fabian tract 408 
EEC problems for British 

agriculture 

contents 1 introduction 1 
2 results of adopting the CAP in the 
United Kingdom 7 
3 negotiations with the EEC on 
agriculture 16 
4 criticisms of the common 
agricultural policy 20 
5 the CAP and Britain's agricultural 
problems 25 
6 conclusion 28 


this pamphlet, like all publications of the Fabian Society,
represents not the collective view of the Society but only the 
view of the individual who prepared it. The responsibility of 
the Society is limited to approving the publications which it 
issues as worthy of consideration within the Labour movement. 
Fabian Society, 11 Dartmouth Street, London SW1. 
July 1971 SBN 7163 0408 2 


introduction 

In the confused debate about the 
United Kingdom's application for entry 
into the European Economic Community 
(EEC), a great deal has been said 
about the agricultural problem. The 
discussion has been concentrated on 
three issues : first, how the balance of 
payments would be affected by British 
acceptance of the common agricultural 
policy (CAP) ; second, how the CAP 


·should be altered when the UK can 
influence agricultural policy as a member 
of the EEC; third, the effects of 
British membership on world agricultural 
trade. Since complete acceptance 
of the CAP had already been conceded 
by the government before .the negotiations 
began, the effects on British agriculture 
of adopting the CAP have not 
been analysed in great detail, except in 
farming circles. Most economists have 
taken the line that on balance there 
could be a slight increase in net farm 
income but that some types of agricultural 
production would fare better than 
others. This assessment is echoed in the 
government's two white papers (Cmnd 
3274 of 1967 ; Cmnd 4289 of 1970). 

The general conclusion of most of the 
experts who have deigned to look at 
the subject is that since British farms 
are generally much bigger and more 
efficient than their continental counter


parts, this advantage would stand them 
in good stead when facing competition 
from Europe. Table 1 shows the trend 
towards fewer and larger agricultural 
holdings in Great Britain. It should be 
noted that similar trends emerge if the 
criterion of standard man days is used. 
Table 2 shows the trend towards concentration 
by type of enterprise. Similar 
gains, varying in degree, have occurred 
in Scotland and Northern Ireland. The 
average size of British farms is more 
than double that of EEC farms. Figures 
of gross product per person employed 
in agriculture, fisheries and forestryshow that the British figure was £1,665 
in 1969 compared with an EEC average 
of £1,000 (Hansard 10/5/1971 c.42).
The figures are subject to certain q ualifications 
but do provide a broad indication 
of relative output per person. 

The brushing aside of agriculture as a 
matter of little or no account in the 
negotiations, is typical of the low public 
esteem for British agriculture and its 
achievements. In spite of publicity by 
the National Farmers' Unions (NFU), 
agriculture is still seen as a sideshow, 
when compared with the rest of industry. 
There are some well informed, 
technical farming programmes on radio 
and television, but general comment 
about agriculture and its problems 

TABIJE 1 
AGRICULTURAL HOLDINGS IN GREAT BRITAIN 
total 
holdi ngs 
holdings up 
to 50 acres 
percentage 
of total 
holdings 
over 300 
percentage 
of total 
acres 

'1951* 
1955 
451.800 
442.500 
290,20()
281,500 
64.2 
63.6 
14.700 
15.200 
3.2 
3.4 
1960 406.200 249.300 61.4 16,500 4.1 
1966 366,700 218.700 59.6 18.700 5.1 
change between -18.8 per cent 
1966~and 1951 
-24.6 per cent +27.2 per cent 
*1950 for Scotland 

Source: tables 6 & 8: A century of agricultural statistics (Ministry of Agriculture1968) 


TABLE 2 
AVERAGE ANNUAL INCREASE IN SIZE OF ENTERPRISE 1960/9 ]N 
ENGLAND AND WALES (per cent per annum compound) 

enterprise 1960-5 1965-9 1960-9 
dairy cows 4.5 6.8 5.5 
beef cow~ 2.5 5.7 3.9 
breeding ewes 2.7 3.6 3.1 
breeding pigs 8.4 9.9 9.1 
laying fowls* 10.3 12.4 11 .2 
broilers 32.5 13.2 23.6 
wheat 7.6 5.1 6.5 
barley 5.4 7.7 6.4 
potatoes (main crop) 5.3 6.0 5.6 
*in 1960 fowls six months old and over; in 1965 and 1969, fowls laying eggs for 


eating. 
Source: " the changing structure of British agriculture," C. J. Brown Agriculture, 
November, 1970. 


rarely rises above the level of petulant 
criticism based on a complete misunderstanding 
about the nature of the 
taxpayer's support for agricultur~. 
From time to time our leading economic 
journal writes about agriculture in 
such an offhand and biased fashion 
that it is often necessary for the misconceptions 
put forward to be corrected 
by letter in the next issue. Perhaps 
the main reason why so many people 
have a blind spot about agriculture is 
that the UK is a highly urbanised 
nation whose pre-occupations have 
naturally been those common to any 
crowded industrial society. Whatever 
the explanation, anyone wishing to 
defend British agriculture and to explain 
its vital interests in the outcome 
of the common market negotiations,
risks boring his audience unless he can 
show that the interests of the whole 
community are affected by what happens 
in agriculture. 

We must begin with a few basic facts. 
British agriculture had a forecast total 
output in 1970/71 of £2,364 million, 
which makes it one of Britain's largest 
industries. Although employing only 
3 per cent of the total working popula


tion, it has made a significant and 
expanding contribution to national 
prosperity both by virtue of importsaving (we now produce nearly 70 percent of our consumption of temperate 
zone food compared with 50 per cent 
before the second world war) and by 
virtue of its productivity record (over 
the past ten years double the rate of 
improvement achieved in manufacturing 
industry). These notable achievements 
have been based on the system 
of guaranteed prices and productiongrants, paid for by taxation, which have 
cost on average over the past ten years 
£275 million per annum. For this expenditure 
the British consumer has had 
the benefit of the cheapest food in anyindustrial nation. These facts are set 
out, not to show that everything is 
right with British agriculture today. it 
is not, but to show that its record as an 
industry is second to none and compares 
more than favourably with other 
sections of British industry (protected 
by tariffs or subsidies) which usuallyreceive the accolades of economists. 
Comparisons are odious, but one 
cannot help pointing out that if the 
record of the car industry, protected 
behind its massive tariff barriers, had 


been as good as that of agriculture 
since 1947, this country would lbe in a 
much stronger economic position than 
it is today. 

An industry like agriculture which has 
served the nation well does not deserve 
to have its interests neglected in negotiations 
for entry into .the EEC. Moreover, 
it is not in the national interest 
that a major British industry should be 
offered up for sacrifice on the altar of 
European unity. Some of the interests 
of agriculture have already been 
abandoned by the government's declared 
intention to accept the CAP and 
the system of financing the communitybudget. This unconditional acceptance 
of the CAP in principle is a serious mistake 
and it will be one of the main 
purposes of this pamphlet to explain 
why this is so. 

lt has been argued that drawing up 
balance sheets of advantages and disadvantages 
for agriculture is not helpful. 
because the CAP will have to be altered 
both to accommodate a group of ten 
nations rather than six and to deal with 
problems, such as agricultural surpluses, 
which have so far proved 
intractable. The point made by pro-
marketeers is that the UK could influence 
the development of the CAP in the right 
direction after joining the common 
market. They accept that the CAP is 
not a good one but they emphasise the 
persistence of the calls for reform even 
within the EEC. What is implicit in their 
view is that the CAP can be radicallyaltered so that it becomes less burden, 
some to the British economy and more 
encouraging to British farmers. However, 
it can be argued with equal force 
thaf to enter the common market in 
hope that the CAP will be greatly improved. 
is to allow wishful thinking to 
triumph over the facts of agricultural 
policy in the EEC since 1958. The policy 
may not be changed radically ; it may 

nol even be changed in ways which 
would benefit British farmers. The one 
thing that will not happen is that the 
basic principles of the CAP will be 
abandoned. These are first, common 
prices for the main products ; second, 
protection at the external frontiers 
against cheap food imports from the 
rest of the world ; third, priority to 
internal production. As long as these 
principles persist, the EEC can never be 
an outward looking body on agricultural 
matters, taking account of the 
interests of farmers in other countries, 
and of world agricultural trade. 

Any reform of the CAP will be of minor 
significance as long as its basic principles 
remain sacrosanct. It is true 
that there are pressures for change but 
not for any radical change. In paragraphs 
14-16 of the European commission's 
revised opinion on the membership 
applications (published in 
October 1969), reference is made to 
"grave problems created by developments 
on the agricultural market, both 
where farmers and the consumers are 
concerned and from the financial point 
of view." These problems require" measures to deal with the structure 
of production and marketing and ... 
a new approach to policy on markets 
and prices." However, even on the 
tenuous assumption that the CAP will 
be changed, no one knows what directon 
a revised CAP would take within an 
enlarged EEC. For example, will producer 
prices be increased, decreased or 
perhaps left unchanged? The future of 
western European agriculture depends 
very much on the answer to this question. 
The recent decision to raise agricultural 
prices in return for some small 
encouragement to older farmers to 
reti.re, shows t,he strength and nature of 
the forces ranged against radical 
changes in the CAP. Higher prices are a 
more than adequate quid pro quo for 
structural reform, for they have an 


immediate impact on product.ion, 
whereas the wheels of structural reform 
grind very slowly. In any event, it is 
doubtful if structural reform will solve 
the long term problem of surplusproduction. 

We must accept thctt current speculation 
about future price levels serves no 
useful purpose, except perhaps to allow 
a let out to supporters of British membership 
of the EEC, who are increasingly 
conscious of the absurdities of its agricultural 
policy. Furthermore, the 
theories of distinguished economists 
about future levels of agriculturalprices are no more authoritative than 
those of anyone who works in agriculture 
; wishful thinking is a dangerousexercise when the future of a successful 
British industry is at stake. While it is 
true that we do not know what CAP 
price levels would be at the end of a 
transition period, we do know what 
they are currently, and it is these prices 
that have to be used in analysing the 
effects on British agriculture. Fmthermore, 
our political leaders have 
accepted the CAP in principle, no matter 
what its merits or demerits, and so it 
is quite fair when estimating its impact 
to look at the CAP as it exists. 

Tt is vitally important that farmers and 
farm workers should know how adoption 
of the present CAP will effect them. 
For this purpose they will be less 
interested in the macro-economic view 
(the "average farmer" is a mythicalcreature) and more interested in the 
effects of the CAP on particular commodities. 
They will also want to assess 
its relevance to the problems •hey face. 
Moreover, it is not just those directly 
engaged in agriculture who will be 
concerned ; the many industries dependent 
on agricultural prosperity are also 
involved. To name only a few ; feeding 
~tuffs firms, fertiliser manufacturers, 
farm machinery manufacturers, seed 

merchants, transport contractors, fuel 
suppliers, slaughterhouse operators, 
meat factor.ies, by-product plants, 
butchers, 'grocers and the {ood trades 
generally. All these without mentioning 
the biggest farm customer of all : the 
consumer, who will be vitally interested 
in changes in the pa·ttern of food supplies 
and prices. 

