, fresh water aquaculture, processing facilities and marine based tourism activities

A growing world population requiring greater yields and reduced food waste Organic farming businesses need to become more market focused and reduce their reliance on States production subsidies

The cattle, sheep, pig and horse industries need to develop co-ordinated disease strategies to enhance animal health and welfare including bio-security

measures and safe animal handling facilities

Research and development to combat crop pests and diseases and meet increased due diligence and traceability requirements

The need for business and environmental risk management strategies Identification of training and skill requirements to meet future business needs, such as cattle breeding and milk recording

35. There is a need to support measures that continue to encourage entrepreneurial activity, economic growth, new ideas and allow rural businesses to respond to the current environmental and economic challenges.

Policy PR 10

Rural Initiative Scheme

It is proposed that the Rural Initiative Scheme is developed to take account of the new challenges facing the rural economy, including the provision for the development of new markets, vocational training and grants to promote the development of best practice.

AnannualreportwillbemadepublicdetailingapprovedRISinitiativesandthe support that they receive.

Collaborating to develop local markets and address food security

36. The world's population is set to grow from 6.7 to 9.2 billion by 2050(28), with a predicted need to double food production by that date. This food has to be

produced by increases in yields and the reduction in waste as there is a finite area of agricultural land. The UK's Chief Scientific Advisor believes that food security will present significant future challenges. Jersey is potentially vulnerable to supply shocks and higher prices as energy and shipping costs increase and will not be isolated from the effects of global shortages.

37. The majority of the Island's produce is exported to mainland UK, with only a small proportion of local produce available locally(29)). Single Area Payment

returns indicate that farm produce sold for local consumption was worth £20.3 m (2008), representing some 18% of local Jersey sales.

38. The Jersey Household Expenditure Survey (HES)(30) demonstrates the potential opportunities that exist in the Jersey market place. For example,

expenditure per household on poultry, beef and pork amounts to £2.00, £1.90 and £1.00 per week respectively that equates to an annual spend of £3.7 million on poultry, £3.5 million on beef and £1.9 million on pork, of which very little of this meat is produced in Jersey. Therefore, a high quality abattoir service which meets internationally recognised regulatory requirements for slaughtering livestock for human consumption is vital, if the markets for locally produced meat are to be optimised, but is also an essential requisite to realise EU export markets.

39. Striving for self-sufficiency in food in Jersey is unrealistic under existing consumption patterns, in an era in which we import food from around the globe, especially so on an Island where needs will fluctuate over time. However, there is aneedtounderstandlevelsofdemandforlocalfood.Thereneedstobeastronger alliancebetweenGovernmentand marketsuppliers,consolidatingthe supplychain, bringing businesses together from different parts of the food chain in Jersey. This will allow businesses to work more collaboratively, ensuring that they collectively satisfy consumer demands and that every business involved from farm to point of sale has this as their objective. Such a partnership approach would improve relationships, improve transparency, take out cost, build trust and ultimately generate untapped value at that part of the chain where farming and food businesses meet.