Transparency needed on corporations purchasing viable farm land for carbon offset schemes to avoid farmers being priced out

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• Inquiry: The economic and cultural impacts of trade and environmental policy on family farms in Wales
• Welsh Affairs Committee

While MPs recognise the importance of woodland to tackle the climate emergency, concerns were raised that companies could be attempting to “game the system” by investing in farming land to offset emissions which is then lost to Welsh agriculture. Farmers could find themselves ‘priced out’ of good quality farming land as many can simply not compete with the prices paid by wealthy companies for the land. The Committee invites the Welsh Government to consider whether it has appropriate safeguards in place to ensure companies investing in carbon woodland offsets have credible emission reductions schemes, calls on the Welsh and UK governments to improve the transparency and regulation of carbon offset schemes which in effect create a change of land use, and suggests that greater transparency may be achieved by the creation of a register of carbon offset schemes so that the extent of this problem can be monitored.

The potential lack of farm land is just one of the issues facing family farms in Wales. Welsh farmers feel the “economics are stacked against the family farm” referring to the single farm payment, working hours and rent. The Committee was concerned to hear that around a fifth of Welsh farms had a farm business income of less than zero with an average income of £26,000 per farm.

The language and cultural traditions maintained by family farms are also at risk. The agriculture, forestry and fishing sectors in Wales represents 43% of Welsh speaking workers, and with farming in Wales dominated by over 60s, when they retire there are concerns that the language could be further eroded. Many younger generations are leaving due to the lack of work, and the Committee therefore recommends that new entrants are supported into farming, while the UK and Welsh governments should work together to create a scheme to support farmers plan for their retirement.

The Committee collected evidence on free trade agreements (FTAs) and heard concerns that Welsh producers could be undermined if the UK market is flooded with cheaper imports. The Committee stressed that it is important that safeguards continue to be included in FTAs with countries with a large agri-food export sector. The Committee recommends that the UK Government publish cumulative impact modelling to show the impact of FTAs and again recommends that a Welsh specific impact assessment is carried out to mitigate any adverse impacts an FTA could have on the Welsh farming sector.

Chair's comments

Rt Hon Stephen Crabb MP, Chairman of the Welsh Affairs Committee, said:

“Farming is an incredibly important and vital sector for communities across Wales. An enormous 90% of Welsh land is used for farming, and comparably with England, the farming sector employs more people and contributes more to the Welsh economy.

“Yet, Welsh farming is facing a challenging time in a number of different areas. We heard that a significant amount of farming land is being lost to carbon offset projects which is being sold at such a high price to wealthy companies that farmers, many of whom are already struggling financially, cannot compete with. While offsets could be a useful tool in meeting net zero, there must be adequate safeguards in place to avoid greenwashing by companies relying on offsets to avoid difficult decisions to tackle emissions at source.

“Further, with older generations dominating the farming community, we must make sure they have a suitable route into retirement so farming, and the rich legacy of traditions that come with it, continue in younger generations.”

Recommendations

The Welsh Affairs Committee’s recommendations are:

• While language and culture are devolved responsibilities, the UK Government should consider how its approach to relevant reserved policy areas can help to protect the unique cultural contribution of Welsh farming communities. For example, the UK Government should add cultural impact to the impact assessment process for future trade negotiations and to the terms of reference for the work of Trade and Agriculture Commission.
  
  
• The UK Government should collaborate on the terms of reference for the Export Council with the devolved governments and farming organisations, and commit to having at least one council member with expertise and experience of the agri-food sector in Wales. We also call for a proportionate number of the new agri-food attachés to have expertise and knowledge and understanding of the distinctive characteristics of the food and drink sector in Wales, food production in Wales and the impact of decisions upon these areas.
  
  
• We recommend that the UK government publish a statement on the impact of FTAs on the agricultural sector in Wales, which takes into account the sector's distinctive characteristics, and call for the UK Government to publish its cumulative impact modelling data on FTAs.
  
  
• We recommend that the UK and Welsh governments work together to ensure that both governments meet their net-zero targets.
  
  
• Although agricultural policy is a devolved responsibility, we heard calls for the four governments to ensure that they discuss changes to their respective agriculture policies. The UK Government should consult via the new Interministerial Group on Environment, Food and Rural Affairs with the devolved governments on potential areas for collaboration and whether there is scope for UK wide agriculture frameworks which would set overarching principles. It must be clear that any such frameworks should enable nation specific policy responses.
  
  
• We call on the UK and Welsh governments to work closely together to support and encourage new entrants; for example, respecting the role of both freeholder and tenant and the different attitudes to risk, revenue, capital, returns on investment, profit and public goods. This might translate into loan and grants for (capital) purchase and improvements such as land management or environmental sustainability. It might also translate into payments (revenue) for other public goods such as cultural preservation and community strength.
  
  
• We recommend that the UK and Welsh governments work together to understand the drivers for exiting farming and creating sustainable routes that meet financial needs and also enable the next generation of farmers. We note that farmers and land/asset holders might wish to extract capital or divest assets through sale or retain assets and use them to generate revenue (e.g. drawdown or rental).

Further information

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