Although most farmers are dissatisfied 
with the present system of agricuitural 
support, they are sensible enough to 
look very closely at any radical alternative 
to it. What they have been looking 
for in recent years is first, a grea·ter 
opportunity to expand agriculturalproduction and thereby contribute substantially 
to import saving ; and 
second, a better return, mainly out of 
market prices so as to lessen the 
amount of subsidies from the government. 
Farmers have felt strongly that 
the treasury, which holds the subsidy 
purse strings has only one aim ; to 
ensure that the financial cost of farm 
support does not exceed the budgetary 
limits laid down, and that these limits 
should not increase substantially from 
year to year. The success of this policy 
is shown by the fact that exchequer 
support for agriculture in 1958/59 was 
£241.4 million and the forecast for 
1970/71 was only £269.4 million. The 
result of this treasury philosophy .is 
that net farming income does not keep 
pace with rising costs. The positionbecame particularly acute in 1970. 
Talble 3 shows how net income as a 
percentage of total revenue has been 
falling. In order to escape this squeeze 
between higher costs and static income, 
the NFUS have suggested combining a 
deficiency payment system with the 
phasing of imports and home production, 
so as to ensure that market prices 
are kept at a high level throughout the 
year. They have emphasised that such 
steps are essential if British farmers are 
to continue to expand production. Such 


TABLE 3 

U.K. FARMING ESTIMATED NiET INCOME(£ MILLION) 
percentageincrease 
1938/9 1947/8 1951/2 1955/6 1960/1 1966 / 7 1970 / 1 1947/48 

(forecast) 1970/71 
total revenue 299.5 762 1159 1448 1655.5 2006.5 2632 245 
total expenditure 
farm net income 
246.5 
53 
530.5 
231.5 
820.5 
338.5 
1097.5 
350.5 
1261.5 
394 
1534.5 
472 
2043 
589 
285 
154 
net income 
total revenue 
(as a percentage) 17.7 30.4 29.2 24.2 23.8 23 .5 22.4 

Source: table 32: A century of agricultural statistics (Ministry of Agriculture 1968)
Cmnd. 4623, March 1971. 

expansion, they claim, would not only 
save foreign exchange, it would also 
help reduce the burden of the CAP if 
the UK entered the common market. 

Dissatisfaction with the present system 
of agricultural support has encouraged 
the Conservative government to begin 
a complete change over in the system, 
so that levies on imports become the 
main factor in keeping market prices 
at a satisfactory level, with a fall back 
guarantee at a lower level. This new 
policy is not unlike the CAP if we regard 
the fall back guarantee as being akin 
to the CAP intervention price. In fact 
the new Conservative policy goes a 
long way to preparing British agriculture 
for adoption of the CAP. However, 
there are many snags to be overcome 
before the new policy can be fullyimplemented, particularly for commodities 
where the UK has interna·tional 
commitments and for those commodities 
where it is more or less self 
sufficient. To take only one example,
pigmeat will present serious problems. 
Th~ UK is virtually self sufficient in fresh 
pigrneat, so levies on non-existent imports 
will be useless in maintainingmarket prices at a reasonable level. 
Imports of bacon, at present providing 
some 60 per cent of domestic consumption, 
come mainly from Denmark on 

a duty free basis. Levies could not be 
imposed unilaterally without breaking 
obligations to EFTA partners. 

The new policy is foreshadowed in the 
1971 white paper, Annual review and 
determination of guarantees (Cmnd4623). Reference is made to the review 
being held "on the threshold of significant 
changes in the system of agricultural 
support." At the same time as the 
annual review was published, details 
were announced of interim levyschemes for beef and veal , mutton and 
lamb, milk products (other than butter 
and cheese) and modifications in the 
existing scheme for cereals. These 
details show the likely form of a full 
scale import levy scheme, although

·there is as yet no information about 
how fall back guarantees will operate. 
Official farming reactions to the new 
system have been cautious but not 
hostile. The council of the NFU of 
England and Wales called the inception 
of the interim levy schemes " a positive 
move in the direction of more effective 
regulation of imports, an objective long 
sought by the union." However, the 
council was "concerned that these 
schemes, which could result in some 
weakening of the guarantees, should 
have no damaging effect on longer term 
confidence." 


In spite of this official caution, some 
farmers are so fed up with what they 
regard as the iniquities of the present 
system that they have welcomed the 
new levy system and also the prospect 
of the CAP. They argue that the aims 
of the CAP and of the 1947 and 1957 
agriculture acts are similar in that both 
seek to secure a more prosperous and 
efficient domestic agriculture. This 
similarity of aims suggests to them that 
the interests of British agriculture 
would be well served under the CAP. 
They point to the similarities between 
UK and EEC agriculture, with farmers 
on both sides of the channel facing the 
same problems. Western Europeanfarmers do have some problems in 
common, especially in relation to agricultural 
production in other parts of 
the world, which have certain natural 
advantages. Agricultural production in 
western !Europe is achieved at a high 
cost for climatic and geographical 
reasons, because of the higher wages 
that have to be paid to farm workers to 
compete with industrial wages, because 
of the high price of land (farming is in 
competition with industry, urban expansion 
and recreational developmentfor the use of land), because of the 
lesser degree of specialisation possible 
in farming units which are small bycomparison with those in New Zealand, 
Australia, Argentina and North 
America, and because more capital is 
necessary than in other countries to 
contain unit costs of production. Therefore, 
if domestic agriculture is to be 
encouraged for social, economic or 
strategic reasons, some degree of protection 
from cheaper and more efficient 
overseas competition in agriculturalproducts is necessary. Tn this respect 
the CAP is probably more effective than 
the British system, since there is no 
nossibility of domestic market pricesbeing undermined by cheaper imports 
as has happened in the UK from time to 
time. We do have a procedure for 

dealing with dumped agricultural products 
(those sold below their cost of 
production) but this has not proved 
very satisfactory in operation. 

All this appears to confirm .that there 
could be considerable advantages for 
British agriculture in adopting the CAP ; 
indeed, this is how some farmers react 
to the debate on agriculture. The NFUs 
have naturally been more cautious, because 
they have to consider the 
interests of all their members, and 
because they are not prepared to pronounce 
on the CAP until they know the 
exact terms of entry, insofar as theyrelate to agriculture. However, they 
have expressed doubts about the effect 
on their members of a change from the 
present system of agricultural support 
to the CAP, even if these doubts have 
been muted in public so as to avoid 
rocking the boat for a Conservative 
government. Nevertheless, it is time that 
the probable impact of the CAP was 
examined in detail. We shall therefore 
begin by analysing the effects of the 
CAP on the major agricultural commodities 
produced in the UK. Then we 
shall examine the concessions the 
government claims to have won in the 
negotiations. However, we cannot stop 
at this stage since the CAP itself mayembody certain features which will 
affect the general progress of British 
agriculture. Furthermore, it is also 
necessary to consider the problemsfacing farmers to see whether or not 
the CAP could make an effective contribution 
to helping solve them. The next 
four sections will deal respectively with 
these issues. 


2. results of adopting the 
CAP in the United Kingdom 
It is as well to begin by echoing the 
words of Cmnd 4289 (para. 25) : 
" . . . any a5~sessment of the effects of 
adopting the CAP must depend upon a 
whole range of assumptions and be 
subject to a substantial range of possibilities." 
Accurate assessment is impossible 
but ~orne assessment must be 
made, and this is more likely to be 
within a reasonable range of possibility 
if it star-ts from the effect on individual 
commodities. 

Livestock : the UK has guaranteed prices 
for cattle, sheep and wool and prod uction 
grants for hill sheep and cow51, beef 
cows and calves. Feed costs have been 
relatively low, partly because cereals are 
subsidised. The CAP would mean no 
guaranteed prices, and the future of the 
production grants for calves, hill cows 
and beef cows would be uncertain. 

There would be target prices for cattle 
and calve~. supported by a system of 
duties and levies and by support biuyingarrangements, but not for sheep. Feed 
costs would rise subsiaO'tially. Producers 
of cattle and calves would be better off 
because the CAP target price is much 
higher than the guaranteed price and 
feed co5~ts would probably not rise as 
much. However, there would be a much 
stronger veal trade than at present, 
which would increase the cost of bought 
in calves for fattening. Producers of 
sheep and lamb would be worse off 
because their only protection would be 
a 20 per cent import duty (even this 
might not apply if concessions are given 
to New Zealand Iamb exports) and there 
would be no guaranteed price for woo! 
or subsidy for hill sheep. It can be 
argued that there is a vast potentialmarket for lamb in the EEC (see taJble 6, 
Page 11) but to change continental eat. 
ing habits would require a sustained 
and eXlpensive advertising campaign, 
which the British .producers could not 

afford to finance. 

Pigs : The UK has guaranteed prices for 
pigs, related to feed costs and forecast 
marketings, and a sy~tem of stabilising 
arrangements for bacon curers (agovernment subsidy at certain times, 
payments to the government at other 
times) which enables them to pay competitive 
prices for bacon pigs even 
though these are not justified by returns 
on the bacon market. Feed costs 
(approximately 70 per cent of the cost 
of pig production) are relatively low 
because cereals are subsidised. Northern 
Ireland has a Pigs Marketing Board 
(PMB) which gives producers security of 
market at reasonable prices. The CAP 
would mean no guaranteed pr.ices and 
much higher feed costs. There would be 
some degree of market support, mainly 
through levies on imports and occasionally 
by means of support buying, resulting 
in higher market prices than those 
currently in force in the UK. The 
stabilising arrangements for bacon 
curers would di5~appear (as would subsidies 
to the Danish bacon pig industry) 
because they contravene the community's 
rules of competition. The 
bacon market sharing understanding 
would have to be abandoned and 
imports allowed freely from Denmark 
and Eire. The PMB in Northern Ireland 
could no·t continue in its present form, 
because its operations contravene the 
community's rules of competition. Since 
an enlarged EEC would usually be more 
than self sufficient in pig meat production, 
there would be a recurrence of the 
notorious pig cycle (the classic text book 
example of rapid increases in production 
causing prices to fall steeply, leading to 
a steep decline in production, followed 
by an increase ·in prices which causes 
increa51es in production) this time on a 
western European basis, with consequent 
instability in the industry. This 
would affect the British pig industry 
more than others because it is more 
specialised and intensive than most other 
EEC pig industrie~ particularly in the 


sphere of bacon pig production, which 
would be hard hit by substantial fluctuations 
in price levels. In this economic 
climate, producers would be reluctant 
to continue present policies of investment 
in better breeding stock, feed, 
buildings and management. Bacon production 
plays no part in the pigmeat 
economy of the EEC, and British bacon 
curers might well find themselves 
starved of raw material as some bacon 
pig producers opt for fresh meat production 
within an enlarged EEC. Such a 
move could overload the pork market 
and keep prices down. Bacon priceswould need to rise substantially to allow 
curers to compete with other outlets for 
pigs., but this could bring about a decline 
in bacon consumption, which has in any 
case been static for several years past. 
Therefore most producers of pigs, 
especially bacon pigs, would be worse 
off under the CAP. 

