Good morning, and welcome to this meeting of the Environment, Food and Rural Affairs Committee. We return to our inquiry into the future of farming, and we will be focusing our attention this morning on the profitability review delivered last year by Baroness Batters. We are delighted to have Baroness Batters with us this morning. Minette, for the benefit of our official record, and for those who are following our proceedings, give us the edited highlights of your CV—who you are and what you do.

Good morning, everyone, and thank you for having me in. I am Minette Batters, a Cross-Bench peer and former president of the National Farmers’ Union. I am a farmer myself—a tenant farmer on the Longford estate in south Wiltshire.

You are very welcome to the Committee, and congratulations on having delivered on time a very substantial, significant piece of work. You have spoken about the circumstances in which you took it on. You said that it came with reputational risk. I am sure we all heard it said, “Parliament will never let her be independent. This is a poisoned chalice.” What on earth made you want to take this on?

I suppose, having spent 10 years at the NFU effectively trying to achieve farming profitability—I guess, if I look back further, that is what drove me to get involved in the NFU as a farmer myself—it seemed wrong not to accept Steve Reed’s invitation to look at the challenges of farming profitability. On reputational damage, I think I ought to clarify that I was not remotely worried about my own reputation. What I was worried about, as you alluded to, Chairman, was a lot of people saying, “The report will be filleted and changed, and you won’t be able to publish it in your own words.” All of that made me slightly nervous. I was very clear all along, both with Steve Reed and Emma Reynolds, when she replaced him as Secretary of State, that if I were to write this review, I would write it in my own words and expect it to be published as is. In fairness to them, they have always accepted that and, indeed, done that, so I am pleased. But that was the advice on reputation. It wasn’t concerns about myself; it was my concerns about the work.

Profitability covers just about everything to do with farming. You have issues around supply chain fairness, access to labour, challenges of climate change mitigation—a whole range of things. You have recognised that and come forward with something that could meet those challenges. How fit do you think Defra is, as a Department, to juggle all those balls in the air at once?

I have said to Defra—and I think it is only fair—that they should have until June, effectively, to digest all of this and come up with a plan that sets out the 25-year farming road map. That was my aim: to set out a process for how to start the farming road map across all sectors, focusing on farming rather than diversification. Diversification was another thing I was asked to look at, and I was very keen to do so. This must be about farming, and it must be about looking at profitability from farming enterprises. That does not just limit it to food production. I did not want my recommendations to say, “Farming is not looking profitable in some areas, so they should look at diversification.” I think that is wrong. I think we want to be able to expect that farmers can earn a living and enough money to reinvest in a business. I am under no illusions as to the major reset this will be for the Department, and the major reset it will be for the industry as well. This is not just about Government. If we are going to look to a comparison with New Zealand, Ireland, Denmark and other countries that are working in partnership, partnership means both sides equally invested and working. It is not just about asking Government; it is about rolling up our sleeves and developing this long-term plan for farming together. It is a major reset. I have given two years for the turnaround. In my opinion, on the evidence I have, we do not have any longer than two years, if we are not going to come up with a new economic model and a new strategy for a long-term farming road map that I would really like. I hope to be able to talk to all political parties, because it is really important to have cross-party support. That does not mean to say that some might do a bit more in some areas and a bit less in others. What we have learned is that we cannot keep taking farming off the road in parliamentary cycles. The 25-year farming road map has to set out a real need for the strategic change that I believe is needed. It is as much a challenge to the industry and the supply chain as it is for Defra as a Department. At the moment, I see competition between Departments. DBT and Defra are not aligned on the common cause. For MHCLG, the challenges on planning are very clear for me to see. They do not deal with farming, so how can they have a Whitehall blueprint on planning? Defra needs to be streamlining that. We also need to look across Departments to make this work, and Defra will need support from other Departments to make this happen.

I will come on to the question of the road map in a second. First, on your point about not considering diversification, that is very important just for credibility and getting a hearing from within the farming industry itself. The relationship between farming communities and Defra is poor, and has been for quite some time. One of the first things we did as a Committee was hear evidence from the former permanent secretary and a couple of senior officials in January 2025, following which we as a Committee wrote. I will read back our observations at that time: “It is my Committee’s view that Departmental officials were not sufficiently alive to the urgency of providing certainty for farmers who must necessarily plan many years ahead…the Government must set out a coherent and signposted plan for change with details of the risks posed and the support available to farmers…we urge you to set out the Programme’s direction of travel as a priority, and at the latest before harvest 2025.” It is almost a year to the day since that letter went, and we are still waiting for the farming road map. How do you see the prospects, with your profitability review, of resetting that relationship between Department and industry?

I do not think we should underestimate the Herculean challenge that it is. Actually, Defra’s own evidence base tells us that. It speaks volumes that fewer people now understand the Government’s plan—the ELMs proposal—than when it started. It was less than 10% then, and now it is down to 7% who actually understand what the Government’s plan is. I was very clear that Defra needs to be talking to many more farmers, and that is in the recommendations with the agri-growth hubs and the catchment approach. There is not a relationship with the farmers on the ground at the moment, which is why so many do not understand what the plan is. You could say, “Well, there hasn’t been a coherent plan”, and you only have to look at the number of Secretaries of State we have had—on average, it has been one every year—which has also led to enormous challenges. In many ways, you could say that we do not start this from a very good place, but we actually started with pretty much a blank canvas from which to operate. I have to say, as a farmer myself, having started with a great degree of almost fear and trepidation about the impossible nature of all this, by the time that I finished and was writing my conclusions, I actually thought that this is very exciting. We really can have a very different industry. We should recognise that many countries across the world have been focused on establishing trade deals with the UK, because they want to have access to this market. They see it as one of the most prized food markets in the world. We are here in this marketplace and not actually recognising what we have. I saw it as a huge opportunity, and it is very exciting.

You touched on the recent changes to inheritance tax in the report. Do you think they help with the reset?

Massively. In fairness to the Prime Minister and the Chancellor, they have both seen me and have both engaged. They have looked at this evidence and the plan, and the Prime Minister has said that he is very keen to see it happen. I think it allows us to start afresh. I talk about the fear and trepidation of the industry facing into this and what it would mean, and the evidence is clear. You only have to look at the independent analysis to see that over 50% of farms fall below the level of median household earnings. If we are looking at the average family farm of 140 hectares, they need a profitability margin of £34,500 to be on a comparison with median household earnings. It is a stark fact that over 50% of farm businesses fall below that. From my point of view, there is enormous nervousness that mid-performing farming businesses are fragile right now. That is why I say two years, because I don’t believe that we have much longer than that if we want to save the farming structure that we have in this country. It is good that the IHT situation has been resolved. Not everybody is happy, and there will be expectations for a future Government to see the end of that, but we have a recognition of where farming is. What we must do now is to work towards the solutions to resolve the whole situation, and to be ambitious, especially in the current geopolitical situation. There are a lot of recommendations about bringing food production into the plan. There is no one silver bullet—I kept saying that, and I have been challenged on the number of recommendations in the review. I strongly believe that all 57 recommendations need to happen. I put a lot of thought into it—I had hoped to get the number into the 30s, but I couldn’t. If we look back 20 years to the Curry commission, it had well over 100 recommendations. We were a member of the European Union then, and we must accept that this plan has been done in the light of there not being a plan for farming since we left in 2020. The plan has had to cover other things that it wouldn’t necessarily have needed to cover in other circumstances.

I want to look at the relationship between your review and the coming farming road map. First, the issue of support for food production and food security. One question I asked the director general for food, biosecurity and trade, when she appeared before us in December, was about the inclusion of livestock numbers—you will know that livestock numbers have been on a steep downward decline. I asked if there was any prospect of that being addressed in the farming road map, and she said, “I would be surprised if we ended up talking about livestock numbers in the Farming Roadmap.” I then asked her, “Why would that surprise you?” and she said “Just because where Ministers have been over the last few years. That has not been a typical view from Defra.” Essentially, the answer is no. We will have this big strategy, but it is not going to be informed by a view on how big the national herd or flock should be. Does that seem like a sensible way of progressing to you?

The fundamental focus of the review is joining up the plans that individual farmers are making on their farms with the national plan. That is what needs to happen. In making decisions as a farmer, I need to know what the national plan is. A vast proportion of this country is livestock production. The uplands are not going to be growing broccoli, malting barley or milling wheat; they are predominantly livestock-based, and we need to know what the plan is for those businesses. I talk about developing sector missions. It is important that all sectors develop sector missions. We must be very careful not to tie up consumption with production. What we are not consuming, we should be ambitious to export. I talk about growing our exports by 30% by 2030, which needs a co-ordinated plan. I was always struck when the New Zealanders came here. The farmers would all turn up with the Government delegation, wearing their black fleeces with the silver fern, and saying, “On exports, these are the three things that we need to talk to you about.” We have to be doing the same thing. Of course, we must know our livestock numbers. We must know, sector by sector, what we are producing and where we need to be ambitious. I talk about the plan for growth. We must be growing domestic production. There are many reasons for doing that, but it must be in measurable terms. The situation with dairy at the moment is why market monitoring is so important. We must know what is coming into our marketplace and what we are producing. We have to set out those plans across the four areas of retail, out-of-home and manufacturing, Government procurement and exports. To your point on livestock numbers, we have to know what is coming in and also what we have got.

