FAIR TRADE
 IN 
FOOD


Church of Scotland

Church and Society Council


Church and Society Council
Church of Scotland
121 George Street, Edinburgh, EH2 4YN
Phone: 0131 225 5722  
www.churchofscotland.org.uk
Charity Number: SC011353

May 2007


Fair Trade in Food
The development of policy which is fair to consumers and to producers in the UK and the developing world

When you reap the harvest in your land, do not reap right up to the edges of your field or gather the gleanings of your crop. Leave them for the poor and for the alien. Leviticus 23, v22
When you have plenty to eat and live in fine houses of your own building, when your herds and flocks, your silver and gold and all your possessions increase do not become proud and forget the Lord your God. Deuteronomy 8, v12-14
The field of the poor may yield much food, but it is swept away through injustice. Proverbs 13, v23


Contents
Summary
Introduction: The context for the Study
Chapter 1 Food and Fair Trade in their Current Context
Chapter 2. Fair Food and Just Relationships
Chapter 3. Fair Food and Scottish Agriculture
Chapter 4 The Common Agricultural Policy
Chapter 5 Impacts of Consumer Purchasing Trends.
Chapter 6 How Might Scottish Agriculture be sustained and developed?
Chapter 7 Trade justice issues for developing countries
Chapter 8 Conclusions
Appendixes
References


Summary
A working group of the Church and Society Council of the Church of Scotland, with an ecumenical composition, has been examining issues relating to the production and trade of food. The group brought together issues related to international trade justice, justice for Scottish producers and fairness to consumers.   
For the past decade or more the Fair Trade movement has campaigned effectively to raise public awareness of issues of fairness associated with the trade in food with developing countries. Thanks to the “Fairtrade” mark, 5 million farmers, workers and their families   now receive a price that covers the costs of production and allows them a modest profit to live on. In addition they are paid a social premium that allows the construction of community facilities, such as health centres.
A much larger group of farmers, estimated as at least 895 million, have continued to be untouched by such arrangements,  because the price of their products is determined by global market conditions rather than by fair-trade agreements.. 
They include domestic producers in Scotland and in the rest of the EU.  Like overseas producers our domestic producers are touched by issues of trade justice. Over the past decade the average net farm income for farms in Scotland has been in the range £5-10k.This figure includes the income received from the CAP which provides around two thirds of the total gross income. Trade justice issues are thus important for Scottish producers.
The increase in the availability and in the relative price of food which has occurred over recent decades for Scottish consumers has not been associated with improvements in health. The incidence of heart problems and stroke remain higher in Scotland than in much of Europe. In addition easy access to food is not uniform across our country. We continue to have some real food deserts, areas where none of the major retailers have a presence.
In a range of situations the structure of the food chain, the value placed on food by consumers and the balance of power in the trading system have resulted in poor financial returns for producers and, for some, a poor deal in respect of food supply. Issues related to fair trade and trade justice need to be seen from consumer, domestic and international perspectives.
Why should the churches be interested in the food trade?
Food is vital to life. As a result of this it is a central theme running throughout our Bible. It involves a web of interactions; between people, the land and God. As a result how food is produced, distributed, prepared and eaten all have consequences which go beyond mere nutrition. For us as Christians the Eucharist expresses the importance of food within human interactions. Jesus took what God had given and human hands had made and put it at the heart of an interaction from which none leave empty handed. The use of the land and our attitudes to food are thus a matter of real spiritual concern. The links between soil and soul are important. All need to benefit from the cultural, social and spiritual elements which can flow from a healthy food chain. For much of recorded history agriculture has been seen as too important to be left to market forces. The question which beset Joseph in Egypt, how to safeguard ones own plenty while simultaneously challenged by the needs of those who have less or  are going without, remains relevant to our current debates. Like Israel in the time of Moses we need a system which is able to both sustain communities and the environment.
Food trends in UK
In the UK the proportion of income spent on food has progressively decreased over recent decades. It now stands at around 10%. Changes in eating habits have meant that close to one third of meals are consumed outwith the home. In addition we have an expectation that a full range of food products, including those once regarded as seasonal, such as soft fruit, will be available all year round on the shelves of our supermarket when ever we want them. The number of items which were once considered as exotic increases regularly. As a result the proportion of our food which can be produced in Scotland represents a decreasing proportion of the whole. For domestic agricultural producers these consumer lead pressures have been compounded by real decreases in the world market prices of commodities such as grain.
In addition to the above consumer trends the structure of the food market has also changed. Currently around 90% of the food market is in the hands of a small number of multiple retailers; Tesco alone has around one third of the total market. The structure of the food chain is such that the value added to food by the primary producer (£5.6bn) is small compared to that contributed by the processors (£21.5bn), the catering sector (£21.1bn) and the multiples (£18.8bn). These differential proportions alone have reduced the influence of the producers, both domestic and from the developing countries, within the global food chain.
Issues for Scottish agriculture
The Scottish climate and our geological history combine to limit agricultural options. Despite this Scotland does host a significant number of profitable farm businesses who have succeeded either because of their size or because they have found novel ways of adding value to their products i.e. through the production and marketing of ice cream rather than liquid milk or through direct selling. Successes of this type are to be applauded but much of our agriculture produces relatively traditional products while managing the environment and our water resources and providing some structure for a range of rural activities. The economic return from farming for most of these enterprises does not cover their costs. This is not a new situation and for most of the period from the early years of the last century governments have provided some financial support. Hence for most of living memory agriculture in UK has been a subsidised activity.
Current support is via the Common Agricultural Policy of the EU (CAP) through the single farm payment mechanism. The basis of government support for agriculture has varied over the years. For much of the last century this was justified on the basis of a need to maximise the home production of food. This was the original rationale for the CAP. Support was then seen as important for its role in rural development, its effects on related rural industries such as tourism and food processing. Currently payments are justified on the basis of their role in delivering biodiversity and the positive management of the environment which is an important part of our global change management strategy. The changing basis given for public support illustrates that agriculture has, and always has had, a variety of roles and delivers a range of benefits. The current CAP mechanism has too often resulted in an unhealthy dependency on direct public support by European farming and too little return from the sale of food or produce used in the production of food. This is the crux of many current problems
The costs of the CAP represent around half of the total EU budget. As a result when the EU budget is next revised, which is due in 2013, it is predicted that support for agriculture could decrease by as much as 50%.This could lead to a reduction in average farm incomes by up to one third. A reduction of this size would affect the number and types of farms. It is not inconceivable that farming could disappear from much of Scotland with major consequences for the appearance of our countryside and the profitability of other rural businesses, e.g. tourism. This potential change in the viability of agriculture as a result of budget discussions in the EU is a result of the relatively low prices obtained for home produced food from the global food market.
Related to CAP reform is the question whether the UK still needs a major domestic food production sector or whether most of our needs could be met via imports, especially from elsewhere in the EU. If this is to be the case it asks what should now be the role of governments in the food chain and whether market mechanisms can be relied upon to ensure supply over the longer term and how this relates to the other longer term issues; world population growth, global climate change and energy supply. These are decisions which seem unlikely to be properly decided just through market mechanisms. The range of areas to which agriculture contributes, in addition to food production, suggests that economic judgements alone will not result in sustainable rural communities and good environmental care.
The current operation of the CAP has resulted in some significant downsides. It has aided the export of food to developing countries at prices below those required to cover the costs of domestic production in those countries. Our current production systems and mechanisms are thus
not independent of international issues.  The value which Western consumers accord food is however a key issue for all food production.
Trade justice issues for developing countries
Although world production of food has increased relative to world population the distribution of that food across the world has not been uniform. As a result it is estimated that 824mil people suffer from chronic hunger. Chronic hunger is a particularly important issue in Africa. Trade, including trade in food, is seen as a means of aiding developing countries in that continent. It has been estimated that were Africa to gain an additional 1% of world exports that this would be worth $70mil annually, an amount which far exceeds the levels of aid promised as part of the 2005 Gleneagles agreements. Greater trade justice and development of the FairTrade system are thus important to both international development and the alleviation of hunger.
However it is clear that neither trade justice nor fair trade in food yet exists, in relation to the developing countries. Too many developing countries depend too highly on the production of a small number of unprocessed commodity crops for export. Such dependence, which is commonly a legacy of history, has not been in their best interest. They have remained too dependent upon markets upon which they have little influence. 
In addition, as indicated above, the current working of the CAP (and the USA’s Farm Bill) has distorted some developing country markets accentuating the impact of the above issues. Current arrangements have too often led to environmental degradation and the break-up of rural communities. The global food chain has also led to pressures for agriculture in the developing countries to be developed using the western economic model. 
Fair trade arrangements challenge these assumptions but apply to only a small proportion of the major traded agricultural crops and to a limited range of commodities. Although FairTrade goods have stimulated some consumers to question the prices paid to producers in global markets, this mechanism is unlikely on its own to resolve the complexities of world trade in food.
When agriculture was included in the arrangements for the World Trade Organisation (WTO) in 1995 it was hoped that it would provide a means of increasing the influence of developing countries in discussions on world trade in food. The collapse of the 2006 Doha round of trade negotiations at the WTO indicated just how difficult this would be to achieve. 
Part of the difficulty of achieving agreements in WTO has been that most food related issues are not simply matters of economics. Sociological, developmental, ethical and cultural issues are at least as important in respect of food production. The values associated with intensive/conventional/westernised agriculture, simplified management and cost externalisation, are very different from those associated with organic production and the systems which have traditionally predominated in the developing countries; management of biological cycles and community involvement. The very real differences in the underpinning ethos of different farming systems are illustrated by the very different ways in which foods of different origins are promoted in our supermarkets. Using this as a basis for increased understanding of food production is important.
Fairness for the consumer
While most consumers in Scotland spend only a limited fraction of their income on food this is not the case for all. For some food is the major item in household expenditure. While most consumers have benefited from the efficiencies which the market mechanism appears to have delivered there are significant areas in Scotland from which all of the multiple retailers are absent. Some parts of our country have become dominated by fast food outlets. In addition access to quality food is more than just the ability to source it in a supermarket. Knowledge and a food tradition have important roles in the ability to use quality fresh food products.  Nutritional issues are important but so are issues related to family involvement in food preparation and eating together.

