5th Report - The economic and cultural impacts of trade and environmental policy on family farms in Wales

Agriculture plays a significant role in the Welsh economy, employing a higher percentage of the workforce in Wales than in other parts of the UK. However, the agriculture sector in Wales is dominated by large sub-sectors such as livestock production and dairy farming. At the same time it is characterised by relatively smaller farm holdings—many of which are family farms. Together this paints a picture of higher risk: a sector dependent on a narrower range of production and farms less resilient to economic shock.

Farming communities are vital to rural Wales and play an important role in defining and maintaining the distinctive culture in Wales, including sustaining the Welsh language. 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 could consider adding 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. (Paragraph 19) Free Trade Agreements (FTAs)

We welcome the inclusion of a member of the new Trade and Agriculture Commission (TAC) who has experience of the agricultural landscape in Wales, along with moves to recruit new agri-food attachés, and the establishment of a new Food and Drink Export Council. However, to be successful, the Welsh Government and farming communities need to be fully engaged in the work of the new TAC and Export Council, as well as the work of the attachés. 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.

As we concluded in our report on the implications for Wales of the UK/Australia FTA, we are acutely aware of the concerns held by Welsh farmers of the potential competitive threat posed by FTAs. However, while it is far from certain that the UK will be flooded with produce from countries that the UK Government is negotiating FTAs with, it is important that due thought is given to the impact of FTAs on the agricultural sector, food and drink production in Wales. One particular concern is negotiating tactics which will have a disproportionate impact on Wales, because of the greater reliance on agriculture and food production sectors—for example, subverting the interests and protections on agricultural and food production sectors in order to secure preferential access for larger domestic markets, such as, say, financial services. (Paragraph 30) 16 The economic and cultural impacts of trade and environmental policy on family farms in Wales

We have previously recommended that the UK Government should publish a Wales- specific impact assessment for FTAs. While this recommendation was previously rejected by the UK Government, we believe that a Welsh impact assessment continues to command substantial support from the sector as well as from the Welsh Government. 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 we call for the UK Government to publish its cumulative impact modelling data on FTAs. (Paragraph 31) Environment

We recognise the importance of increasing woodland to tackle the climate emergency. However, there are unintended consequences emerging as a result of planting too many trees, of the wrong type, in the wrong place. The move to net zero also needs to be better understood—something that would be helped by greater transparency on what is happening. We have heard legitimate concerns from a large number of witnesses regarding companies buying Welsh farmland for tree planting in order to off-set their carbon emissions. The extent to which this is happening, and the drivers for these actions (and whether they are an unintended consequence of tree planting schemes, including those established by both the UK and Welsh governments), is difficult to establish.

We oppose any attempts to ‘game the system’ by investing in viable farming land purely in order to offset carbon emissions accrued by companies elsewhere. Tree planting schemes are an important pillar in attempts to preserve our natural environment for future generations and were never intended to be exploited to the detriment of current businesses or future generations of farmers.

While we acknowledge and respect the fact that environmental and planning policy are devolved competencies, we strongly encourage the Welsh Government to reassess whether it currently has sufficiently strong safeguards in place for its tree planting schemes. In particular, we draw their attention to the Woodland Trust’s call for a requirement that companies investing in carbon woodland offsets have a substantial and credible emission reductions programme in place and are not using offsetting schemes to avoid reducing emissions. Furthermore, we call 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. For example, 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.

Climate change is already having a clear impact on farming. Changing weather patterns alter the farming environment and create greater instability. Wetter weather will increase challenges to livestock production with increased flooding of fields potentially reducing the crop production used to supply bedding and feed. We are concerned that a reduction in yield, as a result of environmental factors, could reduce the viability of farms and, in turn, could have negative consequences for the cultural, economic and social significance of family farms in Wales. We recommend that the UK and Welsh governments work together to ensure that both governments meet their net-zero targets. (Paragraph 43) The economic and cultural impacts of trade and environmental policy on family farms in Wales 17 Future agricultural policy

We recognise the vital role that farmers play in food production and acknowledge the desire of UK and Welsh governments to move to a system of funding for public goods. However, we are concerned about the impact that transitioning from the existing system of payments for food production will have on the agricultural sector.

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 a UK wide agriculture framework which would set overarching principles. It must be clear that any such frameworks should enable nation specific policy responses. (Paragraph 50) Future of farming in Wales

Farming is economically, socially and culturally important in Wales. We recognise and endorse the vision of a future where the natural environment is cared for, prime agricultural land is cultivated effectively and appropriately, and where the next generation has a pathway into the industry while older farmers have a viable route towards a well-deserved retirement.

The future of farming in Wales depends on the viability of career options for younger generations to come through. 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 are aware of the importance of succession for family farms. One challenge for new entrants into the farming industry is the lack of opportunities available for older farmers to step aside and plan for their succession. 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). (Paragraph 58) 18 The economic and cultural impacts of trade and environmental policy on family farms in Wales