You mentioned dairy, and that is the most obvious and acute issue around farming profitability at the moment because a market glut is driving down the price. I have no doubt that it will eventually correct itself, but in the meantime, we risk losing a substantial number of dairy operations within this country. Again, that has been the direction of travel in recent decades. Unlike other parts of the United Kingdom, the European Union and elsewhere in the world, we have no basic payment left. To what extent did that inform your comments on SFI and how it could be used to deliver food production, as well as environmental benefits?

We heard a lot in the last Parliament about this being a global first, and it is a global first. No other country in the world has gone down the purely environmental route. It is now absolutely essential that we bring food production into the SFI. We can deliver public benefits for the environment, nature, soil and food by doing that. We must recognise that we can deliver that, and that it is not an either/or. We have had a lot of warm words over many years about food and the environment being treated as two sides of the same coin. We have failed to act on that. It is essential that we bring food into that, but we can still look at the environmental benefits of those crops, and I have talked about peas and beans. We should be aiming to be soya-free in 10 years’ time. We are importing a vast amount of soya that, in some cases, is doing environmental harm in other countries. We can change all of that. In Kenya, which is a country I have spent a bit of time in, they have a massive plan for tree planting, but they focus on food-producing trees. Obviously, they sequester carbon, but they also deliver a crop. It is really to our detriment that we have excluded food, and we must incorporate it now. There are other reasons for not continuing to focus only on environmental crops. I will come on to farmers, but I talk about mandating the Taskforce for Nature-related Financial Disclosures. We do not have enough money—we are working with a vastly diminished budget. If you factor in inflation, I was working with a 2007 budget, and with the current situation with defence spending and the NHS, it is unlikely that Defra is going to get more taxpayers’ money. That means that, to be truly profitable, it is going to be essential to allow farm businesses to produce food crops as well.

How worried should we be about the position of the dairy sector at the moment?

What has happened in dairy is enormously concerning, and it is why market monitoring is so important. We have a huge population—70 million people on an island. We cannot be importing liquid milk, but it is very easy for a country like ours to go into oversupply. The ramifications of that are stark, and we lose businesses on the back of it. That is why we really have to manage the supply and demand model much better than we have. In Europe, they have done it for us. Regardless of alignment, we are now an independent nation. We have to be in control of what we are producing: what the home market wants and what we should be exporting. If we do not change, we will continue to get more challenges like we have seen in the dairy sector. The fundamental first rule of agriculture is that you manage supply and demand, because you are dealing with a fresh product. You can’t just say, “Well, actually, we are just going to store this.” That is why Ireland and other countries have invested so much in drying facilities in order to export milk powder. We have to do the same thing.

Is this the sort of thing you think the farm advisory board would be able to tackle?

There are two platforms, effectively. A lot of this thinking is modelled on Ireland, with the Bord Bia food board and Teagasc. Teagasc is about technical advice for farmers, but also science and research. That was how it started, with a research platform, and their equivalent of ADAS—the advisory service—coming together. I believe we should do the same. At the moment, advice for farmers is in about 40 different places. I would love to see Defra have one dashboard, a one-stop shop with everything that a farmer needs, so that they do not have to go to all these different places for advice in the future, and also for research. We should be very excited about the opportunities that we have on the sector missions for developing the research priorities, but also at a national level.

I have hogged the limelight for long enough. Sarah, you wanted to come in with a quick question.

Good morning, Minette. Thank you very much. Going a bit further on dairy, an awful lot of butter and cheese has come through from Australia and America over the last few months. That has obviously pushed the price down significantly, because there is an oversupply now, and many dairy farmers are selling for way less than the cost of production. It looks like prices might go down a little bit more. What is your feeling about the impact of the trade deals on this cyclical market we have in milk? Also, what is the importance of point of origin labelling? A lot of these products are coming in without that labelling, and that is undermining the UK market. Consumers are almost being duped into thinking that they are buying British when they are not.

Absolutely. There are a couple of things here. I will pick up the labelling point first. We tend to focus all our attention on retail. Obviously, you have labels in retail and, indeed, retail has absolutely embedded country of origin labelling. It is different in the out of home sector. Not even the voluntary code on country of origin applies to the out of home sector, which is about 50% of the value of the food market. I recommend that, in the very first instance, we should apply the voluntary code to the out-of-home sector. That should look to a statutory embedding, so that consumers know what they are actually buying. This is not about further cost for the out-of-home sector, which is really struggling at the moment; this is about transparency, honesty and integrity. Equally, in retail, we are seeing misuse of the Union Jack. I recommend that if the Union Jack is going to be used, it should be used on products that have been grown, reared and produced in this country. It should not be used on products with raw ingredients that have been imported and processed here and are then badged up with a Union Jack to mislead the consumer into thinking they are buying a British product. In my report, I say that the Union Jack should be linked to assurance schemes like the Lion mark, Laid in Britain and Red Tractor, where they provide clear proof that food has been produced here. We need a complete overhaul, particularly in the out-of-home sector. This is anecdotal, admittedly, but I was told that probably only one in 16 steaks is actually a British Aberdeen Angus steak. We are seeing a lot of misuse of “British”. That leads on to your point about the impact of trade deals. We have signed a trade deal with India. We are going to see India become SPS-compliant. We must be very mindful here that SPS, and SPS alignment with Europe, does not represent food values. Food values are legislation and regulation on animal welfare and environmental protection. SPS is about food safety. Those are two different things. We have to have that point of difference in what we are expecting our farmers to produce to and the legislation and regulation of our farmers, as opposed to that of others we are importing from. We have to know. This is why market monitoring becomes so important. At the moment, market monitoring is all over the place: HMRC has some, AHDB has some, the NFU has some, and you have one person in Defra looking at it. It has to be centralised so that all this data is in an accessible format and we act on it. As we import more, we will need to look at exporting more to balance that very fragile supply-and-demand model. That is why I talk about the two years. If we do not do that, we will have a lot more product coming on to our market—we do not know how much and when. Do not forget—it is easy to forget—that it was a fully liberalised deal with Australia, so they will have open access. In the upended world market that we have at the moment, we will see more product coming on, so it is fundamental to profitability—it is the most important thing. I do not expect to see misuse of the Union Jack in the way that we have seen.

Some of my fellow countrymen would, of course, point out that other flags are available. Flags, eh?

A lot. I was surprised at the dysfunctionality of Government Departments and the competition between them. The more I looked into it and understood it, the more I realised that it is actually set up to work in a European situation. It is not set up to work independently. This was a profitability review for England, but I was really mindful that we are four nations, one country. I am enormously grateful to Scotland, Wales and Northern Ireland, who all welcomed me in. A lot of these recommendations are UK-wide. I have spent so much time out in Europe engaging with the 27 member states, and I fear that we are headed for more complexity with the UK four than we had with the EU 28, so we have to make sure this internal market works as well as possible. That means continuing to respect the devolved relationship. Where necessary, particularly on trade, disease and biosecurity, we have to have a joined-up plan. Equally, with the policy, we are currently heading for serious divergence. England, Scotland and Wales are all connected in one island. That is why I talk about bringing food production back in, and why I talk about the active farmer principle. I am using the wording from our Agriculture Act because we have to have a common approach. I talk about the principles of the common agricultural policy. This island needs to establish principles and a framework from which to operate. Politics must respect the wider importance of making sure we have a plan for rural.

It was more the challenge of time. I was given six months to engage with the whole industry and ask it, sector by sector, what the three blockages are, and I was very keen to challenge it on the solutions. I would have needed longer to do it well. In my conclusions, I say that there are regrets. I would have liked to have spoken to more young people. There is a real difference in young people’s plans for the future and my generation’s thoughts on the future, and we should be allowing young people a really strong voice in all of that. On biosecurity and disease, I made the point that that is actually another review in itself. Similarly, on diversification, I felt that was also another review and I would have diluted my recommendations. I still stand by the fact that it is not for every farming business to diversify. Some have—and my own business is a diversified business—but for others it is not a possibility or something that that farm business would be suited to. I still think that it was right to explore the challenges for farming and what profitability means for that sector. If the Government choose to look at diversification on the back of this, that will be a choice for them. I think that it would have muddied the waters.