The ways ahead
The relatively poor prices obtained from the multiple retailers in Europe by developing country and Scottish producers are a result of the latter’s limited power within the food chain. This is accentuated by the desire of western consumers to obtain ever cheaper food,   without questioning whether such an approach is truly sustainable or whether it has linked consequences in respect of issues such as the management of the environment and global climate change. 
Many governments have simply allowed the market mechanism to control their food supply arrangements.  While, in the short term, this has achieved real economic efficiencies within the sector and delivered low prices to consumers in the west, its long-term sustainability must be questionable. Too many of the short-term gains are a result of the substantial social and environmental externalities (consequences, and commonly, very real additional costs which sit outwith the costs born by those initiating the action and so fall upon others) upon which the approach has depended.  Producers in Scotland and the developing world alike know this to be the case... They also know that, while there is some scope for them to change and influence their own incomes, the most likely means of effecting real change lies with governments, supermarkets and consumers.
The role of government remains important. While agriculture remains a more economically significant activity in Scotland than in England, many of the decisions which most affect Scottish farmers are taken at either UK or increasingly at an EU level. It matters therefore that government at all levels should continue to have real commitment to a varied agriculture and to the range of activities which the term agriculture covers. 
If, in the future, a fairer trading situation is to be achieved for producers of food in both Scotland and the developing countries, then it will require both an increase in producer influence in the international food chain and a widening of the current vision of corporate responsibility of supermarkets, and international catering companies, to be put into effect. This could be influenced by a growth in the numbers of interested and ethical consumers. 
If Global Climate Change is the world’s largest market failure then none of us will benefit from trading practices which can lead to this type of environmental damage. More consumers asking the question why FairTrade products cost more than other products and what this price achieves would be a useful first step. More people using their power as consumers, by making choices as to which supermarket they will use, where choice exists, will lead to a re-evaluation of corporate values.  Churches promoting fair trade issues so that their members adopt more considered food purchasing strategies will have real effect. 
Church members helping the rediscovery of the sense of achievement which can come with food preparation and the pleasure of communal eating will also be important. On the basis that food is something that none of us can survive without understanding more about food production is an essential skill for all in the modern world. Fairer trade in food is something on which we all can have an influence. It matters to our domestic producers as well as to those in the developing countries.  It is an issue for both producers and consumers. It is part of our practical interpretation of scripture and a real challenge for those of the Christian faith.