Cereals: The UK has guaranteed prices 
for wheat, barley, oats and rye, The CAP 
would mean no guaranteed prices. but 
there would be target prices (adjusted 
for transport cost in relation to distance 
from the area of greatest deficiency) for 
wheat, barley and rye. The target prices 
are much higher than present guaranteed 
prices and are supported by a 
system of variable levies. Even after 
allowing for the loss of the fertiliser 
sub~dy, producers of cereals would be 
much better off under the CAP. 

Milk : The UK has a guaranteed price 
for milk, subject to a standard quantity 
arrangement. Production is geared to the 
liquid market, with less than 25 per cent 
going for manufacture. Feed costs have 
been relatively low. The CAP would 
mean the replacement of a guaranteed 
price by a target price. Producer prices, 
however, have not always reached the 
target price level. Dairy by-product 
prices will rise because EEC productionis geared to a highly protected manu-

Jacturing market, with only some 20 
per cent going to the liquid market 
which is not yet covered by a CAP regulation. 
The general over supply problem 
of milk and milk products in the EEC 
will not be alleviated by UK entry, if 
longer term concessions are made to 
New Zealand dairy products. There 
could be less efficient plant utilisa tion 
because of the imbalance between summer 
and winter milk production ; this 
would weaken the competitive position 
of the UK producer vis-a-vis his continental 
competitors, since they are 
geared to producing for a much bigger 
manufacturing market. Feed cos.ts 
would increase, partly because of higher 
cereal prices, and partly because on 
larger farms grassland for milk production 
would be in competition with grassland 
for beef production and grassland 
for cereals. Fertilisers. would cost more. 
The effect of increased costs will vary 
widely, depending on the ratio of each 
producer's output to purchased feed 
cost. There would be higher prices for 
calves and culled cows, which could 
provide an incentive to increased production. 
The Milk Marketing Board 
would probably have to change those of 
its operations which contravene the 
community's rules of competition (particularly 
the pooling of trans.port costs). 
Some producers of milk, especially those 
in remote areas, would therefore be 
worse off under the CAP but those producers 
favourably situated in relation 
to the liquid market should do at least 
as well as at present. 

Eggs: The UK's present guara nteed 
prices for hen and duck eggs. are being 
phased out, as are centralised market 
support operations. Feed costs have 
been relatively low. The CAP has no 
support arrangements for eggs, though 
there are levies on imports. Feed costs 
would be much higher. The producer of 
eggs would be worse off under the CAP 
by vi rtue of higher feed costs. 


Poultry : The UK has no guaranteedprices but .feed costs have been relatively 
low. The CAP has no supportarrangements for poultry, though there 
are levies on imports. Feed costs would 
be muoh higher, so producers would 
be worse off under the CAP. 

Potatoes : The UK has a guaranteedprice, but acreage is restricted by the 
Potato Marketing Board which also 

· undertakes support buying. The CAP has 
no support arrangements for potatoes. 
The board's main functions could not 
continue since they contravene the community's 
rules of competition. Producers 
of potatoes would be exposed to free 
market conditions and could therefore 
be worse off under the CA P. 

Sugar B.eet : The UK has a guaranteed 
price for sugar beet. The CAP has a 
target price, together with a guaranteed 
minimum price for specified quantities. 
CAP prices are similar to those in the 
UK. Producers of sugar beet would 
therefore be better off under the CAP in 
terms of opportunity to expand, ~ince 
sugar imports would be subject to tariff. 

TABLE 4 

Wool : The UK has a guaranteed price 
for wool and the Wool Marketing Board 
(WMB) undertakes price stabilising operations. 
The CAP has no support arrangements 
for wool, which is treated as an 
industrial product. The WMB's main 
marketing and price support functions 
could not continue since they contravene 
the community's rules of competition. 
Producers of wool would therefore 
be worse off under the CAP. 
l-lorticultur.e: The UK has no guaranteed 
prices for such products but 
tariffs on imports give some protection. 
There are also certain government 
grants. The CAP has no support arrangements 
for horticultural product~. There 
would be no tariff against imports from 
EEC members, and the future of governments 
grants would be uncertain. There 
are urpluses in the EEC, especially of 
apples and pears. which could drive 
prices down to an uneconomic level. 
Tomatoes and early vegetables would be 
adversely affected by competition from 
areas with better climatic condition5\. 
Thus horticultural producers would be 
worse off when the CAP is applied in full, 
at the end of any transitional period. 

estimated British farm percentage of total 
commodity output 1970/71 farm output 
£million 

fat cattle and calve~ 373 15.8 
fat sheep and lambs 91 3.8 
fat pigs 280 ll.8 
cereals 307 13.0 
milk and milk products 498 21.0 
eggs 191 8.1 
poultry 141 6.0 
potatoes 108 4.6 
sugar beet 44 1.9 
wool 13 0.5 
horticulture 286 12.1 
sundry output 33 1.4 

Source : A century of agricultural statistics (Ministry of Agriculture) Cmnd. 4623 
March 1971, table 12. 


TABLE 5 
CURR!ENT BRITI8iH AND iEEC AAJOOS 1970/71 

UK EEC 

guaranteed prices ·target or equivalent price~ 

in £ in £ 

1971/2 1970/1 
fat cattle (per cwt.) 12.35 14.40 (a) 
wheat (per cwt.) 1.63 2.25 Qb) 
bar.ley (per cwt.) 1.45 2.02 (b) 
rye (rper cwt.) 1.08 2.06 (ib) 
milk Gper gallon) 0.221 0.20 (c)
pigs (per score deadweight) 2.93 2.92 
sugar beet (per ton) 7.60 7.15 (d) 

Source: 1971 annual review (MAFF) Cmnd 4623, and European commission. 

(a) increased by 6 per cent for 1971/2. 
(b) cereal prices were increased by between 1 and 5 per cent for 1971 /2.
(c) increased by 6 per cen:t for 1971 I2. 
(d) increased by 5.7 ·per cent for 1971/2. 
This brief survey has covered the majorfarm commodi,ties produced in the UK. 
Table 4 shows the relative importan.::e 
of each one, within the context of total 
farm production. Table 5 compares 
British guaranteed prices with EEC target 
or equivalent prices for the major commodities. 
These figure& show that gross 
receipts for most commodities will increase 
but it must be emphasised that 
for many farmers such increases will be 
wholly or partly offset by increased costs 
of production and marketing. 

general effects on British 
agriculture 

The recent white paper on the CO!\tS of 
British entry into the EEC estimated that 
net farm ·incomes would rise between 3 
and 10 per cent. These average figures 
should not be considered in isolation. 
Producers of ca·ttle, calves, cereals and 
sugar beet (approximately 31 per cent of 
the value of farm output) would be 
much better off than at present ; producers 
of other commodities would 'be 
no better or worse off. The pres.entbalance between arable and livestock 
rroduction could well be upset with in


calculable consequences, since milk, 
beef, veal, cereal and grassland prod uction 
are all closely related. Two examples 
will suffice to illustrate t·his point. 
It will be much more expensive to feed 
cereals to livestock, so more efficient 
gras.sland management will be imperative 
; but grassland farmers with favourable 
soil and climatic conditions will be 
under great economic pressure to replace 
grass by cereals. It &eems inevitable 
that cereal production, at presentonly a small percentage of UK total 
farm output, will expand, probably at 
the expense of liveSttock production(using bought in cereals) and milk production, 
in areas where cereals are a 
feasible alternative to grass. 

There would at present appear to be 
considerable scope within an enJ.arged 
EEC for expanding production of cattle, 
calve&, barley and sugar beet (barley 
and beef at the expense of milk production, 
veal at the expense of beef production). 
Opportunities for such a scale 
of expansion would probably not exist 
for other commodities, however, because, 
even though the UK does not 
produce all its temperate zone food 


requirements, in some cases British 
farmers would initially have to acceptthat the ~hortfall would be made up by 
surplus production in the other nine 
member countries of the enlarged community. 
For sheep and lambs the prospects 
of expansion are limited by consumer 
eating habits in the EEC (seeTable 6) and by the economics of 
mutton and lamb production, for even 
under -the system of guaranteed prices 
the breeding flock has been in decline, 
particularly in lowland areas. The CAP 
offer& no assurances to mutton and lamb 
producers and is therefore unlikely to 
provide incentives for ·increased production. 
For milk producers the prospects 
of expansion are nebulous. An 
enlarged EEC would not be self sufficient 
in butter and cheese but it is generaHy 
assumed that concession& will be made 
to enable New Zealand to continue 
sending buHer and cheese to the UK. 
The effect of such concessions would be 
to provide some limited scope for expanded 
production in the UK. Much 
depends on whether there would be an 
increase in milk consumption and the 
extent of reduced consumption of 
manufactured dairy products caused by 
higher prices. 

For pigs the shor-t term outlook is verydifferent. Pig herds both in the UK and 
in western Europe have been expanding 
because the relative cheapness of pig-
meat compared with beef and veal has 
led to increased consumer demand. This 
favourable economic factor should continue 
in an enlarged EEC, but in due 
course there will be considerable over 
production, Market prices will fall. 
Support buying on the 1\Cale required to 
maintain market prices will be too expensive 
and unwieldy to operate effectively. 
The notorious pig cycle will 
recur, leaving the future of pig production 
in the hands of producers with 
strong enough nerves or big enough 
capital investment to remain in business 
until the next phase of the pig cycle. It 
i-t tragic ·that British producers whose 
own pig cycle has been tamed by the 
opera'tion of the flexible guarantee 
arrangements, should have this safeguard 
·taken away from them under the 

CAP. 

The EEC has no mechanism to limit 
pigmeat production ; indeed, it seems 
to regard the pig cycle as an act of God. 
This is not a good prospect for pig 
producers, 

TA!BiJE 6 
MEAT CONSUMPTION IN E'EC A!ND THIE FOUR APPLICAiNT 
COUNffiiBS (pounds per head per yerur) 

mutton, total 
beef and veal pork lamb, goa~meat (inol. horsemeat) 

average1961-5 1969 
aver(llge1961-5 1969 
average1961-5 1969 
aver~e 
1961-5 1969 
Belgium& 
l.Juxembou~g 
France 
53 
63 
59 
66 
52 
51 
64 
59 
1 
5 
1 
6 
113 
124 
131 
135 
West Germany 48 
Italy 36 
HoHand 44 
52 
45 
42 
70 
19 
52 
81 
26 
61 
1 under 0.5 
2 2 
under 0.5 under 0.5 
120 
60 
99 
133 
73 
107 
U.K. 57 54 58 60 25 23 140 137 
Denmark 
NorwayEire 
37 
33 
30 
41 
32 
38 
90 
33 
55 
74 
38 
60 
1 
10 
24 
1 
10 
23 
129 
78 
95 
117 
81 
121 
Livestock and meat, FLM 1-71, us Dept. o'f Agriculture. 