It addressed the costs. If we are looking at fixed costs, last year the OBR was predicting that there would be a 30% rise in input costs. Fixed costs were exactly the same—they are marching stride for stride. New machinery was also up 31% from where it was in 2019. Those are enormous costs. We have not seen price hikes like that in such a short period within living memory. We know why that was: leaving the European Union, covid, rising inflation—then the final challenge of a war in Europe drove a coach and horses through it. We are dealing with enormous challenges in those costs. It is very hard to put in a floor, or indeed a recommendation, that deals with that. If we look at how we are structured with competition law, we are not actually enabled to intervene like they do in the US, and I refer to that. That is why we need to look at a new economic solution to build resilience at a farm level. That makes it very clear that we must be looking at a profit margin of £250 per hectare if we are going to be remotely there. There are other factors. With long-term contracts, we are now seeing the supply chain very much look towards a long-term relationship. Pilgrim’s is coming out and talking about 20-year contracts. Who would have thought, 10 years ago, that that would happen? We now need the same approach from Government—a long-term plan. Three years is not long term and does not allow for those necessary long-term investments. It is a challenge to what we do about input costs. There are other things that we can give certainty on and manage to cope with the enormous volatility that we are now facing. There are multiple reasons for that volatility: geopolitics, weather and the fact that we deal with global commodities and do not have control of their end price. We face lots of different challenges. I have tried to focus on how we build resilience and manage volatility. On managing volatility, again, a lot goes back to market monitoring. A big push from a lot of the evidence that I had was wanting to understand fertiliser pricing and know what flows of grain there are within the UK market—what is coming on to our market and what we are exporting. Farmers do not have that knowledge at their fingertips. They need much more knowledge to join up that national plan with the individual plan on the farm.

I absolutely think it was. There is so much talk of conspiracy at the moment, but I dare say it is nearly always cock-up. I know Defra was disappointed, and Emma Reynolds was very keen to have it published straightaway. I worked very hard, and Steve Reed was quite happy to give me longer—until the end of November. Emma Reynolds wanted it on her desk by 31 October, so I worked very hard to get it over the line by the 31st. They wanted it published; I wanted it published. It was very frustrating that it took a while, but I had to and did understand that 20 Departments—in the run-up to the end of the year, a lot of Departments are saying, “We have to get this published,” and so, probably, all roads lead back to Alastair Campbell establishing the No. 10 grid.

The days running up to Christmas were a lot busier for many of us, as it turned out.

Thank you very much for attending today. The response from the farming industry has been broadly positive. The focus is now on how Defra will implement the recommendations. You made it clear in your report, and you have said today, that there is no silver bullet to improve profitability. Of the recommendations you made, which should the Government prioritise?

That is a very difficult one to answer. They have committed to the partnership board; let me focus on that, because they have committed to it already. I still stand very strongly behind the 57 recommendations, which are needed to start the process. The partnership board is an important first step, but it is not a new idea. What we must do is learn lessons, particularly from the Food and Drink Sector Council, which was set up by Theresa May for the industrial strategy. In that time, other sectors of our economy, including the automotive sector and aerospace, all came up with a plan to be part of the industrial strategy, and they are part of the industrial strategy. Food and drink did not come up with anything, and that is a travesty. That is what has to change, which is why I talk about the balanced scorecard approach to do this in measurable terms. The fundamental first step is, I still believe, recalculating the value of the sector. I think it has been enormously damaging over many years that we are perceived to be 0.6% of GDP. I have had conversations in the past with the Treasury and with Defra officials where they have said that farming couldn’t matter less: it’s 0.6% of GDP; it’s not important. I would always follow up by saying, “Well, what about all the foreign businesses that are here because the raw ingredients are grown here?” But that is only the first step. You then look at the machinery dealerships, the farm vets, the agronomists and the schools and pubs in rural areas. I make this point. Who is going to clear the roads in winter? Who is going to put out the wildfires in summer? Farming is integral to the rural economy, but nobody in Whitehall understands what it is. That is not particularly their fault. It is about many, many years of not understanding what it is. There is evidence in other countries, such as New Zealand, that 80% of the value of primary production comes from other areas. So if we recalculate the figure with the ONS, which is my first ask of Defra, you will have a very, very different figure that I think will make the Treasury think, “Oh gosh, this is actually quite an exciting sector,” and that it can be very much about growth and wealth creation.

What do you think that figure would be?

The irony for me is that I hoped, while I was doing the work, that we could work it out, but we couldn’t. That is extraordinary in itself—that we do not know the value of all the businesses that are here and that are involved with the raw ingredients. Other countries could tell you that. New Zealand could tell you that. Ireland could tell you that. We can’t, and that shows you why we need to do it—because this is about jobs. This is about jobs in very rural places. We look at all the challenges and opportunities with AI. I think there will be a lot of opportunities for jobs in the food supply chain on the back of this. But we have to know—that is the point. That is why we have to re-establish the true value. I could have recommended that farming went into DBT, because DBT deals with businesses; Defra deals with farming businesses. That is why it is so important to have the focus on primary production, because nobody else has that focus on those businesses. But then we need to join it up with DBT, so that we are focused on UK raw ingredients. I remember very well having conversations in the last Parliament. For example, I can remember having a conversation at the Food and Drink Sector Council, where Liam Fox actually said that the great opportunity of Brexit is to bring in cheap raw ingredients and add value to them under the Union Jack. That is the line that was used. We have to focus on UK-grown raw ingredients. That is why it is important that we do this work in measurable terms and join up across those four markets that I talked about at the beginning. That is probably up there with the most important things that Defra needs to do. But it is not about just establishing a board; it is about establishing a board that delivers the right outcome—and a board cannot do that unless it is set up in the right way at the beginning to do this work in measurable terms. Otherwise, what happened at the Food and Drink Sector Council will happen again and you will have people sitting around the table saying, “The Government should…” or “The ask is…”, and it will turn into a talking shop or a lobby all over again.

If the board is set up correctly, what impact do you think it will have?

It should be able to grow our exports by 30%; 2030 might be a bit of a tough ask, but it should be aiming to do that. There is also the out-of-home sector. We have no idea what the out-of-home sector wants. If you talk to the out-of-home sector—I put in some case studies. Ascot racecourse is not just doing the catering for Ascot; it is doing catering for quite a lot of different venues. For instance, they did the catering in Ireland for the Ryder Cup. So, it was very interesting to look at their sourcing, and actually they have a very strong commitment to British sourcing. However, among the many people I spoke to in the sector, the wholesalers were saying, “We have no idea what is being produced in this country, let alone what to buy.” In most European countries, wholesale sits above retail; in the UK, retail sits above wholesale. So, retail has the first—it has the lion’s share of what we are producing. But that does not mean to say we cannot look to grow our domestic production for the out-of-home sector—for the manufacturers. When I talk about protein crops, we should be producing much more of our protein here; we should aim to be soya-free in the next 10 years. We know that there is a demand for more plant-based proteins. The Food Foundation is talking about more peas and beans. Well, that should be part of the SFI.

I have another two questions for you. First, what was your experience of working with Defra? Secondly, do you believe that it has the resources, the capability and the appetite for reform that are needed to significantly improve farm profitability?

When I first started, I was given a very small team of five. You have had oversight of the Cunliffe review. Cunliffe had 40 people working on that review. I had five people, only one of whom knew anything about farming. So, I thought at the beginning, “This is going to be impossible.” When I got to the end, I can honestly say that that team of five were all experts, and I was learning as much from them as vice versa. They were challenging me as to what was not in the review and what should have been in there. So, I was really proud of them, and everywhere that I have been I have thanked them and talked about what they achieved. What that proved to me was that—those were bright young people. Bright young people can turn their hand to anything when they are given the right direction. So, they pretty soon picked it up. And if they picked it up, anybody in Defra can pick it up. But what is missing is the co-ordination. I think that Defra, as a Department, was very much set up in Michael Gove’s time. The world was completely different then. Our world has changed beyond all recognition since that green Brexit announcement in 2016, and the Department has to adapt. The funding that I talked about— the 2007 budget—has to become an economic Department. It really does need to change at pace. So, there is pressure on Defra. It is not its fault. Our civil service is bright, and people go into the civil service to achieve, but what they need is a co-ordinated plan to operate from. I think that is what is missing.

So, there is an appetite—it just needs to be delivered in a different way.

It is the deliverability. I hope that I am not speaking out of turn, but Paul Kissack, the new permanent secretary in Defra, said to me, “I was really struck by what you said about civil servants”—I had said, to start off with, that they should be sleeping in the lambing sheds, but I decided that it was better to change that, and say they should be helping in the lambing sheds in the daytime. What I was trying to establish was that you have to get out of Whitehall. You have to get out to understand. Equally, farmers have to come in. You have to have change on both sides, in understanding, working and developing together, not this continual—in some cases on both sides—writing of press releases. This is about developing a long-term strategic plan together. We used in the past to have a lot more secondments out into the sector; none of that happens now. We have to get back to doing that.

For some of us, being helpful and being asleep are not always necessarily different things when it comes to the lambing shed. I was really struck by what you wrote, Minette: “I’m convinced that Civil Servants need to get out on farms, helping in the lambing shed or spending a day picking fruit and farmers need to work with them. We need to plan much more together how we shape the future of food and farming.” Strong words. How likely do you think that is?

