Further written evidence submitted by the                                     Central Association of Agricultural Valuers (CAAV) (ELM0051)

Thanking the Committee and you for the session yesterday, the Chairman did invite further comments and I thought it worth recording some, perhaps touching on both parts of the afternoon but underpinning some of my responses with the sense that the Agricultural Transition is larger than the movements in payments or developing environmental policies:

• The pressures for change are such that there is no case for farmers deferring improving their competitiveness.  Our productivity improvement has slipped relative to other competitor countries at least since the first area payments in 1993 and more so since 2000.  This is a serious problem for both competitiveness and environmental achievement.  The evidence is consistent with area payments operating in the UK (and it seems the Irish Republic) to inhibit competitiveness, not to help it, which is where Basic Payment withdrawal is a policy in its own right.
• While Basic Payment (and Single Payment before it) can be seen at any one point as a high margin payment, over time it has been used to support costs, both by paying more for input costs and by retaining structures that would, as in any other business, have changed.   Withdrawing Basic Payment will see farmers work to reverse those outcomes.
• The very wide range of performance between farmers (and the evidence that that at least for commodity production that turns on the farmer more than on any other factor) shows the hope for achieving effective progress by encouraging the good (existing and new) to have access to the land they need.
• That also means that change cannot mean the survival of all existing businesses.
• The businesses that are most likely to thrive will be those who are not waiting on DEFRA to be told what is happening with payments. 
• That said, DEFRA needs to use its June announcements to give as clear a picture as it can ahead of many farmers becoming pre-occupied with the critical work of harvest and drilling.
• Overall, better businesses have better environmental track records by being better managed, making more efficient use of inputs and so on.  We are well short of the point where the two goals of environment improvement and productivity are much in tension.
• In this process of accelerated change, it is important that the new public goods policies are not so structured as to obstruct the changes in land occupation that will come.  A basic problem with most models of “whole farm” schemes is that they assume and impose a rigidity on land occupation when farms are frequently more complex and flexible than that assumes and will now need to be even more so.
• SFI is the part of the new programme that is by its nature always likely to look most like an agri-environment scheme.  Wider public goods policies for the six goals of the 25 Year Environment Plan should be more feasible as the programme of schemes (Local Nature Recovery and Landscape Recovery as well as SFI) develops – if that is how it does develop.
• As observations on the questions about trade deals:
• If other countries provide what markets want, it can be expected that they will win markets.  If we do not, then we can expect to lose markets.  Our recent history shows that retaining BPS would frustrate the adaptation needed.  If we want to support things the market is not interested in, then that can be where Public Money for Public Goods comes in, creating its own market with the freedom for businesses to adapt.
• With UK already importing significant volumes of livestock products, EU suppliers (such as the Irish Republic) to the UK look more vulnerable to third country trade deals (as they are agreed and then phased in) than domestic producers.
• With the concern about livestock farms, the top fraction (whether lowland or upland) shows good financial results, often better than can be achieved from combineable cropping, while the stimulus of competition and the opportunities needed for good businesses to grow and new ones to start should see overall performance improve  

• Market pressures point to more farms moving away from what has been standard commodity production to more specialist, diverse or added value production with new skills required.
• All this points to the need for fully rounded advice for farmers on business, environment and other issues within their contexts of taxation, land tenure, development control and capabilities.