Introduction: The Context for the Study 
In the preparation of this report, an ecumenical working group of the Church and Society Council (Appendix 1) took evidence from some of the principal groups within both Scottish agriculture and international development agencies. It also held individual or small group discussions with representatives of organisations in the food chain and those responsible for regulating that chain (Appendix 2). By the end of the exercise representatives of most of the links in the chain which moves food from home or overseas producers to consumers had been part of the conversations. The views from these discussions were refined though discussions with an international stakeholder group at St Georges House, Windsor Castle (Appendix 3).  From this,  approaches and overall directions that are both possible and, if implemented, likely to help maintain a strong Scottish agriculture that does not disadvantage producers in the developing countries and which is also fair to consumers have been identified. Clearly there are issues in respect of trade in food which affect farming in Scotland and also issues of trade justice in respect of producers in the developing countries. Current trading practices and regulations influence both situations and there is need for change. 

Chapter 1 Food and Fair Trade in their Current Context
Food is a central theme throughout the Bible. There are interactions between people and the land, between people as social actors and between people and the divine. How food is produced, distributed, prepared and eaten has consequences which go beyond the simple supply of nourishment to people’s bodies. (1)  The frequency of references to food  and to meals in the Bible indicate the central importance of food related issues, the centrality of food to the structure of societies and the contribution of food production to environmental and heritage issues. Agriculture has long been recognised as “multifunctional” (2). The preoccupation of looking at food and trade in food as purely economic issues is of recent vintage.
Over recent years agriculture has changed greatly both in Scotland and throughout the world. By 2020, it is estimated that the world’s population will reach around 7.5 billion (current estimate 6.4 billion).  Despite world population growth, both food security globally, and levels of malnutrition throughout the world (measured as a percentage of total populations) have improved greatly in the last 30 years (3).   In all continents except Africa, (4) the number of underweight children has declined; however, malnutrition among African children continues to increase. Overall, the number of hungry people in developing countries, excluding China, grew from 630 million to 673 million between 1990 and 2002. An estimated 824 million people in the developing world were affected by chronic hunger in 2003 (5). These are major challenges for international food policy. 
World wide over the past 50 years food supply has increased at a faster rate than population growth. (6) This has sometimes led to stability but also to reductions in the world market prices of many food products, such as wheat, rice, beef and soya. Looking ahead it seems improbable that such a situation can continue. World population continues to grow. The factors which have permitted increases in agricultural production, especially those related to bringing new land into cultivation, the use of water for irrigation and the use of chemicals, seem less capable of increase in the future. Many of the factors which have improved agricultural productivity in the past are now recognised as having significant carbon footprints and therefore being significant contributors to global climate change. Solutions to world food supply must be seen in the context of other major problems facing our world rather than being viewed in isolation.
Trade has become increasingly vital to secure food supplies and so global issues now have an increased importance to all of those who live in Scotland and the UK. As a result international institutions have become increasingly important. The current shape of Scottish agriculture is largely a product of the EU’s Common Agricultural Policy (CAP). Until recently it influenced what was grown and how much was grown. It still provides much of the funding for most of agriculture. The Single Farm payment, which effectively gave farmers freedom over what they might grow, became effective as recently as 2005. It will change again and seems set to decrease significantly in 2013. International trade is ruled by the deliberations of the World Trade Organisation (WTO) (Appendix 4), by organisations such as the World Bank and by multinational companies such as Tesco. If we wish to influence trade in food, at home or in the developing countries then we must affect the deliberations of such organisations.
In Scotland, as in other developed countries, the overall quantity and choice of foods available has improved greatly in the past 50 years.  However, in a mainly urban society, the pattern of food consumption has changed as society itself has changed. This has resulted in changes in where we buy food, the variety of food we consume, the amounts of food consumed outwith the home, the sources of food which is “eaten out” and in social structural issues such as who we eat with. Traditional school meals have decreased while consumption of “fast foods” has increased. The strength of the supermarket sector and the small number of players within that sector has meant that many of the crucial decisions about food have moved beyond the control of governments and into the hands of companies which need not be UK based.
The issue of fair trade in food thus clearly goes far beyond consideration of markets and of economics. It is a microcosm of most of the major issues where global economic drivers and wider societal values, especially Christian values, are in tension. In seeking to address current issues related to the fair trading of food a wider range of issues such as the role of government and the striking of an appropriate balance between economic drivers and sustainability, particularly of the environment and of social structures, must be considered.
A Perception of Domestic Issues
Seen from a Scottish perspective many of the issues as they influence those who produce our food and manage our countryside can be summarised by the views of a single Scottish producer.