It is important in considering the prospect& 
for expanding British agricultural 
production to bear in mind the 
estimated rise in retail food prices of 
between 18 and 26 per cent. Even this 
official estimate must be treated with 
reserve, since it is based on theoretical 
calculations and not on actual prices in 
shops. It allows only a very low mark 
up for distributive margins, though experience 
&uggests this is too optimistic 
an assessment. A report in the Financial 
Times (30.12.1969) gave the results of a 
shopping survey by Associated Industrial 
Consultants (the only wide ranging 
survey carried out by an impartialorganisation) which concluded that 
" common market countries pay from 
between 22 and 58 per cent more for 
Britis.h style food than the equivalent 
cost in the UK." Since that time the gap 
between UK and EEC retail food prices 
has narrowed. Nevertheless, adoption of 
the CAP would still mean steep increases 
in the retail prices of beef, veal, pigmeat, 
sugar and manufactured dairy products, 
which would have serious repercussions 
on the pattern of domes.tic consumption. 
British farmers will want to know consumption 
trends in the light of higher 
prices, before they can decide on their 
prospects of a profitable existence under 
the CAP. Useful evidence on this point 
could be obtained if the price elasticity 
of demand for the products in question 
was known. Informa-tion would also be 
needed about income elasticity of 
demand for various products. because, if 
personal incomes increase as the result 
of entry into the common market, more 
money might be available for spending 
on food . In the absence of reliable 
statistical informa-tion OJL these points, 
we must use such evidence as is 
available. 

So far as. beef is concerned, the rise in 
retail prices in the past two years has Jed 
to a check in the growth of consumption 
and a move to increased consumption of 

pork and poultry, which have been 
relatively cheaper. This process could 
be accentuated by the much bigger retail 
price increases likely under the CAP. 
Table 6 shows how meat consumption 
pa:tterns differ in the UK, the EEC 
countries, and the other applicants. For 
bacon the market is highly inelastic. 
Retail prices have been rising slowly 
but demand has been static, even though 
bacon is still one of the cheapest meats 
available to the consumer. As a popularbreakfast food , bacon is competi<tive 
with eggs and cereal products., To the 
extent that its price rises faster than 
such competitive foods, there is likely 
to be a reduction in demand. For milk 
and manufactured milk products, the 
position under the CAP has been assessed 
by the Milk Marketing Board. Milk 
production under the CAP would be 
cheap in summer and expensive in 
winter. Higher cons.umer prices in winter 
could reduce milk consumption without 
any guarantee of higher consumption 
than at present in summer (though it is 
possible that summer milk prices could 
fall slightly). For butter. the MMB 
estimate is a drastic decline in consumption 
of between 20 and 25 per cent. 
This itself may be an under estimate in 
the light of experience in Holland, where 
butter cons.umption per head per year 
has declined by almost 40 per cent 
between 1958 and 1969. For cheese the 
MMB has estimated a drop in consumption 
of 12.5 per cent. 

Those farmers who applaud the CAP 
would do well to give careful consideration 
to future patterns of domestic food 
consumption under it. To the extent that 
consumption of important farm pro· 
ducts and staple foods like beef and 
butter is. adversely affected by steep 
price increases, British farming will 
itself be affected. It is inevitable that 
retail price rises of between 50 and 100 
per cent for beef and butter must lead 
to drastic decreases in consump<tion and 


an insistence on lower priced products ; 
pork and poultry instead of beef. 
margarine instead of butter. Such decrea&
es in themselves would be evidence 
of a reduction in Jiving standards, which 
could affect the prosperity of British 
agriculture, and reduce the scope for 
expanded production. 

So far we have been dealing with 
general considerations, which will affect 
farmers indirectly. Of much greater importance 
are changes in the system of 
agricuitural support which will affect 
them immediately and directly. The first 
major result of adopting the CAP would 
be Joss of the annual price review, 
whereby there is ~tatutory consultation 
between the government and the 
farmers' unions: Under the CAP there 
is no statutory general review of farm 
income and production prospects. The 
EEC is to begin an annual review, but 
this could not be as effective as the 
present UK procedure. Consultation with 
farming organisations is informal. 

Furthermore, there is a marked lack of 
reliable ~tatistical information about 
farm production, costs and incomes in 
the common market. Where commodities 
have target or guide prices, 
these are settled a,t different times of the 
year. As the NFU of England and Wales 
has emphasised (British Farmer 
19.11.1966): " The UK annual review 
procedure is the best way of ensuring 
that policy deci~ions for basic commodities 
are made as part of an 
integrated and balanced policy for agriculture 
as a whole related to the needs 
of producers and consumers." 

In spite of some soothing noises from 
Brussels and Westminster. there seem~. 
little chance that the politicians and 
bureaucrats of the common market will 
want to institute meaningful consultative 
procedures. They claim that the EEC 
fixes target prices for the market. which 
directly affect the economy in general. 

Therefore, any official consultation 
could not be restricted to farming organisation&, 
If this point is valid, it is an 
argument for instituting wider consultations 
when agricul,tural prices are fixed , 
rather than for not undertaking any 
formal consultation at all. However, 
common market agricultural politics are 
so complex that radical changes in consultation 
procedure are very unlikely. It 
is therefore difficult to avoid the conclusion 
that the British farmers' unions, 
representi·ng some 3 per cent of the 
working population, would have a much 
reduced influence in the context of 
common market agricultural politics. 
Consequently, British producers would 
have less say in the political decisions 
affecting them than under the 1947 and 
1957 agriculture acts (which would of 
course have to be repealed). 

A further consequence of the change 
from a statutory British annual review 
of agriculture to an EEC review, is that 
British farmer~ would Jose their safeguards 
about the inclusion of cost increases 
from year to year in the annual 
review determinations. Increased costs 
are an important element in farming 
profitability. After allowing for the 
efficiency factor in the annual review, 
British farmers can expect something 
near full recoupment of their increased 
costs of production. Thus higher tram.port, 
fuel and wage costs can be met 
knowing that they will be taken into 
account at the following review. Under 
the CAP, there is no automatic recoupment 
of increased costs ; indeed, such 
costs are not worked out on an EEC 
basi . Small wonder that EEC farmers 
should have demonstrated earlier thi~ 
year after four years of rising costs and 
static commodity prices. Apart from the 
fact that the increased prices granted do 
not recompense the cost inflation of four 
years, British farmers should note that 
prices are unlikely to be increa~ed 
further in future years, since the 


emphasis is very much on structural 
reform to improve farm ·incomes. Not a 
happy prospect for the UK where there 
is only limited scope for doing this. 

The abandonment of guaranteed prices 
and deficiency payments would remove 
much of the relative stalbility of price 
and market which has chancterised 
agricultural progress in the UK since 
1947. Farmers would be exposed to 
w.ide seasonal and supply/demandfluctuations in prices for all commodities 
where the enlarged EEC would be 
self sufficient or over supplied. Target 
prices (where they exist) may not be 
achieved. Levies on imports will work 
to keep up domestic prices only when 
there are imports. Even the intervention 
prices fixed at a lower level oannot 
be regarded in the same t1ight as 
guaranteed prices, because in theorythey are maintained by market managc;ment 
and support buying. Market 
mana-geme;nt in agriculture is a difficult 
operation when there is a free market. 
Support buying is a costly business, 
especially for meat. Moreover, Stllpportbuying becomes even more burdensome 
when there is over production. The 
concept of support buying as a vJtal 
element of the CAP could be put to its 
severest test in 1971/72 wi~h the 
western European pig population expanding 
towards a cyclical pe:ak. We 
must therefore conclude that there is as 
yet little evidence to suggest that such 
measures can take place quickly enough 
and on a large enough scale to ensure 
that market prices for particular commodities 
at particular t·imes in different 
parts of the EEC do not fall below the 
intervention price level. 

It can be argued that British farmers 
do have some advantages over their EEC 
competitors ; greater farm size is an 
obvious one. Nor should we neglect the 
technical progress in pig production 
and, to a lesser extent, in livestock 

breeding generally, where developments 
in the past deoade have given the 
BritiSh producer better feeding, breeding 
and management teclmJques. However, 
these advantages can be applied 
only throu~ investment ; putting up 
more efficient buildings, using a more 
costly ration, cullin·g and replacing 
breeding stock, adopting new methods 
of management control. Investment 
depends on cash and confidence. Unfortunately, 
under the CAP there would 
be such a loss of price and market 
stability, together with disruption of ilie 
British production pattern, that producer 
confidence would be undermined; 
and such confidence is essential if producers 
are to invest as the basis for continuing 
improvement in agriculturalproductivity. Confidence in agricultureis as muc'h a matter of psychology as of 
rationality. Each farmer makes his own 
productJon and investment decisions 
but not always on a ration:al economic 
basis. The bandwruggon effect seen in 
the infamous pig cycle shows ·this very 
clearly. Furthermore, it must be emphasised 
that farmers are .producingagainst an uncertain future, when free 
market condit·ions apply. Using normal 
production methods it takes over two 
years to produce a steer or heifer for 
beef production. Why produce a steer 
if the selling price in two years time 
could be below the cost of production 
or at a level giving an insufficient return 
on capital? 

The psychological value of the system 
of guaranteed prices has been very important. 
Even though the guaranteedprices have only 'been for one year at a 
time, the assurances in the 1957 act 
about the limited extent possible for 
reductions from year to year have been 
sufficient to give producers the longer 
term confidence essential if they were 
to undertake expenditure on fixed and 
working capital for expanded production 
and for improved quality. Even 


before the 1947 act wartime regulations 
had applied to give security O!f priceand market and before 1939 the agr·icultuml 
marketing legislation of the 
'thirties had attempted to provide a 
similar security. There has not been a 
free market system in operation for the 
major agricultural products for over 
30 years ; in fact, a whole generation 

' of British farmers has grown up, without 
experience of the free market conditions 
in operation in British agriculture 
between the first and second world 
wars. Those who survived the traumatic 
experiences of that period will not want 
to return to them. Consequently the 
changeover from a system which 
(whatever the current criticisms) has 
served agriculture well, to a completely 
different one, is likely to lead to a reapproisal 
and curtailment of investment 
plans, against an uncertain £uture. Since 
investment and confidence are t:he keys 
to agricultural production and productivity, 
the transitional period before the 
CAP fully applies could see many producers 
marking time on further investment 
until they have discovered if they 
oan cope with free market conditions. 
Such a situation would weaken the 
competitive position of British agriculture. 



3 . negotiations with the 
EEC on agriculture 
The British government accepted the 
CAP before any negotiations began, so 
there has not been any question of 
negotiating on the fundamental principles 
of the CAP. The government, 
however, stated that there were certain 
matters on which assurance would be 
sought in the negotiations. These were 
the special problems of pi·gs, eggs and 
milk, the procedure for an annual community 
review of agriculture, the future 
of aids to hill farmers and the position 
of producer marketing boards. In addition, 
the length of the transitional 

period, the phasing of the stages for 
the adoption of community preference 
and an easing of horticulture's problems 
during the transitional period were also 
matters for negotiation. The solutions 
found for each .problem will be 
examined to see if they make any real 
contribution to dealing with the difficulties 
facing British agriculture within 
an enlarged EEC. 

pigs, eggs, milk 

On 29 October, 1970, Geoffrey Ripponreported to the House of Commons 
(Hansard vol. 805 c. 440) :-" At previous 
meetings, we expressed some concern 
whether the communities' existing 
arrangements would be adequate, in the 
circumstances of the enlar-ged community, 
to ensure stability in the markets 
for pig meat and eggs and to allow 
adequate supplies of liquid milk. On 27 
October, the community recorded its 
agreement with our understanding of 
the possibilities that will be open to us 
and which would ensure the provision 
of adequate supplies of liquid milk to 
meet consumer demand throughout the 
country and throughout the year; theyaccepted our views on the importance 
and characteristics of the bacon market 
in an enlarged community and the need 
for keeping the situation under careful 
review during the transitional period 

and thereafter ; and they recognised 
the desirability of stability for pig meat 
and eggs. We concluded, therefore, that 
no further points need be raised on 
these items during the negotiat.ions, except 
in the general context of transitional 
arrangements." 