As I say, Paul Kissack, the new perm sec in Defra, said that those were the words he was most struck by, so I think he is very much committed to wanting to establish a new relationship with farmers. I thought that his commitment to those words was very positive indeed.

I might even have a vacancy for him in a few weeks’ time. We move on to the fourth section, on ELM schemes, with Josh.

Thank you very much, Baroness Batters, for coming to speak to us, and thank you for your review, which I think is a genuinely useful blueprint, particularly for us, as Back Benchers, to hold the Government to account. Thank you very much for all your work. As you said earlier, England’s transition from basic payments to public money purely for environmental goods has been controversial, and it has fundamentally changed the relationship between farmers and the Government. Particularly in the light of the early closure of the SFI, what sense did you get, in your discussions, of how well ELM schemes are supporting the farming sector and profitability? What improvements do the Government need to make in their revised SFI offer?

Right from the beginning—don’t forget that I came in at about the time that the SFI was being shut—I think that it was a real shock and a real concern to Steve Reed and Daniel Zeichner at the time. If I am honest—you have to look back—I think it was set up in totally the wrong way. If you have a scheme that is open-ended and demand led, you have no idea what the demand will be, so you have no idea of the value that will be demanded. You can understand why the Treasury would be enormously frustrated by a scheme like that, and then the Government came in without the knowledge that the scheme could run out of money. Of course, in the desire in the last Parliament to get the money out the door, the payment rates were raised, so a lot of people came forward. But, again, because it was demand led, and you did not know what the demand would be, the money disappeared very quickly. In many ways, it was set up to fail. The SFI can be a really good scheme, and it is the scheme, so we now have to make it work. But we don’t have enough money. NFU work shows that if we were to be compliant with the legislated environmental targets and deliver all the outcomes that are required of farmers, we would need a budget of £4 billion. With the challenges that this country faces and the debt that this country has, I don’t see that money coming forwards, so we have to look at a new economic model. That is why I talk about the SOILSHOT programme for building our soil health, but also, again, not putting all the burden and cost on farmers. This fundamentally goes back to the “polluter pays” principle. If you have removed BPS, and if you have removed all payment that has effectively covered off our risk over the years, you cannot expect farmers to carry that cost. Equally, you don’t want to drive food inflation, so you have to make this as broad and fair as possible. That is why I think you can have an effective approach on climate change and emissions, which is legislated. People will have different views, but my terms of reference were specific to climate change legislation and regulation and net zero objectives, so I had to work within that framework. That is why I recommend establishing the SOILSHOT programme, and why I talk about the taskforce on nature-related financial disclosures being mandated. I feel this is a very exciting thing to do. At the moment, BNG is very narrow and very costly, and it is holding back a lot of infrastructure projects. We know that the financial institutions and the corporate sector have to be—and they are, voluntarily—responding on the nature disclosures. The Government have all the answers here, because Government effectively have the ability to offer high integrity, as they have done with BNG, the Woodland Carbon Code and within the BSI standards. If nature can be embedded as a fundamental national asset, you have the integrity. Farming gives you the scale, and farming giving you the scale is what makes it affordable. This gives you your new economic model. It could be distributed by the RPA, as is currently the case, or you could go down the catchment approach that I have recommended, but we have to look at this new economic model. That also frees up all the challenges on infrastructure. You can bring in trees and hedges—herbal leys deliver a nature benefit, as do cover crops. Our fields this autumn have been alive with phacelia and buckwheat, which has been a fantastic nature benefit. If we want to retain the family farm structure that we have, we need to have a new economic model, and that is why I propose establishing this taskforce. Emma Reynolds is very well placed to lead this, because she of course ended the green taxonomy when she was in the Treasury, and that had become very much a standard of how to farm. We need more flexibility for farms in England. This could then work as a budget UK-wide, which would be a global first, and I think it could be really transformative.

We have been talking about complexity, particularly for small farms, around the capacity within Defra to do this. Do you think there would be the capacity to deliver that new model, alongside a potentially very different SFI as well, all coming this year? Do you think that is something that other Departments will have to assist with? Will this have to be a whole of Government effort?

No. I think it would simplify it enormously. You don’t need 100-plus options; you need enough options, and Defra now has a good evidence base for the bulk of the options that have been pulled down and what they have achieved. If you bring in the protein crops, the pulses and the oilseeds—we have banned neonicotinoids in this country, but we are mixing what we produce here with countries that have not banned them. We really should be looking at our own country and what we are producing. You would never see that happening with olives in Greece, Italy or anywhere else, as an example—it just would not happen. We really have to look at what we are producing and how we add value to this. The deliverability has to be much more simplified than it was before, so that we effectively know what the budget is, and what it is being spent on. When I originally spoke to Paul Caldwell at the RPA, I was shocked about the costs of delivering the SFI, as opposed to the costs of delivering the land-based payment. You had enormous change in personnel, so the simplification is really important to deliver the benefit to the taxpayer. That was an important point for me; I could have written a great review for farmers that would have sat on a shelf, so it was really important that this review worked for Government priorities, taxpayers, consumers and farming profitability.

You have recommended that some elements of agri-environment schemes should be linked back to food production. You referenced earlier the push-back that some of your recommendations have had, and I think it is fair to say that is one of them—for example, I know it was something that you were asked about on “Farming Today”. To what extent do you think that could undermine the environmental aims of ELMS? That is what some people are saying, so what is your response to that?

There might have been push-back, but I have not had it directly to me.

They are too scared.

It is almost like they’re scared.

I do not underestimate that this Committee has a really important role in implementation and delivery. I effectively am one person. It is almost that I have done the work and have to step back now. The last thing that anybody wants is me griping from the sidelines. You have a really important and critical role in establishing this. I am not talking about subsidising in the way that we saw subsidies in the past. I am talking about crops that deliver double benefit: food production benefit and environmental benefit. I don’t think there is any problem with that. All I am saying is: this is a moment. If we don’t change, in two years’ time you will start to see a very different farming sector. Do we want large-scale monoculture farming operations? Who wants that? If you want it, yes, you are on a road to getting that. If you don’t want it, you need to change and to put these recommendations in place.

I think it is fair to say that we have seen, since the closure of the SFI, with the farms that were not able to get into it, what happens when we do not have an effective scheme: losses for farm profitability and nature. That underscores a lot of the points that you are making. Some of the more ambitious schemes, such as countryside stewardship higher tier and landscape recovery, are clearly delivering on an environmental level, and a lot of the partnerships that have been formed around them are fascinating and effective, but some people have complained that, particularly for smaller farmers, they are difficult to get into and quite bureaucratic. Did you look at that as part of your review? How do you see such schemes, which will still be there, operating in the future?

I had an opinion on them. I was told not to get involved in them, but I did have an opinion and have, I think, a very important opinion. In the last Parliament it was made very clear, and you heard Michael Gove say many times, that the CAP was very unfair: you had large payments going to wealthy landowners and it should be different. We are seeing exactly the same play out now: the larger you are, the bigger a recipient you will be. In my opinion, that is wrong, given what the initial aim was. Landscape recovery projects are great if you are in one. If you are not, what is there? I have recommended landscape recovery across all of England. That is what we need. I see more and more of what I would call diamonds in paper crowns. You have these diamond projects surrounded by a paper crown. That is wrong, and it is particularly wrong for a Labour Government. There is another challenge here around decision making. The National Trust is a very large landowner. We are seeing large landowners pull down huge sums of public money. The decisions are made by those large landowners, not the tenant. That is why I think that we should look at the new commissioner, Alan Laidlaw, having similar powers to the Groceries Code Adjudicator. Tenant farmers—nearly 50% of farmers in England are tenants—should be allowed to have a say in all of this, and they do not. There is one person that signs off the contractual relationship, and that is the largest person. If you are a tenant, your landlord is the one signing it. This is about evolution, not revolution. Landscape recovery is great, but let us have landscape recovery for all of England, not some of it.

Absolutely. As you will have seen, at the Oxford farming conference the Secretary of State announced that the first round of the revised SFI will be for small farms only. That is in an effort to tackle the imbalance in who is getting the lion’s share of the previous round of allocations. What challenges do you think that will pose for rolling it out? What do you think we could do to better target the SFI, to make sure it gets where it needs to go?

I am really sympathetic to the challenge Defra faces, which is the fact that it does not have enough money to do what it wants to do. However, it has been a long-established principle within agri-environment schemes that we invest per hectare. There is a short-term challenge with the SFI, which it is trying to resolve with the budget it has. We must get back to investing in every hectare; that is really important. Otherwise, you are back to more diamonds. You will have these little pockets that are working, but nature is across the whole country, so we should not penalise anyone. We should be prepared to make sure that we are investing in every hectare. That is what I believe should happen. It would be very easy to say, “Well, we’ve got so much going on now that we’re going to leave this to the next Parliament.” We must develop the changes now, before the multi-annual plan is written for the next Parliament. The permanent secretary in Defra is the one who writes the multi-annual plan, and that will dictate the funding and indeed the proposals for the next Parliament. It is really important that we recognise the challenges that Defra has, but see those changes happen. Again, I think this Committee has a really core role in making sure that this is implemented now, so that we develop the change for the next Parliament.