Comments from a Scottish Farmer
My farm is 500 acres in total – 400acres cereal, 100acres grass for 150 breeding cattle. I have no full time labour – 3 sons all interested, helping out when available. My wife is now working part time away from the farm to help support our life style.
Like pawns in a game, we jump through hoops to produce the standard and safety of food/raw materials society demands, (until the same unregulated produce can be imported from the other side of the world at a much lower price.)
Direct subsidies have all but disappeared in this country. They have been replaced by the Single Farm Payment, which is already being eroded at an alarming rate and will almost certainly disappear completely by 2010/12. Lots of farms like mine will simply vanish and be swallowed up by much bigger enterprises if the price for our produce does not increase substantially. E.g. the best year on our farm for many years was two years ago but take away the SFP from the bottom line and our income was £4000.
Our grain is all on contract. I will eventually receive £80/tonne for 2006 produce. I received £160/ per tonne for the same produce 20 years ago!! At the same time, the price of fuel and fertiliser has doubled. How can this work? Without some form of subsidy, it can’t...
Our industry is under the microscope from all sides.  We have inspectors (whose salaries farmers can only dream of) for everything we produce. This ensures that only the highest quality produce is presented to the public.  This may not be the case worldwide.
We farm under environmentally considerate conditions in this country and have the paperwork to prove it.  Legislation comes in large doses in our industry and that is the biggest “turn off.”  Duplication from various departments increases by the year.
WHAT’S GOOD – We have to keep very close records of everything we do on the land.  Everything we produce, how it was treated i.e. fertiliser, chemicals, what the weather was like the day we sprayed the crop has to be noted.  Every animal born (cattle) has to be individually registered and recorded and ear-tagged. These are some of the disciplines that make our business more efficient.
WHAT’S BAD – Everybody wants to know – e.g. SEERAD, SEPA, BCMS, QMS, QAFC, OTMS, to mention but a few!
Unless we are prepared to pay more for our food, there will be no conflict with Third World farming because there will be no farming left in this country in a very short time.

In Scottish political terms, issues of food and agriculture are complicated by being the responsibilities of several very different levels of Government.  Responsibility for agriculture and rural development is devolved to the Scottish administration.  But relations with European policy development, and hence the CAP, are conducted at the UK level, while relations with the WTO are conducted by the European Commission, with input from London. The Scottish Executive has discretionary powers when it comes to the administration of the single farm payment, and processing and marketing grants; but Scottish ministers have only a marginal influence when it comes to trade negotiations, although they can negotiate on behalf of Scottish farming on such things as the recent removal of the beef export ban.  A key question is how can Scottish concerns be adequately reflected at these international levels?  A related one is how individual Christians or Churches can influence international organisations?
The current economically driven models envisage Scottish and UK agriculture competing effectively and efficiently in global agricultural markets freed from barriers that inhibit trade and production. Such models however make a series of assumptions about trade which if shown to be flawed invalidate many current positions. Unfortunately the key issue within the whole of the food sector is that currently there are no free and fair markets in the trading of food. In addition these markets impact upon people socially at least as much as they impact economically on production.  Any just vision for Scottish agriculture must therefore be concerned with the wider issues of trade justice. Trade justice for domestic producers however means that Scottish agricultural solutions must be aware of the global social impact of its trading systems on people and especially on those in the developing countries.
A Perception of Developing Country Issues
The principle of comparative advantage suggests that each country should specialize in the production of things it can produce at relatively lower cost. While this economic rule has been applied to agriculture it has not worked in practice because other factors of equal or greater importance have intervened. In practice, the protection and subsidies given to processed farm products in developed country markets have resulted in developing countries being restricted to producing raw materials, and even being prejudiced in these products. Agriculture, apart from tropical products, was almost completely excluded from trade negotiations on goods under the General Agreement on Tariffs and Trade (GATT), the predecessor of the present World Trade Organization (WTO). (Appendix 4)  While GATT succeeded in reducing tariffs on industrial products, and on tropical products in their raw form, agriculture was not included in the negotiations until the Uruguay Round (1988-1995) which led to the creation of the WTO, and its Agreement on Trade in Agriculture, in 1995.
In the absence of effective trade negotiations on agriculture, developed markets have been able to protect their farmers from external competition through high tariffs and various non-tariff measures.  In addition, subsidized exports from developed countries have for years undercut the prices that farmers in developing countries are able to get for their produce. Millions of small farmers throughout the developing world have thus been unable to gain a viable living from agriculture and to meet their own or their community’s food needs. The Commission for Africa identified increasing Africa’s share of global trade as a key driver of sustainable economic growth and poverty reduction for the continent.  Elsewhere, twenty years of trade expansion in China and India has led to accelerated economic growth in both of these important developing countries. (7) However, the relationship between trade liberalisation, sustainable economic growth and poverty reduction is far more complex than these bald assertions would suggest.  Liberalising national markets and increasing the nation’s share in global trade certainly has the potential either to improve or to worsen the livelihoods of poor people. The problems of producers in the developing countries can be illustrated by examining specific case histories.  
Commercialised agriculture exploits economies of scale through intensive farming and monoculture. There is no place for the small farmer who makes up the majority of the world’s population surviving on the equivalent of less than a $1 a day. These pressures can result in environmental degradation. If one of the main planks underpinning our support for our agriculture is the protection of the environment then it cannot be acceptable for our agriculture to result in environmental damage elsewhere. The probable impact of Global Climate change makes this increasingly important for all of the world’s population 
“The populations of the world’s poorest countries have been growing rapidly, increasing the demand for food.  At the same time environmental degradation, both natural and man-made, has reduced the ability of farmers to grow food in many areas.  An increasingly commercialised agriculture has helped total yields keep pace with needs but has often cut small farmers out of the equation.” (8)