So far as pigs and bacon are concerned, 
this so called agreement is not 
worth the paper it is written on. 
Nothing is said about how stability in 
the pigme<lit market is to be preserved, 
a matter of some importance since the 
British flexible guarantee arrangements 
for pigs, which have helped preserve 
relative stability of market, will have to 
disappear with the phasing out of deficiency 
payments. The fact is that the 
CAP has no effective system for com-
batting the pig cycle and these vague 
assumnces g.ive no indicat~on tha:t it has 
either the willpower or the acumen to 
devel'Op one. With regard to the bacon 
market, the words used can mean any. 
rhing or nothing. If we ask how the 
s~tuation is to be kept under careful 
review, we are told that the mechanics 
of doing so have not yet been s_ettled 
because it is too early to do so (parliamentary 
answer 8 December, 1970). 
Since everything depends on the 
mechanics, bacon pig producers and 
bacon curers may legitimately doubt if 
t.be common market countries are 
aware of what needs to be done to preserve 
the special characteristics of the 
bacon market. Indeed, when theyrealise that the bacon market sharingunderstanding and the bacon stabilisation 
scheme have not yet been safeguarded. 
even during the period of 
transition (parliamentary answer 30 
November, 1970), t>hey may well despair 
of their future in an enlarged EEC. 

Stability in the market for eggs may be 
too much to hope for, because of the 
way the CAP operates, but since the 
phasing out of the guaran.tees is likely 


to produce similar conditions in the UK, 
egg producers can hardly have expected 
more than this wishful thinking 
to emerge from the negotiations. Milk 
is a maHer of great importance to 
British agriculture. The prospects for 
producers and consumers are bound up 
with any final agreement that may 
emerge from the negotiations on dairy 
products, including the opportunities 
for continued imports from New 
Zealand. There is no EEC regulation for 
liquid milk so the government's assurance 
that there is a joint understanding 
with the EEC about the possibilitieswhich will be open to us, may or may 
not be a worthwhile one. The EEC has 
accepted that one aim of the CAP should 
be to use as much milk as possible for 
liquid consumption, and Vhat the policy 
should not be ~pplied so as to impedethis aim. However, much will depend 
on there being a sufficient differential 
between the price of milk for liquidconsumption and the price of milk for 
manufacture. The differentipl need not 
be fixed but whether it will be sufficient 
no one can say at t!his stage. It should 
also be borne in mind that there is no 
mechanism envisaged to ensure that 
British winter milk production remains 
at its present level and to correct the 
imbalance in an enlarged EEC between 
supplies of summer and winter milk. 
The negotiations have therefore clarified 
some issues but left a number of 
other problems unresolved. Producers 
and consumers are being asked in 
effect to wai·t and see. 

community review of 
agriculture 

Geoffrey Rippon made the following 
statement on 29 October, 1970 (Hansard 
vol. 805 c. 440) :-"We were able 
to reach agreement on procedures for 
an annual rev·iew of the economic conditions 
and prospects of the agriculturalinduMry in the enlarged community. 

The commis~ion will draw up this review 
for the council of ministers on the 
basis of all the relevant information 
and after contacts with the agricultural 
o11ganisations. 11hese arrangements will 
ensure effective contacts with producers." 
The statements speak of contact, 
not consultation, but it may be 
that consultation is intended. Mr. 
Rippon speaks of " adequate contacts " 
lbut Jim Pri'Of, the Minister of Agriculture, 
speaks of " effective and meaningful 
consultations with producer organisations" 
(Hansard vo. 809 c. 1324). 
There will be an annual review in the 
UK, but the arrangements for this will 
not be given statutory force (unlike the 
present system). This review will not of 
course deal with prices. At communitylevel there will be a review of " economic 
conditions and prospects by the 
commiss·ion, in consulta.tion with member 
states." The information to be used 
in this review is uncertain ; and there 
is no assurance th•at the trend of net 
farm income or cost increases since the 
last review will be taken into account 
(as under the present British system). 
The phrase " all the relevant information" 
might be held to cover these 
points, except that not all community 
countries have this information to the 
extent that it is available in the UK. 
Farmers should also remember that if 
costs are taken into account, these will 
be assessed and used on a community, 
not a national, basis. The communityreview procedure ought to cover prices, 
but there is as yet no assurance that 
this will be the case. In short, the commun
·ity review will fall far short of 
what British farmers have been used to 
since 1947. It is small consolation to 
realise that such a review, however inadequate, 
is a considerable advance on 
what has gone before. 

Production grants for hill farmers are 
considered to be a matter for negotiation 
with the BEC since they conflict 


with the principle that ubsid1ies and 
barrier to free competition must be removed. 
Since these grants actX)unt for a 
very high percentage of the net income 
of hill farmers, it is es entia! to obtain 
assurances about their f.uture, even 
thoug~h there is no pecific EEC prohibit>
ion of any present Brit·ish aids to hill 
farmer . Such, farmers might qualify 
for aid if the EEC had a centrally financed 
r gional policy, but such a development 
is not in pro pect. All tha.t 
can be hoped for is that the common 
agricultura·l fund may be prepared to 
provide some assistance and that pre


cnt Briti h grants can be converted 
into a legitimate form of aid for d·ifficult 
area . No a urances on these points 
arc l>ikely until a.fter a decision has been 
taken on tlhc i sue of entry. 

producer marketing boards 

The future of these boards, which play 
a vital part in maintainin.g British agri·
ultural prosperity, ha been d>isoussed 
in the negotiations. The Minister of 
Agriculture said (Hansard vol. 809 c. 
1323/4) : " .. . a non-governmental producer 
organi&at>ion, provided that it acts 
within the provisions of the treaty and 
secondary legislation deriving from it, 
may engage in the direcLion of supplies,
the p ling of returns and seasonal 
pricing. Thus our under tanding is that 
the Milk Market,ing Board as a nongovernmental 
pr ducer wiiJ be able to 
c ntinue the e entiat features of our 
pre ent milk marketing arrangements. 
Likewi e. we believe that the other 
marketing board will continue to play'ln important r61e in the efficient producti 
nand marketing." Thi statement 
would provide orne a surance to 
farm r . . if it was not for the use of the 
w rd " our understanding" in connecti 
n with the future of the Milk 
Marketing Board and the words "we 
b lieve '' in connection with the other 

marketing boards. The use of "our 
under tanding " suggests that the commission 
or other EEC countries may 
have a different understanding, and that 
the government is merely trying to reassure 
producers wiLhout having obtained 
an agreement with the EEC that 
the marketing boards could continue 
all their present functions, except those 
directly stemming from the present 
guarantee arrangements. These doubts 
are confirmed by a parliamentary answer 
by Jim Prior on 20 April, 1971 :"
It has been establ-ished tJhat the marketing 
boards wiH be able to carry out 
certain of their functions, and I very 
much hope (this is founded on l!he intere 
t which, in my experience, people 
in France and Germany have shown in 
the efficiency of our marketing boards)
that we hall be able to carry over many 
of the functions." 

Hope is a poor substitute for definite 
as urances. It is now quite clear that 
there is no clear cut agreement about 
how many of their present functions the 
marketing boards will be allowed to 
oarry out. (There must now be grave 
doubts a to whether price fixing and 
pooling of transport costs are permis


ible.) It sho'llld be noted in this connect,
ion that the EEC places great reliance 
on the development of producer 
groups but these are in no way a substitute 
for marketing boards. British 
expeDience shows clearly that marketing 
groups are not !'he answer for most 
producers, Whereas marketing boards 
have proved their worth. If the fiuture 
of agricultural marketing in the UK 
depend on groups, then that future is 
a very bleak one. 

problems of the transitional 
period 

Geffrey Rippon dealt with these matter 
in hi statement on 17 May, 1971 
(Han ard vol. 817 c. 884) when he said 


that : " .. . we would adopt the mechanism 
of the common agr<icultural 
pol~cy at the beginning of the transitional 
period, but our transition to 
community prices would be achieved 
by six even steps spread over five years. 
The deficiency payments system would 
be phased out gradually during that 
period. British producers and consumers 
and third countries should thus have 
time enough to make the adjustments 
which in many cases would be necessary 
... The community recognised 
that we had a speoial problem over 
horticulture. Here it was agreed first 
that tariff adjustment for horticultural 
products shouad proceed at a slower 
rate ; second, that no move on horticultural 
tariffs shoruld take place until a 
year arfter our accession ; third, that 
there should be provision for flexibility 
in the adjus·tment of horticultural 
tariffs to permit some modifications of 
the process if necessary ; and, finally, 
that for ~pples and pears, where there 
is a special problem arising from surpluses 
in t!he community, we should repl:
ace our quota arrangements at the 
beginning of transition by a system of 
compensatory levies, thus offsetting the 
difference between British and community 
prices. These levies would be 
gmdually phased out during the transition 
period as British and communityprices come into line. Ta:ken together, 
these measures should ensure that British 
horticulture gets the exceptionaltreatment which it needs." 

No comment seems to be called for 
albout purely transitional arrangements, 
since at the end of the five year rperiod 
British farmers will have to face the fulL 
rigours df the CAP. The more we 
examine ministerial statements on the 
negotiations aibout agricultural matters, 
the more difficult it becomes to avoid 
· the conclusion that these negotiations 
·have been concerned with window 
1 dressing, rather than with securing 

effectlive .and definite safeguards for 
some, but not all, olf the problem areas 
of BritiSh agriculture in the event of 
membership of the EEC. 


4 . criticisms of the common 
agricultural policy 
The AP has been criti ised on a number 
of grounds by those who have to 
live with its deficiencie . Nevertheless, 
the British government, in its application 
to join the EEC, ha made it clear 
that the AP i fully acceptable, subject 
to certain min r point . This approach 
certainly weakens the British negotiating 
po ilion since all it has been able 
to do i. to suggest minor modifications 
to meet pecific problems raised by 
British entry. The more rewarding 
approach would have been to have 
stated that the AP would need adapiation, 
both because of the problem 
cau ed by enlargement of the EEC, and 
because of it own inherent deficiencies. 
It could have been argued that entry 
negotiations , hould be u ed to work out 
between members and applicants a 
radically revised agricultural policy 
which w uld try to reconcile the 
intere ts of all member states. It is 
ironic that just a the UK has accepted 
the AP, warts and all, the would be 
architect of agricultural reform in the 
EE • Dr. Sicco Man holt, has forecas·t 
that the common market may have to 
a cept the British sy tem of supplementing 
farm income within the next 
two year. (The Guardian 27/3/1971). 