Lastly, we know that at the moment it is our dairy farmers who are at the sharp end of global price fluctuations. I know that your farm is beef, sheep and arable, so I will not ask you to comment on the specifics of that. However, many have noted that, when we had basic payments, they helped somewhat to level out some of those income fluctuations and to build resilience that is not there now, particularly where farms are not in an ELM scheme. How do you think Defra can address the issue of support during times of real crisis, to ensure that we do not keep losing farms every time we have these cycles?

It can’t at the moment—it does not have the budget to deal with a market failure situation. In that situation it would have to use emergency measures and call on the Treasury for funding, similar to what happens with disease outbreaks. We do not have a plan for how we manage risk in a market failure situation or in a disease situation, and we should have. You have a different approach in the devolved nations, but one of the challenges of saying that we are going to follow the environmental route alone and allow the market to provide in the food-producing area is that it does not allow you to do that. That is why there is a need to bring food into all of this. On the evidence that I saw, I personally think it is right that the active farmer principle that was taken out of the legislation in the Agriculture Act focuses on people who are earning a living out of farming. There are many people who may have sold their tech business and bought land for tax purposes—there are many examples—but they are not farming that land and are not reliant on farming for a living. Defra knows exactly who is farming. We have more regulation, probably, than any other country in the world; it knows who is farming. We should be focusing investment on those who are producing the nation’s food, because that is also a way of dealing with the food inflation we are facing. There are a few things that need to be done that will deliver the outcome we are looking for.

Some have said that we should treat farms like any other business and that, if they cannot cope in the harsh world of the global market, then—sorry—they are going to have to go under. You are saying quite clearly that we should treat them differently; that there is inherent value in preserving our own food production and that this is something the Government should be looking to do in times of crisis.

I think it depends on what you want. Broadly, the average farm, on the Defra analysis, is 140 hectares. That is pretty small. If we want those farms to survive and be profitable—if we want them to thrive—then we have to look at how they thrive. There are various different things that we can do. We are seeing livestock prices—beef and sheep—be remarkably resilient. That is because of two things: demand is there, and supply is tightening. Those things are critical to profitability and keeping prices where you want them. If we look back to covid, we saw people eating mince and only mince, so chillers filled up with prime cuts and steaks, and prices fell very quickly on the back of that. There will be the same impact with trade deals. If we start to import a lot more striploins and prime cuts from Australia and other countries, prices will fall, because they will displace Irish products, so you have to balance these things very carefully. If you do not want smaller farm businesses, and if you want big monoculture businesses, then do nothing and that is what you will get. I do not believe that anybody wants that. If you do not want that, we have to act with a plan that builds what I think we all want.

We have touched on the fact that a lot of what Josh alluded to is the brainchild of Dieter Helm and Michael Gove. You have asked what we want. Do you think you know what the Government and Defra want?

We obviously have a different Government. We are in a different world to the one that we were in when the principle of public money for public goods was established, and Theresa May proposed a green Brexit. We have to be very agile with what has happened, and what we want to be. What is this country, what do we want to be, where do we want to go and how do we want to get there? Successive Governments over many years have not understood rural. That is a big problem. Even more so, the machinery of government—our civil service and Whitehall—does not understand rural at all, and that needs to change. I think that is incredibly exciting, because rural is very much part of growth. I was really struck that when I spoke to the Forestry Commission it said, “Where is our plan for timber?” If you look at the Government plans for housing, we have no plan for commercial timber at the moment. A lot of our firewood was imported from Belarus in the last Parliament. It is not rocket science to work out that if you had a co-ordinated plan within the UK for what we were growing here and what we needed here, we would have a huge opportunity, but at the moment it is not a joined-up plan at all. We have to have a radical reset from where we were then, because what was set out in the Michael Gove/Dieter Helm era was a growing public purse and growing public investment. That era has gone. We have to look at how the private market comes into all of this, and at how we deliver on a plan for the whole country. A lot of lessons have to be learned. At the moment, Defra is very much set up for that era, but it can and will adapt—I think it is very keen to adapt. There is a new permanent secretary who I think is very keen to change the way that Defra operates and what it delivers, because there is a pressing demand for it.

That was a masterclass in diplomacy given the question you were asked. Before we move on to planning reform, you mentioned your surprise when you spoke to the RPA about the cost of administration. We can obviously pick that up with the RPA, but are you able to share with us anything you were given that surprised you so much? This is on the move from basic payment to the SFI.

This is why the Committee is important, because so much is dependent on the questions that you ask. I was really struck when I asked the RPA questions about the deliverability of the SFI and the land-based payment. Scotland, Wales and Northern Ireland have chosen to continue delivering via a land-based payment, and of course we got to know how that operated. There were many challenges, and the Government faced fines over many years because we were not delivering on time. The RPA said that it had fewer than 200 people working on land-based payments in the end; with the SFI, they had over 900. Within a year, on deliverability, the shift in manpower was enormous.

From under 200 to over 900. We will perhaps turn to that at some point. Charlie is going to lead the questions on planning reform.

Thank you for coming in today. You mentioned earlier the aspiration to increase exports by 30% and to grow domestic production. Is that in any way possible without reforming the current planning system?

No. If I am honest, I am appalled at the situation that we are in on the back of what we have done. It is not rocket science to work out that if you lower stocking densities, you want a slower-growing bird. To deliver that animal welfare, you need a larger building. What should have happened in the last Parliament was a join up between animal welfare and environmental protection and our planning system. In the last Parliament, we undermined our own producers, because we have insisted that they have a lower stocking density and a slower-growing bird—I am talking about the poultry sector, rather than the pig sector, although the same implications apply. With the cost of living crisis, there is now growing demand for affordable proteins, and we are now importing a lot more poultry and meat on the back of this legislation and regulation. It can be solved immediately by a planning framework that will allow permitted development rights to increase building size by 1,000 square metres. That could be done tomorrow, and it should have been done in the first instance in the last Parliament, when the legislation went through. Not only are we penalising our own farmers, but we are not doing justice to animal welfare and environmental protection. These new buildings will allow for much better facilities, and we are being penalised for it, but when you look at why, you realise that all of the process is in Defra and the leadership is in MHCLG. It is no wonder that, when you get to a local authority level, advice is in one place, infrastructure is another, and none of it is joined up. What I am saying to Defra is that there are two things: permitted development rights for larger buildings—individual wind turbines and on-farm reservoirs could also all be done through permitted development rights—but then you also need to develop a blueprint for planning so that new buildings delivering better outcomes can go through in a very similar way. I compare it with energy, because at the moment it is appalling how much it is holding us back—it is disadvantaging consumers, it is sucking in more imports, and it could be rectified. I am pleased that Defra does seem to be well on the trail of rectifying it.

Yes, you hear anecdotally of hundreds of millions of pounds stuck in the planning system currently. Before we get to the point where we might reach reform, the current situation on the ground is patchy, geographically, from local authority to local authority. How much of that do you think is because of poor interpretation of guidance from arm’s length bodies such as Natural England? How much is that stifling it at the moment? Should there be guidance from MHCLG to say to local authorities, “You need to get this sorted and get it pushed through”?

I believe they need a blueprint for planning for food, which I talk about in the review, that streamlines all the process you refer to. Natural England, the Environment Agency and the Forestry Commission—all of it—is held back by arm’s length bodies that are set up within their process. That costs an enormous amount of money, takes a very long time and sometimes does not lead to anything positive at all. When we look at the remit of a local authority with economic growth, they do not have a direct relationship with farmers. Of course, this goes back to establishing the agri-growth hubs and a closer relationship with farmers at a local level. I believe that is really needed when you are looking at economic growth plans, which planning has held back. Then it all grinds to a standstill because you often have a national approach blocking planning permission, bypassing the fact that this will be better for animal welfare and the environment. There is nothing not to like, but the system is failing it at the moment.

Given the amount of money that goes into the rural economy as a result of building new buildings and everything else, it is not good for the economy, so it desperately needs to be sorted. Is it your aspiration, therefore, that the blueprint will form part of the land use framework when we eventually get that from Defra, or are those conversations separate? Are you confident that we will see this reform planning move forward quite quickly?

Certainly, there seems to be totally different mood music. The help here is that Steve Reed is in MHCLG, and nobody knows these challenges better than him. Indeed, when I saw him the other day, he said he is very keen to join it up, but this has been going on for a long time. It has been failing for many years, so it needs to be reformed in totality. I still think that when we are looking at reservoirs, turbines and the ability to make a building larger, permitted development rights should happen immediately. On the wider challenges in planning, Defra needs to streamline it so that MHCLG effectively has an oven-ready blueprint that local authorities can use. At the moment, it is very difficult and costly not only for the person applying for planning permission; it is equally confusing and costly for the local authority. I hope that can change, but that will only happen if we get a Whitehall-established approach.