Effects of EU and US export subsidies 
Dairy - Jamaica
Winston Tailor, a Jamaican dairy farmer, inherited his land and everything he knew about dairy farming from his grandparents.  He delivered fresh milk from his 25 dairy cows to locally based processors who turned it into various dairy products for Jamaican markets. However, a surge of milk powder imports into the Jamaican market – 67% from the EU – squeezed Winston out of business.  He simply could not compete with cheap, subsidised EU milk powder flooding into Jamaica.  The EU was estimated to be subsidising milk powder exports into Jamaica to the tune of € 4 million annually – with most of those subsidies going to European processors and exporters rather than European dairy farmers.  In the end (2002) Winston was forced to sell his dairy cows to the butchers for meat.  
Maize - Mexico
US corn producers receive US$10 billion a year in government subsidies and credits, enabling them to export cheap corn into Mexican markets, destroying livelihoods for poor Mexican farmers. The NAFTA agreement, concluded between the US, Canada and Mexico in 1994, changed the structure of Mexican agricultural production and trade. Large-scale producers often linked to United States agribusiness interests, expanded exports of fruits and vegetables (such as tomatoes) to the United States. But maize imports from the US to Mexico more than trebled as import licensing was replaced by tariff quotas in Mexico. Mexican maize prices fell by 50 percent.  This benefited livestock producers and consumers. However, the brunt of the price decline was borne by the 3 million small-scale maize farmers producing on non-irrigated hillside fields, who did not have the flexibility to shift into other crops. (6)  Jose Manuel Gonzales, a peasant farmer from Chiapas, one of Mexico’s poorest regions, saw the price for his home-grown corn collapse by half under the pressure of this competition from subsidised imports.  He now works 6-7 days every week to earn less than US$2 a day.
Chicken - Ghana
Francis Kumajor runs up and down a busy road in the centre of Accra, trying to sell chickens to commuters in the sweltering heat.  Few drivers, in their air-conditioned vehicles, stop for him.  “For the whole day I have not managed to sell enough to pay my rent” complains Kumajor, with three cages of birds still standing by the roadside.  The cause of Francis’ plight is not difficult to find; in fact, he articulates the problem well. “Walk into any supermarket and you will find they are bulging with imported frozen chicken”, he says.  People do not want to buy local chicken because imported ones are much cheaper.”
For the last few years the Ghanaian market has been flooded with cheap imported chicken from the EU and the US. Demand for local poultry has collapsed, threatening the livelihoods of over 400,000 poultry farmers in Ghana. In 2004, imports were estimated to be as high as 40,000 tonnes. In 1992, domestic farmers supplied 95% of the Ghanaian market, but in 2001 their share was only 11%.
Importers pay a duty of 20% on poultry shipped into Ghana.  Under WTO rules, the tax could be as high as 99%.  In 1994, the Ghanaian parliament passed a law allowing an additional 20% duty to be imposed on imported chicken, bringing the overall tax to 40% - perhaps still not high enough to combat the subsidized chicken imports.  However, under pressure from the IMF, the duty increase was reversed two months after its increase.  And in 2006, the Ghanaian Government overturned the Act under which the duty was raised, even though a court had recently ruled in favour of farmers seeking the duty protection.  The matter will likely go to Ghana’s Supreme Court.
(Sources:  Oxfam and CorpWatch)
A Perception of Societal Issues
In addition to the traditional trade and economic related issues there are also a whole series of societal issues whose impact is becoming increasingly obvious. Within our society, the importance of family meals and even of communal eating, such as school meals, has diminished.  Links between consumers and local producers have weakened resulting in a poorer understanding of the very real links between the use of land for food production and a range of critical societal and heritage issues. In addition to these changes in the relationship between society and food, changes in diet, particularly among poorer people, have paralleled increases in obesity and linked ailments such as diabetes and cardio-vascular disease. It is important therefore to ask whether recent changes in food supply have led to a society which is more content with itself or even to one which is more generous to the less well-off. An example from the work of an individual church illustrates some of the problems of our current society. It also provides hope that changes which can be achieved without major new resources can have significant effects on the lives of individuals.

Transformation: A parable for our times.
At the Greyfriars Kirkhouse in the heart of Edinburgh’s Old Town, a fascinating project is taking shape in which vulnerable people are rediscovering the culture and power of food as a means of transformation. A traditional soup kitchen that has for many years offered food and hospitality to vulnerable and homeless people in the Grassmarket area is being transformed into a place where people are learning how to cook and to appreciate healthy food. They are being encouraged to experience all that goes with eating well and they are doing so in a caring and communicative environment. This project is being supported by Edinburgh Cyrenians who have pioneered a project called Good Food in Tackling Homelessness. Along with Community Food and Health Scotland (formerly the Scottish Community Diet Project) they are developing a nation-wide programme that is rediscovering the culture of food as a tool for positive transformation.
By sharing food around a table, opening up lines of communication and fellowship that did not previously exist, positive change has taken place in people’s circumstances. For many, and not just those who have experienced homelessness, the idea of sitting at a table, taking time to serve one another and listen to other people’s stories is both novel and empowering.
Peter is homeless and has all the scars of homelessness upon him. He has low self-esteem, suffers loneliness and there are times when he is tempted by drug abuse and is prone to despair. He signed up for a cooking class. After several weeks of tuition and support, he cooked and served a meal to his peers in the drop-in centre. Many compliments were offered for the delicious meal he had cooked and Peter beamed with satisfaction. It was clear that he was delighted with the outcome and explained later that this was the first occasion on which he had been praised for something he had done for as long as he could remember. 
The boost to his self-esteem and the sense of accomplishment that went with the cooking class has led to new opportunities opening up and an end to the cycle of homelessness in which Peter was locked for many years. In addition to being able to move on in his life, Peter now eats better food, is healthier and making healthy eating choices and has learned a new and very satisfying skill. 
Something else has happened that is of inestimable value too; he has rediscovered the culture of food. He has discovered the infinite value that comes from taking the time to share a meal at table with friends and the communications of life that flow from that as a part of the cement of community living.  The culture of food is more than just nutrition and for many people in today’s society the age-old customs of table fellowship and hospitality that are common to almost every culture are being downgraded in the rush for convenience and speed. 