Since the UK has accepted the CAP it is 
essential for tho. e concerned about the 
future of Briti h agriculture to be fully 
aware of the critici m which have been 
made about the P. Tt i not the purpo. 
e of thi. pamphlet t 1\Ugge. t ways 
in which these critici 'm can be overorne. 
[For detail of desirable reforms, 
. ee I. H. Wal ton-Farm gate to 
Bmssels (Fabian re earch pamphlet 
288): 2. J. outhgate-Agricultural trade 
tmd the FF ( abian research pamphlet294): 3. J. . Mar, h-Rritish entry to the 
£uropean Community : implications for 
British and North American agriculture 

(Briti h North American ommittee): 

4. Various authors-A future for Euro-
pl'an awiculture ( tlantic Paper 4).] 
The United Kingdom will have a voice 
in the shaping of the CAP in future, but 
we should bear in mind that the basic 
CAP principles are unalterable and it is 
the e wihich make the policy so difficult 
to accept. Changes in the detailed application 
of the policy will be only marginally 
heLpf.ul to our fa1.1mers. urthermore, 
the likelihood of radical reform 
[ the CAP will lessen with the advent 
of British membership, for this will 
offer an ideal chance for EEC surpluses 
to be dispo ed of at economic prices. 

Until British producers win a full share 
of their own market, the costs of disposing 
of CAP surpluses will diminish, 
and these have provided the only 
effective impetus to reform in the past. 
Furthermore, the big British contribution 
to the community budget will 
reduce the financial burden on other 

member and therefore red i.tce still 
further their pressure for radical 
reforms. 

There are eight major criticisms to be 
m:.tde about the CAP. First, farm priceswere initially fixed too high for political 
reasons. The combination of high 
prices in a protected market with no 
pr duction control (except for sugar) 
has meant greatly increased production 
for most commodities, without regard 
to trends in consumption and in spite 
of the los of over 5 million workers 
from the land. on cquently there have 
been huge , urpluse of dairy product. 
with maller surplu es of ugar, oft 
wheat and poultry ; other urpluse 
can be fore een. pigmeat being a notable 
example. Table 7 shows how BEC 
grain production has expanded in the 
pa t decade, pr tected from cheaper 
overseas supplie . The production of 
surplu. es i. an inevitable consequencef the CAP. which distorts normal 
supply/demand relation.hips to ~uch an 
e tent that surplu e do not mean 
automati cut in commodity price~. 


21 

TABLE 7 
EEC GRAIN PRODU T!ON (million metric tons) ---year 
wheat other cereals total 
1958-59 1 
1961-62 
average 
1962-63 
24.3 
29.5 
27.0 
2R .3 
51.3 
57.8 
1963-6-.J. 24.4 32.3 56.7 
1964-65 29.2 30.2 59.4 
1965-66 30A 29.8 60.2 
1966-67 26.3 31.7 58.0 
1967-68 31.2 37.0 68.2 
1968-691 32.3 37.4 69.7 
1969-701 31.5 38.2 69.7 --1 
Preliminary. 
Source : For.eign agriculture: us Department of Agriculture. 24.8.70. 

There is no machinery lo bring upply 
and demand into reasonable balance. 
fnstead official intervention agencies 
buy up the surpluses, store them and 
export them to the outside world at 
subsidised prices well below the cost 
of production. The costs of support 
buying, storage and export ubsidies 
are already running at some £700 
million per year. Although these costs 
have risen steeply in recent years, the 
rise has been halted temporarily mainly 
because climatic conditions have led to 
reduced production of cereals and the 
policy of slaughter premiums for cows, 
together with unchanged prices 
throughout four inflationary years, has 
led to a reduction in dairy production, 
and butter stocks. 

There is no evidence that the tendency 
to over production has been permanently 
halted. This is not surprising 
since the protectionist nature of the 
CAP ·must eventually lead to increased 
production. To aim at self sufficiency 
in agricultural production is absurd, 
because a policy designed to achieve 
<>elf·sufficiency in agriculture must inevitably 
produce large surpluses in the 

long run. 

,)'econd, in &pite of the elaborate and exrpensive 
machinery of agricultural protection, 
farm incomes in tihe EEC have 
fallen further behind those in industry. 
This has happened in spite of the unrealistically 
high prices paid to EEC 
farmers in order to give them a subsistence 
income. Many of the EEC 
farmers are very small, many are part 
time, and some 75 per cent would fail 
to pass the British viability test of 
standard man days. The CAP has not 
succeeded in promoting agricultural 
prosperity within the EEC. As a group 
of distinguished economists has pointed 
out (Atlantic paper 4, Atlantic I nstitute, 
op. cit.), high farm prices do not 
nece sarily mean high farm incomes. 

Indeed, -the chances are that incomes in 
agriculture will continue to lag behind 
other sectors of the economy because 
any further increase in commodity 
prices must be ruled out because it 
would be likely to worsen the problem 
of over production. The very existence 
of surpluses means a constant threat to 
farm prices, as can be seen by the price 


22 
proposals put forward in the first 
Mansholt plan ·to amend the CAP. 
Although it is unlikely that prices will 
actually be decreased because of the 
widespread opposition to such a move, 
the probability is tha·t commodity prices 
will be lef.t unchanged after the small 
increases in March 1971. As their value 
is steadily eroded by inflation and cost 
increases, this will put much greater 
pressure on EEC farmers to increase 
their efficiency or get out of farming. 
They are having to recognise that, 
whatever alterations are made to the 
CAP, little can be done by agricultural 
measures a1'0ne to narrow the gap bet-
ween fa,rm and non-ifarm inCOIIlles. It 
must be realised that in many parts 
of the EEC (as in the UK) farm incomes 
are a social problem as well as an agri-
cultural one. The record of agricultural 
politics in the common market shows 
that social problems cannot be suc-
cessfuHy treated as iJf they were agricul-
tural ones. 
In this context, it is tragic that the 
Labour government's experiment with 
rural development boards has been 
abandoned by the Conservatives. These 
boards were an imaginative concept, 
designed to take into account rural 
amenities, rural transport services, 
tourist prospects and farm amalgama-
tion. The CAP has proved incapable of 
thinking of anything as farsighted. 
Third, measures such as those the EEC 
has recently adopted to achieve struc-
tural improv·ements by creating larger 
and more efficient farnning units, will 
not in themselves solve the prdblem of 
surpluses, though they may succeed in 
increasing average farm incomes. The 
injection of capital into large farms will 
strengthen their ability to take ad-
vantage of scientific and technologicaiJ.
developments and lead to even bigger 
increases in production and improve-
ments in productivity; and consequently 
even greater surpluses. Gradual de-I 
creases in commodity prices could have 
the same effect, with producers increas-
ing production in order to keep down 1 
unit costs and maintain income. The 
only solrution to this problem is to re-· 
move resources from a,griculture. by 
taking land out of agricu'ltural use al-
together. The second Mansholt plan, 
submitted to the EEC council of mini-
sters in May 1970, placed greater em-
phasis on the restructuring 'Oif rproduc-
tion. This is a better policy than that of 
seeking to improve farm incomes by 1 
means of the price mechanism. Never-
theless, the new policy places greater 
respons~bility on member countries to 1 
bring aJbout structural improvements in 
agriculture, with the EEC aclling as co-
ordinator of national policies. Although 
politically desirable, this approach is a 
departure from the community ap-
proach previously adopted. It is doubt-
ful if even the truncated version of the 
second ManSiholt plan recently ap-
proved by EEC ~gricultura~l ministers 
could be properly carried orut bynational goverruments depending to a 
great extent on the a,gricultural vote 
(alth"Ough this is gradually declining in 
importance). Moreover, there are defici-
encies in the Mansholt approach to 
structmal improvement. For example, 
one Mansholt scheme gave incentives 
to milk producers to g.ive up produc-
t.ion. Many producers who might other-
wise have gone out of milk production 
held on to their cows until the slaughter 
bonus becaJme effective. Before sending 
in cows for slaughter undoubtedlymany producers would have first ex-· 
changed llheir best dairy cows with 
cows culled from neighbouring herds. 
Thereifore, although the immediate 
effect of the cow slaughter programme 
has been to halt the rise in milk pro-
duction, the prospects are that average 
milk Y·ields will grodually increase and 
raise the problem of surpluses once 
more. 
22 
proposals put forward in the first 
Mansholt plan ·to amend the CAP. 
Although it is unlikely that prices will 
actually be decreased because of the 
widespread opposition to such a move, 
the probability is tha·t commodity prices 
will be lef.t unchanged after the small 
increases in March 1971. As their value 
is steadily eroded by inflation and cost 
increases, this will put much greater 
pressure on EEC farmers to increase 
their efficiency or get out of farming. 
They are having to recognise that, 
whatever alterations are made to the 
CAP, little can be done by agricultural 
measures a1'0ne to narrow the gap bet-
ween fa,rm and non-ifarm inCOIIlles. It 
must be realised that in many parts 
of the EEC (as in the UK) farm incomes 
are a social problem as well as an agri-
cultural one. The record of agricultural 
politics in the common market shows 
that social problems cannot be suc-
cessfuHy treated as iJf they were agricul-
tural ones. 
In this context, it is tragic that the 
Labour government's experiment with 
rural development boards has been 
abandoned by the Conservatives. These 
boards were an imaginative concept, 
designed to take into account rural 
amenities, rural transport services, 
tourist prospects and farm amalgama-
tion. The CAP has proved incapable of 
thinking of anything as farsighted. 
Third, measures such as those the EEC 
has recently adopted to achieve struc-
tural improv·ements by creating larger 
and more efficient farnning units, will 
not in themselves solve the prdblem of 
surpluses, though they may succeed in 
increasing average farm incomes. The 
injection of capital into large farms will 
strengthen their ability to take ad-
vantage of scientific and technologicaiJ.
developments and lead to even bigger 
increases in production and improve-
ments in productivity; and consequently 
even greater surpluses. Gradual de-I 
creases in commodity prices could have 
the same effect, with producers increas-
ing production in order to keep down 1 
unit costs and maintain income. The 
only solrution to this problem is to re-· 
move resources from a,griculture. by 
taking land out of agricu'ltural use al-
together. The second Mansholt plan, 
submitted to the EEC council of mini-
sters in May 1970, placed greater em-
phasis on the restructuring 'Oif rproduc-
tion. This is a better policy than that of 
seeking to improve farm incomes by 1 
means of the price mechanism. Never-
theless, the new policy places greater 
respons~bility on member countries to 1 
bring aJbout structural improvements in 
agriculture, with the EEC aclling as co-
ordinator of national policies. Although 
politically desirable, this approach is a 
departure from the community ap-
proach previously adopted. It is doubt-
ful if even the truncated version of the 
second ManSiholt plan recently ap-
proved by EEC ~gricultura~l ministers 
could be properly carried orut bynational goverruments depending to a 
great extent on the a,gricultural vote 
(alth"Ough this is gradually declining in 
importance). Moreover, there are defici-
encies in the Mansholt approach to 
structmal improvement. For example, 
one Mansholt scheme gave incentives 
to milk producers to g.ive up produc-
t.ion. Many producers who might other-
wise have gone out of milk production 
held on to their cows until the slaughter 
bonus becaJme effective. Before sending 
in cows for slaughter undoubtedlymany producers would have first ex-· 
changed llheir best dairy cows with 
cows culled from neighbouring herds. 
Thereifore, although the immediate 
effect of the cow slaughter programme 
has been to halt the rise in milk pro-
duction, the prospects are that average 
milk Y·ields will grodually increase and 
raise the problem of surpluses once 
more. 