It seems to be a no-brainer, because it will not cost the Government vast amounts of money. It costs parliamentary and Whitehall time, but apart from that it will free up huge amounts of money.

Totally. It is a classic example of a process holding back growth and opportunity.

Very briefly on protected landscapes and national parks, do you see that as a slightly separate carve-out when it comes to this planning reform, or would you also like farmers in national parks to be free to do permitted developments?

We have to understand that farms have evolved over millennia. We cannot set anything in aspic. As much as we want to preserve the heritage and culture of our national parks, we want those farms—those businesses—to have the same benefits of buildings that are fit for the modern age. The past must not just be set in stone. It is about making sure we have a plan that is joined up in all areas and delivers the outcomes that are needed.

Moving on to questions about supply chain fairness, I call Sarah Dyke.

We have already said that farmers and growers need fair dealings within the supply chain to survive and thrive. Food resilience should be recognised as a public good. The review recognises the power imbalance between producers and the rest of the supply chain. The resilience of the food system depends on securing critical supply chains from end to end. What are your key areas of concern for supply chain fairness, and how can they be addressed?

The parliamentary journey that all sectors need to go on is really important. For the pig sector, what has come out of it on fairness and long-term relationships has been really important. The arable sector just started its journey through Parliament. But it is not about one thing; we should look at the Groceries Code Adjudicator, the GSCOP, the ombudsman. I recommend that the Groceries Code Adjudicator should come into Defra, because we have nearly lost it twice in DBT. It is not a cost to the Department. I recommend that it be expanded and that the threshold be reduced from £1 billion so that it goes to all businesses purchasing over £500 million, and that the golden rules be enshrined in law. We have to make it fit for purpose for the age in which it is working. I think it has done a huge amount of good, with Mark White following on from Christine Tacon. I think we have been very lucky with the Groceries Code Adjudicators that we have had. They can open the door into any retailer, but I think it is important that they can spread into the out of home sector as well. I have noticed that I have had a bit of pushback in The Grocer; the model that looks at the regulation around the golden rules and the reason for enshrining them in law, which seems to be being resisted, was the unanimous feedback from everybody who fed into me, so from the NFU and others. They were adamant this needed to happen. Indeed, in my time at the NFU I spoke to a lot of businesses that were very nervous about getting involved for fear of being delisted. That nervousness is still there. We have to give suppliers confidence that they can engage with the process and that that will be acted upon. I do not think we should underestimate the progress that has been made and the good job that has been done, but we now need to go to the next level. It seems to make complete sense, looking at market monitoring as a whole, that we have the Ombudsman working with the GCA so that we can really deliver on all of this. That should not be a concern or worry for anyone, but I think it would be better placed in Defra to deliver what is needed.

Do you think it will be an effective system? If so, how effective do you think it will be? Thinking about the voices of farmers, you have already said that some simply will not go because they are scared of the implications of making a complaint. There is also the number of small farmers’ voices being drowned out by those big industry players. We know that farmers often receive less than 1% of the money in terms of what they produce. There are pushes and pulls from both ends of the supply chain and we know in the middle there are some companies that are getting very rich as a result of it. Do you think the Government have the confidence to really deal with this issue, both for the benefit of farmers and for consumers?

That is why I think the threshold should be changed to £500 million from £1 billion, because that will bring more in. They are expecting that, so it should most definitely happen. I have always been struck by the lack of understanding of our competition law, which is so prohibitive to discussing price. I remember at the food summit that Rishi Sunak as Prime Minister organised at No. 10 Downing Street that Thérèse Coffey was very keen to have a conversation on price with primary producers—farmers and growers—and retailers in the room. There is no way that conversation could happen, and they were very quick to say, “We cannot have that conversation without a lawyer in the room”. I make the point about the largest fines in history, which were basically issued because processors and retailers were trying to get a few pence back to dairy farmers, and that was deemed to be collusion in the marketplace. This is a really difficult one to resolve, because of the wider structure. Because of time, I did not speak to the Competition and Markets Authority, but I would have liked to, because I think it is set up to look at this through the lens of the consumer. That is why those fines came about originally. What we do not want is the consumer being disadvantaged because we have less British produce on the shelves because we are not able to have conversations around price. What we want is to be able to have those open conversations where people feel they can discuss price and the relationships. I am very mindful of the pressure on buyers at the moment to drive a good bargain. We have to make sure that this is an open conversation whereby everybody has confidence and that Government, which will be Defra, feel they can intervene if necessary.

On that basis, do you think the single regulator is preferable?

I think you are looking at change across the whole area. Market monitoring is really important, so that you have the information. The horticultural sector feels really strongly that it needs that information every two weeks. Other sectors will not be quite so focused on timings, but we need to do all of it, rather than some of it. Lots of different things need to be part of this—the ombudsman, the adjudicator, the market monitoring—to make sure that the parliamentary journey for all sectors happens. There is not one part that you can reform that will deliver on the rest of it; you have to do all of it.

On sectors, I was really pleased to see the sector missions in the review, particularly the horticulture strategy, which is fantastic to see. I have already spoken to many people who are so pleased to see that. However, there is an absence of focus on the organic sector. That sector has doubled since 2010. It is growing, yet our land production has remained relatively static at about 3%. I suppose that tells us that we are satisfying that market through imports. I feel that we need to focus on that sector a little bit more. Why is there so little mention of organic and no call for an organic action plan?

It is very important that the sector missions establish that themselves, so that every sector is focused on the market opportunities. There will potentially be a bigger opportunity for organic for some sectors than for others. However, I would like to think that part of the sector and sub-sector missions will be to look at what the market wants and what the opportunities are—not just the opportunities at home, but the opportunities for exports. The fundamental point with organic is the price premium. We have to be focused on those price premium opportunities for them. Of course, there is quite a lot of concern about conversion, what the opportunities are going to be and what the Government ambition is for organic farming going forwards.

The EU has an average of 10% land in organic production, and a target of 25%. Scotland has committed to doubling land area and Ireland has set a target of increasing coverage from 1.6% in 2020 to 10% in 2030. That shows that it can be done. To bring the price point down, we must be able to develop a road map to encourage it, because we know that there is a market there. Rather than bringing in imports, we should be producing home-grown organic food to sustain that market.

We should, but we also have to look at the challenges of sustainable food production. What does sustainable food production mean, and how do we put a floor, effectively, into achieving it? If I am honest, I have put the bulk of my focus on that because it is legislated for. Things like the carbon border adjustment mechanism are coming in, which will be a tax on primary producers and will not be reciprocal to what we are importing. The real goal in all this, which I was trying to set out, is: how do we maintain or grow production, but decrease impact and cost? That is what I have set out. Organic farming plays a big part in all that, but there simply was not the time or the remit to go down into specific areas.

Thank you. Lastly, climate change is already one of the biggest factors undermining profitability in farming. It is not going to go away; it is going to get worse. There is little or no mention in the report of the need to move away from conventional farming practices, which, as we know, exacerbate some elements of this. What are your thoughts on the most effective ways to support farmers to ensure that they have resilient farms and businesses?

The WWF said a similar thing, which I absolutely dispute; I think this report is totally focused on that. I talk about the absolute need for commercial research projects to scale our ability to dry and pelletise waste nutrients, not only from the challenges of sewage sludge, but from dairy slurry and poultry manure. We really need to look at how we scale drying and pelletising and providing those green fertilisers. We need to be establishing a standardised baseline of how we measure on soil health, carbon, biodiversity and water—a standardised approach. I think there is a lot in my report that is about reducing our impact, but it is also about growing more with less impact and with less cost. That is fundamental to the whole journey of meeting net zero objectives. What I have tried to cover off is how this is done and what needs to happen. The fund—that is why it is so important that this commercial research happens. We have also got the issues of microplastics. We need these scale projects at a national level to do this, but also within the sector missions, we need to be using the opportunities around research and innovation. We have the agri-tech centres as part of the industrial strategy, but we do not have farming or food production as part of that, so I see a really critical role with the UK Agri-Tech Centre, of which Steve McLean, formerly of M&S, is now the new chief exec. I think it has a huge role to play in working with the AHDB and TIAH, which is about CPD and skills, to bring this together and see if we can get everything in one place on research and on advice, very much following the Teagasc way of working in Ireland. To your point about decreasing impact, that is the only way we do it. That is why the two years is important. I am conscious I am talking about a levy investment. We must allow those sectors to define what those research priorities are, rather than mandate them. It would be totally wrong for me to come in and say, “Each sector should be doing this.” They have two years to develop that.

Finally, we have spoken about the national herd and national yield, in order to be able to benchmark properly. What are your thoughts on establishing one system for a carbon audit so that we have that benchmark on carbon, and then standardising that carbon market?

Yes, that is essential. That is why I talk about a standardised approach to baselining. We have to accept that there has to be investment. We cannot leave that cost on those farm businesses. There has to be investment in that. We have to put a financial floor in that sustainability. That is why we have to look at this economic solution, effectively, for how we deliver it. On a standardised approach, Scotland has committed to one calculator. I would like to think that within the UK we could commit to one calculator. That would take us a lot further forward. The standardised approach is critical. We have enough evidence now that we can do that.

