Agriculture and Fisheries: Policy Report 2001 (P.126/2001) - comments

AGRICULTURE AND FISHERIES: POLICY REPORT 2001 (P.126/2001) - COMMENTS _______________

Presented to the States on 12th February 2002 by the Policy and Resources Committee

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STATES OF JERSEY

STATES GREFFE

150             2 0 0 2 P . 1 2 6 C o m  .( 3 )  

Price code: B

Comments

1. T h e Committee  has  spent  much  time giving  careful  thought  to  the  Agriculture  and  Fisheries  Committee's proposals. There has been a good deal of discussion between all those concerned. Analysis has been undertaken from both economic and environmental perspectives. Questions have been asked of the Agriculture and Fisheries Committee in order to seek clarification of its proposals and their objectives, and the answers have been carefully considered. Very careful note has been taken of the wider debate, in the farming community and elsewhere, about the proposals, a debate which has reflected a wide variety of often quite different perspectives. The Committee has also consulted with the Finance and Economics Committee about the affordability and financial implications of the proposals.
2. I n th  e light of all this consideration, and in particular because the answers to its various questions of the Agriculture and Fisheries Committee havenot allayed its concerns, the Policy and Resources Committee has reluctantly come to the view that it cannot support the proposals before the States.
3. I n sa y ing this, the Policy and Resources Committee wishes to emphasize that it fully recognises the important role that agriculture plays in Island life.The industry is now a smaller part of the economy than it used to bebut it still has a vital role to play, economically, culturally and, particularly, environmentally. The task is to ensure that this role can be best sustained over the long term, in the face of inevitable change in the structure of the industry in response to changing markets and international competition.
4. T h e Committee also emphasizes that it certainly supports the general principle of providing appropriate financial aid to the agricultural industry. Support mechanisms for agriculture are common in all developed countries, for a range of well-established reasons. Jersey, of course, already has substantial support arrangements in place, through the Agriculture and Fisheries Department's existing budget of about £8 million. The question on the table for decision now is not whether the quantum of current support that this represents should be reduced but whether it should be increased in the manner proposed, that is by the very substantial sum of about £15 million over a five year period. It is important for the States to be clear that it is the issue of the increase that is before them.
5. T h e Po  licy and Resources Committee's main reasons for not being able to support the Agriculture and Fisheries Committee's proposals are as follows -

  ( i) tw  o clear messages emerged from last year's Oxford Policy Management Report on the Agriculture and

Fisheries Industry in Jersey, which was jointly commissioned by the Policy and Resources Committee and the Agriculture and Fisheries Committee. The first of these was the need to set clear objectives for policy on agriculture for the medium and longer-term, as well as any short-term requirements. The Policy and Resources Committee is, however, concerned that, in practice, the objectives of the proposed strategy are not clear. Importantly, it is equally uncertain whether there are objectives that have been sufficiently agreed by all stakeholders. In other words, what exactly is it that the States are trying to achieve by these proposals?

  (ii ) th e point above about objectives is especially important given that the agricultural industry consists of three

or more different sectors - notably dairy, horticulture and Jersey Royals. The Committee is concerned that the Agriculture and Fisheries Committee's strategy does not specifically address the individual challenges and problems facing the different sectors, and does not set specific objectives and targets accordingly. This applies not  only  to  the  different  economics  of  the  three  main  sectors,  but  also,  in  particular,  to  the  different environmental issues that each sector needs to face.

  (ii i ) th e second message from the OPM Report was that, once objectives had been agreed, there were three broad

financial scenarios that could be contemplated: cutting the current budget for agricultural support, keeping it at the same level or increasing it. The Agriculture and Fisheries Committee's proposals reflect, in essence, the third of these scenarios. Despite much deliberation, there has been no real analysis of the first two options and consequently, why it is that the third has been chosen as the preferred route. It is difficult for the States to take a good decision about providing new resources on such a scale as has been requested without such an analysis having been clearly made.