A policy of structural reform based 
on the discouragement of smaller units 
in order to increase farm incomes and 
reduce surplruses can help farmers contain 
rising costs, but it will not do 
more than this unless it is combined 
with an effective policy for taking land 
out of agricultural production. The 
econd M~ansholt plan does contain 
proposals for subsidising the conversion 
of agricultural land into use for forestry 
or recreation ; but these proposals do 
not go far enough and have liHle 
chance of success, except perhaps in 
marginal farming areas such as hill 
5arms, where increased output and efficiency 
are no longer poss1ble. The 

1Vedel plan for the reform of French 
agriculture proposed much more radical 
mea~sures in order to take agricultural 
land out of production. Such a 
plan on an EEC basis could do much 
to overcome the problem of surplusproduction, but this sort of approach 
stands absolutely no chance of acceptance 
by the policy makers of the European 
Economic Community. 

Fourth, the CAP (even if amended on 
the lines of the second Mansholt plan) 
means a diversi·on of agricultural resources 
to the remoter, high production 
Icost areas of western Erurope, whe:re 
production ought to be discouraged. If 
the aim of EEC is limited to co-ordination 
of national political and economic 
poljcies, this aspect of the CAP would 
not be worth supporting, since it would 
mean a diversion of investment resources 
to areas outside the UK. It 
could be argued that such a policywould be more appTOpriate in a United 
States of Europe, where tthe UK would 
be merely one reg·ion among others. 
However, we have to consider the CAP 
as it is in the present context of national 
policies. In these circumstances British 
farmers could fairly ask why they (and 
the Brit.ish consumer) should subsidise 
overseas competitors in the EEC at the 

expense of home agriculture. As the 
commission itself pointed out (op. cit. 
para 15): "the drive to improve the 
structure of production in agriculture 
and of the relevant marketing system 
will help the agricultural sector to close 
the g~p beween tthe situation in the 
community and the highly efficient agriculture 
of certain candidate countries." 
This is confirmation, if any wa's needed, 
that under the CAP British agriculture 
will be eXIpected to bear much of the 
burden of improving the efficiency of 
EEC agriculture ! It will be held back 
(indeed, its competitiveness will probably 
be undermined) so that its EEC 
rivals oan catch up ! For this reason 
alone, British agriculture has nothing to 
gain and a great deal to lose by entry 
into the EEC. 

Fifth, the CAP was intended to be self 
financing, with income from levies on 
agricultural imports finlaDcing agriculture 
in the EEC and community export'S.
This policy has failed completely. In 
·1968-1969 tJhe cost of the CAP was just 
over 2,400 million dollars, of which 
only about 890 million dollars was 
raised by levies. The balance came from 
national exchequers. In the last three 
years the percentage of market support 
expend·iture covered by levies ha'S 
dropped from 63.3 to 35. Such a development 
has been inevitable since 
the expansion of EEC production mu<St 
reduce the scope for imports. This suggests 
that the cost of restructuringEuropean a1griculture is going to fall increasingly 
on the taxpayer. Indeed, the 
agreed method of financing the CAP includes 
part of the proceeds of the value 
added bax. Since British agricultJUre is 
in a better structural condition than EEC 
agriculture, our taxpayers will be financing 
the structural reform of EEC agriculture, 
at the same time a.IS the position 
of our agriculture is weakened by the 
loss of deficiency payments. There will 
not be a great compen·sating benefit 


from the EEC agricultural fund. because 
there is little or no surplus production 
to export Cllt subsidised prices and funds 
for structural improvement would go 
mainly to the other member countries. 

L'Sixth, the CAP means heavily sulbsidised 
expor-ts to the rest of the world. This 
inevitably results in a distortion of the 
pattern of world agrkultu11al trade. 
Whether it is the sale of French wheat 
to China, Dutch broilers to Switzerland, 
or French butter to Hongkong, to 
quote only some examples, traditional 
suppliers at world prices are upsetand eventually forced into retaliatory 
measures or subsidised exports of 
their. own. In~eed, the usA has already 
retahated agamst the EEC in indu~trial 
products, because of levies on us 
chicken exports to the EEC ; it is now 
sulbsidising chicken exports to Switzerland 
to compete on equal terms w!th 
the EEC in <that market. One little 
noticed consequence of this policy is 
that it makes virtually impossible the 
task of countries like New Zealand, 
which have been malci.ng great efforts 
to diversify thei,r marketing of butter 
and dairy products. The conclusion of 
preferential trade a'greements covering 
agricultural products between EEC and 
third countries also results in a distortion 
of world agrioulrtural tmde. Tradi


tional suppliers are shut out to make 

room for EEC exports sold below the 

cost of production. Such agreements

are good examples of the economic im


perialism which can be seen more and 

more in EEC foreign t-11ade policies,

apart from the fact that they usually 

contmvene one or more provisions of 

the general agreement on trade and 

tariffs (GAIT). 

Seventh , the whole basis of financial 
~ppor~ for agriculture in EEC is regJresstve. 
Htgh consumer food prices are the 
worst form olf indirect taxation, worst 
because unavoidCllble and because they 

affect the poorest sections of the community 
disproportionate'ly. Furthermore, 
the recent EEC agreement on financing 
the CAP in futJUre calls for a 
fixed percentage of the value added tax 
to be paid into community agricultural 
funds ; thus indirect taxation, whose 
burden is heaviest on the poorest sections 
of society, is contributing a great 
deal to the cos,ts of the CAP. The British 
system of agricultural support gives the 
consumer relatively chea1p food and is 
of course financed out of direct taxation. 


Finally, the CAP was not designed with 
the interests of British agriculture in 
mind. It is absrurd to expect that it will 
serve to protect those interests as well 
as a policy specifically designed to do 
so. It may have been necessary to tide 
over a period when farm efficiency had 
to be improved in the EEC (thorugh this 
is anguable) but it is completely unsuited 
to Brrtish agricultural traditions 
and to the problems facing British 
farmers. l t would be retrograde to 
adopt a policy not designed for our 
particular circumstances. Since the 
po1icy h1as been acceprted without regard 
to the need's and interests of British 
agriculture the likely effect is that 
the balance of our agricultural production 
will be completely upset. It would 
of course be open to our farmers to 
suggest ways in which the CAP could 
be altered, but they would merely be 
one voice among nine or ten. In any 
event, it is quite clear that the main 
principles of the CAP are sacrosanct. 


the CAP and Britainls 
gricultural problems 

CAP will do nothing to resolve the 
problems facing British agriculture in 
the foreseeable future; indeed, its 
adoption might aggravate them. 

!First of all, there is the problem of 
maintaining living standards amongproducers in remote areas. This is 
linked with the need to satisfy the 
growing demand of an urban population 
in a densely populated country for 
open air leisure and recreational 
activities. The problem is not merely 
one of small farmers, since there are 
many small farmers (in terms of acreage) 
who are intensive and efficient 
producers of pigs, eggs and poultry.
The problem is basically one of 
marginal farmers, not all of them 
necessarily small. In most cases they 
are dependent on pigs, eggs, milk or 
hill sheep, or a combination of these. 
Unable to obtain capital or unwilling to 
pay the costs of obtaining it, they are 
unable to keep up with the trend to 
more efficient production. Rising costs 
inevitably mean no increases, and 
sometimes reductions, in their net farm 
income. The problem with such producers 
is basically a social one. Can 
they be guaranteed a decent standard 
of living in order to prevent the de


population of remote areas, which 
would in turn lead to the abandonment 
of agriculture and of any hope of conserving 
the countryside for the leisure 
needs of an affluent population? Rural 
development boards might have been 
one answer, but we shall not know until 
the next Labour government reestablishes 
them. What is certain is that 
the CAP has nothi•ng to offer. 

A problem which has only become 
apparent in recent years is the slow, 
but seemingly unavoidable, move bynon-farming interests into farming.
There are three reasons for this. First, 
the ·tax concessions available to owners 
of agricultural land. Second, the need 

for assured supplies of raw material of 
the right quality by food processors,
manufacturers and distributors. Third, 
the need for feeding stuffs firms to 
ensure sales of their feed in the face of 
intensive competition. The latter two 
are forms of vertical integration and, 
as such, regarded with horror by the 
National Farmers' Unions, because 
they undermine the farmer's independence 
and in some cases reduce him to 
the status of an employee. However, 
those of us who have been employees 
may not feel strongly that this is a 
fate worse than death, especially if the 
farmer is thereby assured of a reasonable 
income. There will be plenty of 
scope for farmers who wish to maintain 
their independence, provided that 
they are willing to accept the challenge 
of the economic pressures which are 
leading to changes in the patterns of 
farm ownership and farm management. 

One of the major economic pressures 
on the present structure of British agriculture 
is the difficulty of obtainingcapital and its high cost, especially for 
tenant farmers who find sources of 
credit reluctant to lend unless profits 
are good. Shortage and cost of capital 
mean that many producers now have 
Jess scope for absorbing cost increases 
and increasing productivity. In this 
connection we must not neglect the 
problem of the growing shortage of 
skilled labour, especially for the large 
specialist livestock and pig enterprises. 
The growing inadequacy of traditional 
British farms (family businesses) in the 
face of shortage of capital from normal 
resources (banks, Agricultural Mortgage 
Corporation, ret·ained profits) and 
the disruption caused by dea.th duties, 
is a problem likely to lead to profound 
changes in our agricultural structure. 
The tendency for farmers to turn themtselves 
into limited companies or to 
enter into sale and lease back arrangements 
will help in the short term but 


will strengthen the tendency for non-
farm interests to acquire a bigger hold 
on agricultural production. In the long 
term this process could make public 
ownership of land a viable proposition ! 

The problem of capital is the key to 
the future of British agriculture, a problem 
made more complex by the 
dichotomy between agricultural policyand taxation policy, the former aiming 
to build up larger units, the latter 
breaking up larger uni,ts. Many farmers 
would claim that taxation policy needs 
to be seen as an instrument of agricultural 
policy, as well as an instrument 
of social policy. One of the tragedies 
of the present situation is that there are 
many bright young people in agriculture, 
who would make highly efficient 
farmers, but who have no chance of 
ever owning their own farms because 
of their inability to raise the necessi:ry 
capital. There are many opportunitiesfor them as older farmers retire or as 
large estates are sold off in lots to meet 
death duties, but what happens is ,that 
. uch farms are often purchased byneighbouring farmers to complement 
their own farming operations, at priceswhich cannot always be justified by the 
potentialities of the farm as an independent 
unit. In fact, the capital growth 
in land values poses problems. not only 
to would be farmers, but also to 
farmers who find that their return on 
capital (at current value) is getting progressively 
lower. When interest rates 
are high there is even greater need for 
capital to yield an economic return. 
This can only strengthen the trend towards 
changes in farm structure and 
ownership. 