We now move to questions on animal welfare and trade.

Before I kick off, Minette, thank you for your report, thank you for being here, and thank you particularly for the conversations that you had pre-Christmas with No. 11 and No. 10 about APR. I am sure you were very powerful in the chorus of voices that made the good decision happen just before Christmas. Thank you for that. In that context, before I move on to animal welfare, you were commissioned or appointed to do this by Steve Reed. On the journey from being asked to delivering the report, did you feel the winds shift towards the importance that the highest powers place on agriculture and concerns that they might have? Did you feel those shifting winds during that period?

I think Steve Reed deserves a lot of credit for establishing something that was really important—that nobody else has asked, in my lifetime. He deserves a lot of credit for asking that question. He faced opposition to asking it, let alone to getting me in to do it, so even more credit to him for holding on to that. I do not detect that anyone in Government is trying to see less farming—far from it. I think there have been some long-term institutional challenges, which are not particularly the fault of anyone, but are just the way we have been for a very long time. Those need to change, and I think that we are on the road to them changing. In my experience, from my time involved with the sector, apportioning blame and being angry do not normally lead to positive outcomes, so we need to establish a new way of working. I always had access, and I said from the very beginning that I would need to have access to No. 10; in fairness to the Prime Minister, if ever I wanted to speak to him, I could speak to him. There is an ambition to deliver. I do not underestimate the challenges, but I am confident that—with this Committee, which has the ability to hold everyone to account—we can see change happen.

I think your report is a brilliant piece of work, as I am sure you have been told many times, but that evidence-led approach also presents some undeniable facts that will resonate no doubt not just with Defra, but more specifically with the Treasury and other Departments. You highlighted some of the issues with cross-departmental working and the Treasury not always speaking, or hearing, the right language. From that perspective, it is hugely welcome. Moving on, the animal welfare strategy and your report landed at almost the same time. To what extent were you involved in or consulted on the development of the strategy? Were you aware of things that were going to be brought forward through the animal welfare strategy when you were writing your report? What is your assessment of the animal welfare strategy and its realm?

It is fair to say that I did not have any involvement in the strategy at all. I was not briefed on it at all. There was no correlation between the two things. Any nervousness on my part would be on the trade deals and what we are expecting. To the points made earlier and our discussion on planning, we have to do this in a joined-up way that does not mean we are raising the bar here once again for farmers, and importing food whereby those food values are not part of the trade deals, so that we do not have sensitive sectors. That would be my nervousness. We have to have a fair approach to trade with our own producers and imports. Core standards have been a big ask in the evidence that I have had, with a lot of people saying, “We must have core standards.” From my conversations with DBT, that is going to be very difficult to establish, which is why I talk about scorecards, market monitoring and being more ambitious to join it all up. Obviously, we have the Trade and Agriculture Commission and its work, and I talk about implementing that, but that would be my nervousness. I did not have any involvement with the strategy, and I have not had since. I want to see a common, fair and joined-up approach, including across the four countries.

You talked earlier about—although you may have alluded to this, rather than said it explicitly—how our higher welfare standards mean that we have a great export market. We have a product that people want to buy, and that is in large part down to our higher welfare standards, as well as the UK brand. There is a lot to be said for that, although I totally appreciate the risks that come with importing low-welfare goods as a means to access cheaper markets when we have higher costs for delivering welfare. Do you have any advice to Government on what support farmers could receive to move forward with some of the higher asks in animal welfare? If we request and bring up standards in welfare that come with a financial burden, is there a conversation that we should be having with Government about short-term financial support to help those farmers to achieve them?

If you were talking to the poultry or pig sectors today, they would say, “Resolve the planning situation and we’re fine.” Sorting out the planning situation on poultry would allow our producers to supply our home market in a way that we know the demand is there for. You have all the retailers saying that we need more poultry production in the UK, and we know that we already have standards that sit above pretty much every country in the world. We have raised our standards since we left the EU, but we have not done the same with imports, and therein lies the concern for me. We must have a fair approach; otherwise, we will just undermine our own producers and they will be producing a niche product. We saw that happen in Sweden, which is a classic case in point. They raised standards of animal welfare, and all they did was import more German product on the back of it. Now, in the light of everything that is happening, you are seeing a Swedish farming Minister with a very different attitude to food production, saying, “Actually, we need to be producing more here in Sweden. We need to be ambitious on farming and food production.” The approach has to be that this is joined up and part of a wider plan, rather than a press release.

Sorry I was late; I have been on a Bill Committee, so if I ask you something that you have already been asked—I will try not to—please tell me. My question was going to be quite similar to what Jenny has just asked, about the voluntary welfare proposals in the strategy and whether you thought farmers would take those up, or what incentives they would require. I think you have just answered that and said that, rather than financial incentives, they would be looking at relaxing the planning system and that kind of thing. Is that right?

Not so much relaxing the planning system, but just making sure that it delivers on those animal welfare outcomes that are required. I think we are already there; we are already doing it, but without doubt buildings are holding us back. That could be sorted out pretty quickly, and that would make a massive difference.

The other thing I wanted to ask about, which you might already have covered, is the manifesto target for 50% of publicly procured food to be British. Do you think that could be part of the solution?

Definitely. That is why I talk about those four markets—the need to focus on retail, out of home, Government procurement and exports. Government procurement has been talked about for a very long time. I find it extraordinary that we cannot pick up what we did in the London Olympics, whereby we had an across-the-board British sourcing strategy. We actually used Red Tractor assurance to be able to do that. That is state aid compliant. In the last Parliament, there were a lot of concerns that we could not be talking about British because it would not be compliant with state aid regulations. We know all of this inside out; there are ways to talk about British and embed British that are state aid compliant. Red Tractor is completely state aid compliant; it was established within the EU. We were, in fact, the first country, back in 2000, to establish a wide-scale assurance scheme. It is really frustrating to me that we have not been able to deliver on having British within our public sector, which seems to have cross-party support. We have great initiatives, such as the Lincolnshire food partnership that I referred to, but we need many more of them.

You have touched on the tension between SPS and animal welfare twice now, once with Jenny and once earlier in the session. You mentioned India, and I know that there are big differences around cattle transportation, pig production—all sorts of variances—with the Australia deal as well. How do we stop the Government allowing SPS negotiations to undercut farmers on welfare? What do you think we could do differently?

I do not think a lot has changed in the Department for Business and Trade, from the last Parliament to this Parliament, on the ambition. I think a lot of that stems from the 0.6% figure that I talked about: if you have a part of your economy that you do not see as valued, why would you take it seriously and embed it in your trade discussions? It is very important that we join up better understanding of the ambition. That is why it is so important that Defra can do this on behalf of farmers, because DBT does not know farmers; it does not have a relationship with farmers or talk to them. I still think that there is this feeling that imports and ingredients can come from anywhere, and we can export them. That is embedded in the system, and that is why we need to take a step back. If we better understand the trade-offs in all of this, the plan and the strategy will be different, but that is not there at the moment. We have to recognise that a lot of trade deals have been done. We have a liberalised relationship with Australia and New Zealand. We have the trans-Pacific relationship. We have India. We have the US. Imagine if we had had in 2020 a fully liberalised relationship with the United States. That would focus the mind now. The world order has changed. We have to recognise food security as national security. But those are not words on a page. It is about action, and what does that action and that strategy look like? I think the Department for Business and Trade has seen the industry as protectionist in the past—I was certainly nervous in my conversations with it—but if we join this up, it will have a different attitude. If there is an ambition to export more, which there must be, it will come to see the primary producing sector as a massive ally.

I understand what you are saying about making sure that the sector and its importance are recognised, but with your previous hat on, you were very critical about those trade deals with Australia and New Zealand. I think I am right in saying that the level of consultation was not considered to be up to scratch: the sector was more being told what was happening than being invited to be a partner in setting out the negotiating position. Do you think that is still the case in how we approach negotiating these trade deals? Are we not consulting the sector enough beforehand about what our position should be?

This all goes back to the machinery of government. The Prime Minister asked me about this. He wondered why they did not take farmers on their trade delegation to India. When we did the Australia deal, my opposite number, Fiona Simson, was over here. It was the same with the New Zealanders. We had Zippy Duvall, Tom Bradshaw’s opposite number, in our Parliament for a week. The Prime Minister was very keen to change that and take farmers on trade delegations. We have not done it. In the last Parliament, the situation with Australia was an absolute travesty. We had taken back control, but we gave control away completely. That is not about not doing trade deals. Trade deals are a good thing, but if anything is going wrong or you are flooding your market in any one area, you want the ability to do something about it. It was really important to leave in the safeguard measure of balancing the carcase, not just sending us the striploins, but with Australia saying that they were fully liberalised, we gave all that away. That was a big mistake. Things are a bit better now, but the damage was done then. I would love to think that we would establish a way of embedding core standards and sensitive sectors, but at the moment there is simply not enough understanding across Government. The NFU has called for a taskforce to be brought together to look at that. You really have to understand the value of a sector if you are going to do that, which goes back to my point about the ONS.