Wider issues
Clearly there are issues in respect of trade in food which affect both farming in Scotland and producers in the developing countries.  While the history and the detailed mechanisms which have generated current problems are different, some issues in both cases relate to the weight given to economic matters in an area where the issues are  more complex than this. Issues are exacerbated by the apparently low value placed on food by consumers in the developed nations. For all producers this is accentuated by the unequal distribution of power and resources within the food trading chain. In Scotland this is the direct and indirect power of the supermarkets and in the developing countries the power of the developed world. This situation makes some kind of support, via the CAP, essential to sustaining agriculture in Scotland but also identifies the need for WTO rules that are sensitive to the needs of small producers in the developing countries.
Making changes to this situation will not be achieved by the actions of a single body. It is not the sole responsibility of Government or of large companies. Here we attempt to analyse the causes of unsatisfactory elements in the current situation and suggest some of the things which might be achieved through church members and other individuals acting collectively as both selective and informed consumers and as citizens who lobby on trade issues.

Chapter 2. Fair Food and Just Relationships
Sanctification: food and the divine
The food chain, all the way from plough to plate, is more than the business of a few related industries. Every culture has, in various ways, invested its food chain with sacred and cultural significance. People have prayed over it, celebrated with it, shown hospitality through it and grown festivals around it. The Eucharist or Holy Communion is the most eloquent expression of food’s value in human interaction. Here Jesus takes the things of the earth, “what God has given and human hands have made” and articulates one of the deepest manifestations of community that it is possible for people to experience.  In the act of sharing bread and wine all are provided for and none are sent away empty handed. People serve one another, sufficiency replaces excess, and justice and community supplants injustice and division. All of this is made possible by the appropriate sharing of and respect for the produce of the earth’s bounty. (9)
Open-handed generosity to the stranger, and to servants and slaves, was a key means of ensuring personal blessing – and a reminder to those who are well off that they too were once not so fortunate and might not be so again (Deuteronomy 15: 12-16). Food is therefore about celebration and the maintaining of bonds of communal life. In all religions and at the very heart of Christianity in the Holy Communion, food plays a sacramental role in cementing relationships, enabling praise, offering spiritual nourishment and enabling self-identification. (10)
Civilisation: food and culture
The term “agriculture” reminds us that we derive the word and the idea of culture from the idea of cultivating our food.  The term “agri-business” increasingly creeps into our vocabulary but eating is an “agricultural act”, and the whole food chain is a cultural phenomenon. Whilst modern urban people might be detached from the primary production of food, we are all ultimately dependent on the fertility of the soil and the production of wholesome food as a gift of God’s providence. The preoccupation with rural and farming life in both the Old and the New Testament tells us that the use of the land and our attitude to the entire food system is a matter of deep spiritual concern. One reason for this has been the failure of societies to attend to their “food security”. In the past the end of civilisations has been contributed to by the severing of a link between soil and soul, failure to respect the earth, failure to encourage those who tend the soil to believe that they are engaged in a sacred activity, and an inability to see humanity as companions with nature and dependent on its well-being.
The stories of Jesus’ pastoral ministry in Galilee are stories of a “rural redeemer. He used Israel’s rich rural tradition to tell his stories and define the nature of his mission. What he had to say made sense to a people who lived from the land and understood their relationship to the soil and to the source of life. We must search for the recovery of a “food culture” that makes healthy and responsible eating and farming the norm in our society. Our ambition should be that all members of our society share in the cultural, social and spiritual benefits that flow from a healthy food chain.  Human civilisation is an agricultural phenomenon. Settled agriculture is what made it possible for urban life to emerge and we remain utterly dependent on what the soil will provide. No one has come up with an alternative to the age-old tradition of agriculture and the word “agriculture” holds the key to an understanding we lose at our peril. 
Socialisation: food and just relationships
The advent of settled agriculture introduced economic relationships into the food chain and, ever since the pharaohs; there has been intervention in the agricultural market.  Agriculture has nearly always been seen as too important to be left solely to market forces. The present global imbalances in the food chain demonstrate that the food system, like so much other economic activity, is more about forces than it is about markets. Even today we wrestle with the same questions that beset Joseph in Egypt: how do we tend and guard our own plenty and what are we to do when challenged by the needs of those who go without?  The Old Testament addresses such concerns by its advocacy of strategies such as Jubilee (see Leviticus 25), leaving the edge of fields un-harvested for strangers to help themselves to surpluses, and open-handed generosity 
to the needy as the guarantee of blessing (Leviticus 23:22).  The unequal leverage the rich have over the poor is as great a challenge to us today as it was in the days of the Old Testament.
St Paul refers to the need for people to take care not to over-live and exhaust their resources. To the church at Philippi he writes, “Let your moderation be known unto all” (Philippians 4:5).  He understands moderation not just as upright, restrained dignity, but refers to the risks associated with unrestrained materialism that can exhaust resources, damage the environment – and usually means that people somewhere else suffer want as a result of others’ excess. It defines a “fitting in” to the environment and enjoying a rich life in ways that cannot be measured solely in financial terms. He writes on a similar theme to the Corinthians, inviting praise for himself and his Christian companions because, “we have wronged no one, ruined no one, we have not taken more than our fair share” (II Corinthians 7:2).  It is clear that Paul understands that excessive money-grubbing, acquisitiveness and extraction from the earth without putting back is ultimately self-destructive.  A society that lives, as ours does, under the looming threat of global warming and increasing poverty, set against un-dreamt of affluence and excess, needs to hear such warnings loud and clear. (11)
The basis of any theological reflection on the food chain begins with an understanding that food has an irreplaceable role in providing for human well-being – not just nutritional health, but social, spiritual and psychological health too. Jesus did not just associate with outcasts and sinners; tellingly, he ate with them too, and on a regular basis (see Mark 2: 15-17, Matthew 9, and Luke 5). When Jesus invited himself to the home of the tax gatherer Zacchaeus (Luke 19) it was surely to dine and share hospitality.  Such actions might have drawn scorn from the righteous but they were transforming moments in the lives of those with whom he shared table fellowship.  When we take time to attend to each other’s needs through offering hospitality, we give worth to each other and we rediscover how important it is for us both to hear others and to be heard.  Where better to do this than at the table? 
Preservation: food and sustainability
A concomitant to the question of human well-being is that there should be land sufficiently fertile and productive in order to provide for human needs. It has been suggested that the average US citizen needs about 22 acres of agricultural land to maintain current eating habits. In Europe this figure drops to nearer 11acres and in large parts of the world some people live off less than an acre. If all the people of the world wished to have a diet similar to that of people in the US we would require three additional planets.(12) Human societies are bound – morally, spiritually and practically – to search for the wisdom and good practice that will ensure the earth continues to yield its harvest, so that communities might be sustained and the earth responsibly stewarded.(13)  The Old Testament law could be described as a manual for sustainability, by its frequent and exhaustive references about how to treat and rest the land.  Ensuring that the land remains fertile and in good heart is a feature of the Old Testament law that modern western industrial society has at times almost wholly overlooked. There is a clear law of what might be described as “limited cropping”. Deuteronomy 22 refers to the need for restraint in taking mother birds from the nest, so that they may continue to reproduce and provide an ongoing source of food, “so that you will live a long and prosperous life" (Deuteronomy 22: 7). The same chapter goes on to talk about not straining or over-exploiting the land so that it may continue to be fruitful. The Law is also quite clear that the notion of the Sabbath applies not just to human beings who require a day of rest, but also to beasts of burden and the land itself, (see Deuteronomy 23: 23-24). (14)
We are as much challenged today as were the people of Israel in the days of Moses to find a system of agriculture that sustains people, communities, the soil and indeed civilisation itself.  The poetry of Jeremiah can strike a note of gloom in many hearts, and nowhere more so than in his reflection on the consequences for a society that forgets how to live carefully with nature, becomes clever in wrongdoing, and fails to learn how to live well and responsibly. “I looked, and lo, there was no one at all, and all the birds of the air had fled. I looked, and lo, the fruitful land was a desert, and all its cities were laid in ruins” (Jeremiah 4: 25-26). The Bible delivers an apocalyptic verdict on a human society that persists in foolishness and will learn neither the wisdom of survival nor the humility of stewardship.  The well being of the earth actually depends on our capacity to do good. (15)  (16)
What is required of us is the maintenance of an earth that yields a harvest and human agents that accept their role as servants of an earth that is the manifestation of God’s hidden and creative goodness (Genesis 2:15). Our fundamental Christian understanding is summed up in the words of the prologue to St John’s Gospel, “all things were made by him, and without him was not anything made that was made. In him was life and the life was the light of men” (John 1: 3-4).
Continuation: food and life
The ways in which we are transformed, as individuals and as societies, for good or for ill, point us to a continuing engagement with the issues of life that the consideration of food entails. (17)  We need always to remember that when we discuss such basic issues as how we are fed, and how the world is to be fed, we are walking on holy ground.  This is because food is fundamentally about relationship: how we grow and distribute our food creates and reflects human relationships that enable us to choose life – or to choose the lifeless relationships where producer and consumer are so disconnected that their mutual dependence is lost from sight. (18)  We will look to the example of the fair trade movement to see how relationship can be re-established, nurtured, and made to matter.
Once relationship becomes part of our thinking it becomes easier to understand food in terms of justice and injustice.  Such an understanding militates against the atomised and individualised ways of being into which it is so easy to slip in our privileged part of the world, ways of being which allow us not to think about whether our relationships are just or not.  Our relationships with our neighbours near and far, our relationship with the earth, our ability to build relationships with one another, are encapsulated in our thinking on food and life.