One of the ways for farmers to assert 
their independence is for them to work 
clo~er together in supply of farm 
requisites. produotion and marketingthrough agricultural co-operatives and. 
more recently. through producer groups. 

Agricultural co-operation has never 1 
been as popular in the UK as in other 
countries and it is ironic that at a time 1 when economic pressures are forcing 
more and more farmers to work together, 
their co-operation should take · 
the form of group activity instead of 
strengthening the agricultural co-operatives. 
There ha~ been a notable growth 
of producer groups for production and 
marketing of commodities, where there 
are no marketing boards, encouraged by 
the government (as is also the case under 
the CAP). However, the benefits of grouping 
are confined to producers favourably 
situated in relation to their markets. 
Farmers in remote areas (with the exception 
of Welsh weaner pig groups. 
where special circums-tances apply) cannot 
exert sufficient marketing strength,
because higher transport costs make 
their production less attractive to the 
processor. 

Also producer groups can be no Jess 
susceptible to take over by out~ide 
interests than are individual farmers. If 
they succeed in improving efficiencyof production, they are likely to 
develop clos-e links with an individual 
processor in order to secure the 
maximum return for their efforts. 
yet such links make them more 
dependent on the processor whose requirements 
they are fulfilling. The pro-
ce~sor will also be dependent on the 
group. Sooner or later, closer integration 
will come to eem inevitable and desirable. 
For other groups which try to play 
off one buyer against another. the 
danger is that they will increase the incentives 
for processors to go into production 
in order to safeguard their raw 
material supplie . It will therefore be 

een that grouping is a palliative. not a 
cure. 

As if these problems were not enough. 
farmers are under increasing pressure 
from the re t of the commun~ty to 


responsibility for dealing with the 
of pollution from effluent 
e jJisposal (in the case of intensive live-
g ~tack, pig and poultry unit~. fertilisers, 
I· insecticides and antibiotics (used for 
e disease protection and better food 
11 ~onversion in livestock and pig produc-
tion). The problems of conservation 
(cutting down of hedges, misuse of the 
soil and so on) are also becoming in-
e ~rea&ingly important as people learn to 
appreciate that short term economic 
rr :.:onsiderations may conflict with the 
interests of the environment. Even 
ilnimal welfare has become a thornypolitical issue, and our codes of animal 
welfare go far beyond anything contem-
plated in the EEC. These are areas where 
the interests of agriculture and those of 
the community appear to be in conflict, 
e 1 conflict likely to be resolved only by'u""'""u1"" which will increase the costs 
)f agricultural production. 
~ot one of these problems will be re-
;olved by the CAP. On the contrary, it 
;vill increase the competitive pressure 
m farmers to go for short term profits, 
rrespective of the longer term consider-
ttions of pollution and conservation. 
e ~dmibtedly, some of these problems are 
>f more immediate concern in the UK 
e han el&ewhere, because they are the 
· >roblems of an efficient industry in an 
1• ncreasingly technological and competi-
e ive world ; but an agricultural policy 
n or western Europe which takes no 
tccount of them (perhaps does not even 
tppreciate that pollution and conserva-
ion are agricultural problems) is just1.0t good enough for the UK, 
!' fhe basic trouble with the CA P is that 
e t was designed to deal with very 
a lifferent problems from those facing 
~riti~h agriculture today. The two 
Vfansholt plans have given some indica-
ion that the EEC authorities are now 
e .ware of the need for structural changes, 
mt their encouragement of group 
'27 
activity and of early retirement are onlytentative first steps towards a rational 
appreciation of agriculture's future role 
and structure. In any event, such 
measures do not come to grips with the 
rreal problems of production control and 
marketing efficiency. There i~ only one 
respect in which the CAP might be 
thought helpful to British agriculture ; 
the provision of cheap credit for farm-
ing. However, two caveats must be 
made before farmers become euphoric 
at the prospect of capital on reasonable 
terms. First, the provision of cheapcredit for western European farms 
antedates tJhe CAP, and therefore fanners 
cannot expect cheap credit auto-
matically. Second, cheap credit has to 
be financed by someone (u~ually the 
state) and there would have to be safe-
guards against it being used for non-
agricultural purposes. It is difficult in 
these circumstances to see any British 
government changing the present policyof refusing to provide farming with sub-
~idised capital, even in the event of 
British membership of the EEC. 
responsibility for dealing with the 
of pollution from effluent 
e jJisposal (in the case of intensive live-
g ~tack, pig and poultry unit~. fertilisers, 
I· insecticides and antibiotics (used for 
e disease protection and better food 
11 ~onversion in livestock and pig produc-
tion). The problems of conservation 
(cutting down of hedges, misuse of the 
soil and so on) are also becoming in-
e ~rea&ingly important as people learn to 
appreciate that short term economic 
rr :.:onsiderations may conflict with the 
interests of the environment. Even 
ilnimal welfare has become a thornypolitical issue, and our codes of animal 
welfare go far beyond anything contem-
plated in the EEC. These are areas where 
the interests of agriculture and those of 
the community appear to be in conflict, 
e 1 conflict likely to be resolved only by'u""'""u1"" which will increase the costs 
)f agricultural production. 
~ot one of these problems will be re-
;olved by the CAP. On the contrary, it 
;vill increase the competitive pressure 
m farmers to go for short term profits, 
rrespective of the longer term consider-
ttions of pollution and conservation. 
e ~dmibtedly, some of these problems are 
>f more immediate concern in the UK 
e han el&ewhere, because they are the 
· >roblems of an efficient industry in an 
1• ncreasingly technological and competi-
e ive world ; but an agricultural policy 
n or western Europe which takes no 
tccount of them (perhaps does not even 
tppreciate that pollution and conserva-
ion are agricultural problems) is just1.0t good enough for the UK, 
!' fhe basic trouble with the CA P is that 
e t was designed to deal with very 
a lifferent problems from those facing 
~riti~h agriculture today. The two 
Vfansholt plans have given some indica-
ion that the EEC authorities are now 
e .ware of the need for structural changes, 
mt their encouragement of group 
'27 
activity and of early retirement are onlytentative first steps towards a rational 
appreciation of agriculture's future role 
and structure. In any event, such 
measures do not come to grips with the 
rreal problems of production control and 
marketing efficiency. There i~ only one 
respect in which the CAP might be 
thought helpful to British agriculture ; 
the provision of cheap credit for farm-
ing. However, two caveats must be 
made before farmers become euphoric 
at the prospect of capital on reasonable 
terms. First, the provision of cheapcredit for western European farms 
antedates tJhe CAP, and therefore fanners 
cannot expect cheap credit auto-
matically. Second, cheap credit has to 
be financed by someone (u~ually the 
state) and there would have to be safe-
guards against it being used for non-
agricultural purposes. It is difficult in 
these circumstances to see any British 
government changing the present policyof refusing to provide farming with sub-
~idised capital, even in the event of 
British membership of the EEC. 

6. conclusion 
The debate about EEC entry and the 
Conservative government's introduction 
of an import levy system have concen-
trated attention on the future of British 
agriculture. This is all to the good if it 
means that agriculture will no longer be 
treated as the Cinderella of industry. 
The discussion has ~o far been in 
economic terms, but it is of importance 
that agriculture should be considered in 
social and political terms as well, The 
questions to be asked are not only a:bout 
agriculture's role in the economy, its 
effect on the balance of payment~ and 
its influence on trade with traditional 
food producing countries overseas ; 
they should be concerned with the 
attitude of society to the minorities 
Jiving in remote areas and with the 
problem of preserving the countryside 
while developing recreational facilities. 
There could be Socialist answers to 
these questions which would take 
account of problem~ of land ownership, 
taxation of inherited wealth, rising land 
values, pollution and conservation of 
the environment, equal opportunities for 
those who work or Jive on the land, 
safeguarding of consumer interests and 
of the interests of world agriculturaltrade. The working out of solutions to 
these problems would require a separate 
pamphlet but it must be empha~ised in 
this one that the laiss.ez-faire approachof the EEC embodied in the Treaty of 
Rome would make the discussion, plan-
ning and eventual implementation of a 
Socialist approach to agriculture a 
matter of "pie in the sky." 
We must face up to the fact that the 
CAP is completely irrelevant to the cur-
rent and future needs and problems of 
those who work in British agriculture 
and of the consumer. We do not need 
the CAP, although it does need u~. As 
long as the EEC remains isolated from 
the world market we can import cheap 
food from traditional suppliers and 
ifrom the EEC at subsidised prices. 
The present sit'Uation is much to our 
economic advantage. The disadvantageof adopting the CAP are extremely 
serious and the fact that our negotiatorhave accepted it in principle must be 
regarded as a blow to all engaged in 
British agriculture. Minor concessions 
cannot obscure the fact that the AP 
represents at least one step backward 
for British agriculture, un~ettling in its 
effects and offering no solution to the 
real problems that have to be tackled in 
order to ensure reasonable living 
standards and opportunities for those 
who want to work on the land. 
6. conclusion 
The debate about EEC entry and the 
Conservative government's introduction 
of an import levy system have concen-
trated attention on the future of British 
agriculture. This is all to the good if it 
means that agriculture will no longer be 
treated as the Cinderella of industry. 
The discussion has ~o far been in 
economic terms, but it is of importance 
that agriculture should be considered in 
social and political terms as well, The 
questions to be asked are not only a:bout 
agriculture's role in the economy, its 
effect on the balance of payment~ and 
its influence on trade with traditional 
food producing countries overseas ; 
they should be concerned with the 
attitude of society to the minorities 
Jiving in remote areas and with the 
problem of preserving the countryside 
while developing recreational facilities. 
There could be Socialist answers to 
these questions which would take 
account of problem~ of land ownership, 
taxation of inherited wealth, rising land 
values, pollution and conservation of 
the environment, equal opportunities for 
those who work or Jive on the land, 
safeguarding of consumer interests and 
of the interests of world agriculturaltrade. The working out of solutions to 
these problems would require a separate 
pamphlet but it must be empha~ised in 
this one that the laiss.ez-faire approachof the EEC embodied in the Treaty of 
Rome would make the discussion, plan-
ning and eventual implementation of a 
Socialist approach to agriculture a 
matter of "pie in the sky." 
We must face up to the fact that the 
CAP is completely irrelevant to the cur-
rent and future needs and problems of 
those who work in British agriculture 
and of the consumer. We do not need 
the CAP, although it does need u~. As 
long as the EEC remains isolated from 
the world market we can import cheap 
food from traditional suppliers and 
ifrom the EEC at subsidised prices. 
The present sit'Uation is much to our 
economic advantage. The disadvantageof adopting the CAP are extremely 
serious and the fact that our negotiatorhave accepted it in principle must be 
regarded as a blow to all engaged in 
British agriculture. Minor concessions 
cannot obscure the fact that the AP 
represents at least one step backward 
for British agriculture, un~ettling in its 
effects and offering no solution to the 
real problems that have to be tackled in 
order to ensure reasonable living 
standards and opportunities for those 
who want to work on the land. 

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the author 

Eric Deakins is MP for Walthamstow 
West and worked for 15 years in agricultural 
marketing. He is author of A faith 
to fight for and wrote jointly with Edmund 
Marshall, MP, Europe : what 
next? ~abian Traot 389). 

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