Do you think the lessons that we learned from the trade deal with Australia are being implemented in the SPS negotiation with the European Union, or are you not close enough to it?

I still go back to the fact that SPS is predominantly about food safety and biosecurity.

And engaging the sector as well.

There is not the relationship that there should be, which is why I talk about establishing the agri-growth hubs, the catchment approach, and having many more farmers involved with setting the plan and direction. At the moment, there is not that relationship, which is why the national plan and the local plan need to be far more aligned. I asked the New Zealanders if partnership was important, and they said, “No, it’s not important; it’s essential. Nothing works unless you have that.”

We may well return to that, but in the meantime, Henry has some questions in relation to finance.

We have touched on the gap in respect of Defra not having the money it needs or wants in order to deliver on its priorities, and in your review you touched a lot on private finance. Taking a step back, I want to ask you whether it is because of the realities of the public purse that one should be looking at private finance to plug that gap, or whether, if you were to take away those pressures from the Treasury—I appreciate that that is a reality that may not come to pass—your position would still be that private finance should be there and leveraged in the way that you have identified through the SOILSHOT + NATURE taskforce.

The reality is the reality, isn’t it? The claim was made that “This is what we have got to deliver, and this is how much it is going to cost,” and the Treasury has not given Defra any more money. You could go into—and I have touched on—what I think were wrong decisions, which have probably put the Treasury off spending: the fact that we had an open-ended budget, that we did not know what the demand would be, and that we did not know then what it was going to cost the taxpayer. I should imagine that the Treasury was quite nervous about increasing funding to the SFI without changes. However, we have all this legislation. If you look at the Environment Act and the environmental improvement plan, we have a big expectation about 70% of land in England being actively engaged, and there is a cost to that. There are choices. For example, you could repeal the primary legislation that embedded it. I think that that would be very ill received and a retrograde step. So how are we going to fund it when financial institutions and corporate businesses are being requested to disclose their nature impacts, and required to be reporting and investing in the solution? At the moment, we are looking at a lot of very small-scale projects, a lot of greenwashing is going on, and we have a lot of challenges relating to affordability. There are great things such as BNG, but you have very expensive credits. To my mind, you need to be looking at affordability for corporates so that they are not seeing yet another cost in all this. You need to be looking at a really comprehensive audit, so we know what is happening on our farms—if they are planting a herbal ley or a cover crop, for example. It is a real opportunity to create something that is real, that is not greenwashed and that delivers for everybody. The corporate world wants this, it needs to do it, and it needs it to be affordable. Government can provide the integrity, and farmers can provide the scale and the delivery, because they can carry out what is needed to deliver for nature at a landscape scale. You cannot do it without the farmers. I think that it is wrong to keep thinking that we can just put more and more money into the nature reserves; we need to think, “Actually, we have to expand our ambition on landscape recovery across the whole country.” The other option is setting up the FED groups that I talk about in the profitability review. We have had huge success with cluster groups of farmers coming together and collaborating, and with farmers developing. I was given evidence by the Environmental Farmers Group, which is a trading platform and effectively a big co-operative of farmers that is looking at trades on water quality and biodiversity. There were lots of options put forward to me. I just think that we want to make it fair to everybody across the country. We cannot keep relying on the taxpayer to fund all this. We have to look at the private markets and how they invest in a way that is beneficial to them as well. It is not about a tax; it is about a market that operates and delivers for everybody.

We have touched on some of the dangers in respect of the Government subsidy, such as rewarding the larger farms in terms of their capability to access that money; you have talked about the difference between the local and the national, with the local farmer perhaps not having access to capital to access those grant schemes. Do you think that there is a danger that the reliance on private finance might end up perpetuating or exaggerating the differences between the larger estates and landowners and those small family farms that you have talked about?

At the moment, that is what is happening, because the larger you are, effectively, the more money you can pull down. We want to make this fair to everybody, and there are different ways that you could do that. I said at the beginning that I felt it was important to invest in every hectare and not create this difference that “small should have and large shouldn’t”. Investment in every hectare is going to remain fundamentally important to delivering on the outcomes that we want. When we look at what we have at the moment, it is unfair. The larger you are, the more money you get. The decision in the beginning was to change that and make it fair for everybody. You could also not be farming at all; you could have or buy a large estate for other reasons and be pulling down taxpayers’ money to deliver nature benefits. Is that right? There are lots of questions that come on the back of this. What I have tried to do is deliver on those Government priorities and deliver something that is fair for everybody. Surely, that is the best way forward.

What do you think the Government should be doing in the space of private finance to prevent—

That is why I asked Emma Reynolds to establish this taskforce to look at it. She ended the green taxonomy, which was predominantly about a standard of how we would deliver on green finance options on TNFD. The green taxonomy has ended, so she is in a good place to work with the NFU, the CLA, the IGD and the financial institutions to say, “How do we bring this together and what does it look like?” The banks and the corporates desperately need this, but they need two things: integrity and scale. The Government can do that, but I go back to the point that we need farmers involved. This is not just about investment in protected landscapes and nature reserves; we need the whole country involved. That is what makes it exciting, because that gives you your financial instrument to be able to put that floor in profitability for your smaller farming business. If you do not do that and say, “We haven’t got enough money to have an SFI any more; we are going to expect farmers in England to just operate in the market, but we have got that legislation there, so we expect them to be delivering for the environment as well,” it is not rocket science to work out, on the evidence that I have, that it is undeliverable. You have the mid-tier farmer who is producing 65% of output farming 57% of land area, and they are not profitable. In the top-performing farms over five years, only 8% are profitable for five years in a row. There are two critical things for them: one is an efficient business, but the other is scale. There were many efficient businesses that did not have scale so were not profitable. Profitability is absolutely at the heart of environmental delivery. I have talked about—I will not go through it again—the importance of food production being built into this, but if we do not establish a new economic model, on the evidence I have here, we are going to see change that I do not believe we want.

On the one hand we have a Secretary of State who is a former City Minister, so clearly has a grasp of some of this, but on the other hand we have a Department that in many ways—to come right back to the start of our discussion—is quite limited. Do you think the Department has the capacity to do something of this sort, which is really quite innovative, creative and novel for civil servants?

Obviously, this very much involves the Treasury as well, but you look at what it would do for unblocking the challenges on infrastructure and everything else. Yes, it does need to look across Government. I had many conversations with the financial sector, including analysts and the Bank of England, all of which will be important in developing this new model, but for too long, we have had a centralised focus on the City of London. We need to expand that focus and really see the opportunities across the country. It is not just about relying on taxpayers; it is about a fundamental reset of farmers being able to provide what the market is demanding. We are at that juncture where we ask, “Do we want nature as a national asset? Is it important to us?” I think the answer is, “Yes, it is.” Who is going to be out there saying, “No, it couldn’t matter less”? If it is important—if it is a national asset—it has to have a value that is not a commoditised value. That way, you deliver compliance with your legislation; otherwise, you just drive a way that is reliant on the taxpayer funding it.

Do you have any thoughts on having a national asset funded by the Government, as opposed to owned by an Australian private equity company, for example?

At the moment, on offsetting requirements, we have a lot of people offsetting their challenges. Whether they are a private equity business, a celebrity or whoever, they can buy up land and pull down taxpayers’ money to do nice things on that land. What I am saying is that we have to have a far fairer approach that delivers on that for everyone. When it comes to private equity businesses as a whole, it depends on what you want. If we want large areas of land taken out of production, as we are seeing, that is what we will see more of, but if we can allow those farms to deliver the nature requirements and we put a value on nature, which we can only do by mandating the Taskforce on Nature-related Financial Disclosures—a global ambition—then surely it is a good thing to do that through those farm businesses. It does not really matter whether you are a farmer here or a farmer in Kenya; surely, we want to keep multiple benefits coming from our land, rather than just taking land out of production, with others, who potentially are not even living here or paying taxes here, benefiting from it. But we have to create that economic model rather than just look at it or ask for it or think that the taxpayer will pay for it. We have put the legislation in place; now we need to make that market work.

Minette, that has been a tremendous and quite comprehensive canter around the various issues in the review, so thank you for that. You have given us plenty of material to work with. I am struck by the fact that you think we have two years to get this right, so it is within the lifetime of this Parliament. The Committee has some always-open inquiries, the one on the future of farming being the most relevant here, but others, such as the one on supply chain fairness, would also come into play, so thank you for identifying us as an important part of this process. Having identified that role for us, and given the timescale that you have given us, you might put a placeholder in your diary for two years’ time, and we shall revisit some of what we have spoken about today. In the meantime, thank you for your attendance, your engagement and the work you have done, which is potentially one of the most significant pieces that we have seen for quite some time. I do not think there are many other people who could have produced it at all, let alone in the timeframe that you did.