Chapter 3. Fair Food and Scottish Agriculture
Farming and Rural Scotland 
Farming is not just a job – it is a way of life, a major contributor to our cultural heritage and increasingly a major part of our approach to the management of the environment. It is responsible for the management of 75% of Scotland’s land area.  In the recent past, farming has been at the heart of the Scottish economy and remains so in most of our rural areas.  Without agriculture our food processing and tourist industries would be significantly smaller.
Scottish Farming Facts
* 75% of the Scottish land mass is used for agricultural Production
* Produce from Scottish farms and crofts is worth £2bn per year
* Scotland exports £400m (£2.4 bn. inc. whisky) of food per year.
* 70k people (8% of the rural work force) are directly employed in agriculture.
* Around 250k jobs in total, in Scotland, are dependant on agriculture.
* 85% of Scotland is classified as less favoured area by the EU.
* The average net farm income of all farms in Scotland in 2004/5 was £10.5k. The average however can be misleading because farm income clearly varies substantially from a small croft to a large arable farm Average net income was highest for farms where the principle enterprises were low ground cattle and sheep (+£17k) and for dairy farms (+£25k). They were lowest for cereal (- £4.2k) and general cropping enterprises (-£0.6k) both of which, on average, ran at a loss.
* Net farm income includes their CAP payment. CAP payments to Scottish agriculture totalled £500m last year. This represented an average of £25k per farm. Again the range across the 20k registered units is large and so the average is misleading. (19)
For many years, farming provided a good standard of living. That is no longer the case. UK self sufficiency  has declined from over 80% to around 70% in the last decade with associated declines in many individual farming sectors.(20) Despite this Scottish agriculture remains diverse and supplies around 25% of the food consumed in Scotland as well as providing a critical base for other rural industries.