  (iv  ) th  e Policy and Resources Committee agrees that the framework for future agricultural aid must be based upon environmental objectives and outputs. But the Committee is concerned that, notwithstanding this, the

importance of maintaining the environment is not sufficiently reflected in the proposals before the States. Two points in particular might be made here. First, if a move from direct support to environmentally-based support is truly to take place, why is it that in the proposed forward budget, direct support funding continues virtually at the same levels (albeit badged' differently) as now? Secondly, there is very little information about proper

evaluation and measurement of environmental targets and how environmental outputs will in fact be measured. The scheme

as proposed is about taxpayers purchasing environmental outputs from farmers but such a scheme must by definition have a degree of precision about the value for money that can be secured from it. This lack of information about outputs seems to the Committee to stem from a lack of clear objectives concerning the proposed  agri-environmental  scheme,  on  which  no  detail  has  been  presented  on  exactly  what  would  be measured in terms of outputs. In the Committee's view, at the very least, such issues require further work before any agri-environment scheme could properly be launched, whether utilising new funds if they were to become available or through a redirection of existing budgets. This work needs to involve fully the Planning and Environment Department and draw upon the expertise of the Environmental Adviser in the Policy and Resources Department.

6. I f th  e States were to agree in principle that additional agricultural support measures should be introduced along the lines proposed, it would be necessary for them tobe notified to the European Commission under Article  88(3) of the Treaty establishing the European Community in sufficient  time for the Commission to  be  able to submit  its comments before they were implemented. The notification would have to be made formally by the United Kingdom Government. The Commission's examination would be based on the compatibility of any proposals with the common market in agricultural products. In practice, this probably means a main focus on whether the measures were appropriate and reasonable in terms of Community policy overall on agricultural state aid. This requirement arises pursuant to Protocol  3 to the United Kingdom Act of Accession to the Treaty, which governs Jersey's relationship with the European Community and which puts Jersey inside' the European Union for the purposes of trade in agricultural products. It is important that the States are aware of this requirement. The need for this has been discussed extensively with the Agriculture and Fisheries Committee, and indeed the same was done about ten years ago when present arrangements were, broadly speaking, put in place. It is not immediately apparent that there is any particular likelihood of the Commission's commenting adversely, but notification is certainly not a formality and it is one main reason why it is so important to be clear about overall objectives. Case law requires the Commission to comment within two months of having received in its view all the necessary information, so the whole process could well take a while.
7. T h e Po  licy and Resources Committee fully recognises that there is real financial hardship within some parts of the agricultural industry and a need to address the increasing difficulties being faced as a result of challenging and changing market conditions. The Committee, however, is concerned that the proposals donot really address the impact of such changes in the medium to longer term. There is a real question mark, the issue of affordability entirely apart, as to whether the interests of the industry as a whole are best served by substantial additional subsidy from taxpayers in the short term, given in the belief that it will simply tide the industry over and that trading conditions can only change for the better as a result, for example, of a substantial spend on marketing of Island products.  This  does not  immediately look like  sound  strategy.  The  message  from  the OPM report  about  the challenges facing Jersey's agricultural industry was rather less sanguine than that and leads to the view that perhaps substantial additional aid, seen essentially as a temporary palliative might not best meet the industry's long term interests. The Committee believes that such a view is endorsed by some in the industry.
8. L  o o k ing forward, the Committee can say that in principle it welcomes the Dairy sector's ten point plan and believes that there is much merit in seeking to pursue many of the initiatives set out in it. But the Committee cannot readily see the precise tie-up between the aspirations of the ten-point plan and the proposed agricultural strategy. In particular, it cannot  at  present see effective  partnership with  the  industry. In this  connection,  the Committee welcomes the Dairy industry's idea of an Agricultural Advisory Board so that farmers and growers can become really involved, along with other stakeholders, in the decision making process and in ensuring that there is a good mechanism for consultation and advice to government. This is especially important as work proceeds on the machinery of government reform leading to new departmental structures. It is also especially important if real, long- term progress is going tobe made on the environmental side.

In view of the fundamental resource issues to which the proposals give rise, plus the need to notify the European Commission and, in the Committee's view, to do further work on the details of any possible agri-environment scheme, the Committee is not able to support the Agriculture and Fisheries proposals as they stand. Further, given the uncertainty for the way ahead, the Committee believes that it is, in practice, impracticable to contemplate changes in agricultural support arrangements being made before 2003 at the earliest, save to the extent that any immediate reprioritisation takes place within existing budgets. There is therefore the prospect, over the coming months, for further consideration and consultation about the best way forward but, in the meanwhile, the proposals of the Agriculture and Fisheries Committee as they currently stand should not be supported.