Scottish Agricultural production
Livestock: 
The beef industry is the single most important sector of the Scottish farming industry.  
Over 0.5 million beef cows produced 180k tons of beef worth £400m. Scotland has 30% of the UK beef herd and 4% of the EU herd.  
Scotland has around 8 million sheep. It produced 55k tons of sheep meat worth £120m. Scotland has around 22% of the UK sheep flock and over 6% of the EU flock.
 Scotland produced 58k tons of pig meat worth £150m from around 10% of the UK herd.
There are 15 million poultry, 4million for egg production of 853m eggs worth £30m, and the remainder for meat worth £87m.  Scotland has 9% of UK egg production and almost 8% of poultry meat production

Dairy
199k dairy cows produced 1.3m litres of milk worth over £230m. Scotland has 9% of the UK dairy herd. 
Crops:
In 2005, 417k ha of cereals were grown in Scotland. The 2million tons of barley were worth £117m and the 906k tons of wheat £56m. Scotland has 12% of the UK cereal area.  In 2005, Scotland had 29k ha of potatoes, 17% of the UK acreage, which produced over 1million tons - worth £104m. (21)
The decreasing diversity and profitability of Scottish agriculture mean that for many domestic producers “fair trade” and trade justice are critical issues. In addition the contribution of CAP to total farm income means that any changes in either its magnitude or allocation will have a significant effect on the wider rural sector. Whether we believe that a significant agricultural sector is important to Scotland is a very real question. There is a serious need for the industry to have the ability to play a major part in future changes and, as was identified in a key industry report, for farming to take more responsibility for its own future.
 “Most importantly, this vision will not be delivered by the Government alone. Indeed in several places it calls for the Government to stand back and allow enterprise to flourish. Government must assist by providing the right policy framework but the future of the farming and food industry will be decided on the ground” (21).   
Mechanisms by which agricultural producers can genuinely interact with consumers are therefore important.
Food Security
The future role of Scottish agriculture must be seen in the context of continuing discussions of UK Food security. Recent studies have raised this as an issue and asked questions such as: How much agriculture does the UK, including Scotland, need?  Is it safe for us to rely on most of our food being imported? (23)  Questions such as these can lead to suggestions of the following type.
1. The UK should move to a less subsidy dependent trading environment. 2. The UK self-sufficiency ratio i.e. domestic production related to consumption is no longer of importance. 3. Risks within the food chain can be dealt with via market mechanisms with food security being enhanced by the removal of barriers to trade. 4. International trade will enhance global food security by maximising the world’s productive potential.
The implementation of suggestions of this type by Government would have very major effects on the status of agriculture in Scotland. It would change our pattern of trade with the developing countries and would have a significant influence on any discussions relating to the future of the CAP. Present views of self sufficiency are also influenced by consumer expectations. Consumer demand for year-round availability and more exotic foods has also reduced the market share of UK agriculture. Added to this there seems to be a view that enhancing future food security involves diversifying supply options with all the attendant risks dealt with by well functioning markets, especially through sourcing foods from other EU countries.
Even in such a scenario there remains an important role for domestic production but the importance of links between food security and environmental protection and health and nutrition have been questioned. Against this background local supply is not a priority. Such discussions have lead to the view that


“Discourse centred on UK self-sufficiency is fundamentally misplaced and unbalanced. The real issues extend beyond agriculture, beyond food.”
A discussion of this type leads to a radically different agenda for agriculture and one in which some of the key issues would seem to be: strengthening energy security, the promotion of food security in developing countries especially those whose production potential is vulnerable to the impact of global climate change, strengthening of the single European Market, and promoting a flexible, skilled and market orientated agriculture across the whole EU.
Ideas of this type are not wholly at variance with the most recent SEERAD Rural Development Plan (24). However it prioritised developing quality agriculture and food processing, enhancing rural landscapes and developing diversity within our rural communities which do represent significantly different priorities.
All of these food security issues raise questions about who will be carrying out our domestic farm production in the future.
There are significant issues in relation to the age structure of the current farming population and as a result the urgency of attracting new blood, especially those with out a previous farming background, into the industry. The average age of a Scottish farmer is 58 years; although it has been that for many years. Those who would like to enter the industry face significant problems. These include being able to purchase or rent land, access to finance, the historical base used for the allocation of the single farm payment in Scotland and easy access to affordable advice. Young people must be encouraged to enter, stay in or return to farming.  Access to land must be made easier and less financially crippling.  This is an area where government has a clear role.  A more reasoned approach to current planning guidelines would allow the starting of new business options on farm sites and potentially allow the development of the tourist and specialist food industries.  A “young entrant’s scheme,” funded under the EU Rural Development Plan, would go a long way towards addressing the problem.
The image of farming is also a significant obstacle. As food is valued less by society then so farming will be a less good career choice. In many cases farms are no longer automatically passed down the generations. Rather than creating opportunities for new entrants this most often leads to a consolidation of farm ownership.

Chapter 4  The Common Agricultural Policy
During current living memory, farming has been a supported industry. (25) The mechanism of support has varied. Post 1945 and until the U.K.’s entry into the Common Market (now the EU) this was through deficiency payments. Since 1973, it has been through the CAP support mechanism. CAP has ensured abundant food supplies to the continent’s consumers, and maintained farming in areas that would otherwise have been abandoned but at a cost of around half the EU budget. The principle change with the greatest impact on Scotland was the introduction of the single farm payment in 2005 (allocated on a historical basis in Scotland).  This payment is unrelated to the production of specified commodities but is linked to environmental and other objectives. Recent decreases in the farm gate prices for agricultural commodities have meant that for the last decade around two thirds of the total income of Scottish agriculture has come from CAP and only one third from farming activity. In Scotland this is accentuated by the number of small, in terms of financial turnover, farm units. The need for a small farm sector has been questioned. On a purely economic basis it can be hard to defend their role. However the special status accorded to Crofting in Scotland suggests that their wider role is recognised. Small units elsewhere lack the protection of Crofting. They remain under challenge as a recent UK government statement exemplifies.
“The industry needs to play its part by understanding that small is vulnerable. Farmers need to consolidate or co-operate.” (26)
The average size of arable farms in Scotland is smaller than that elsewhere in the UK. This is at least in part a consequence of Scotland’s geological history and especially past glaciations that have left a legacy of variable soils which reduce the size of optimum management units and limit both the scale and options for production. (27) As a result of this and other factors the margin on turnover in many farming businesses is commonly 1-2%.  Given the small average size of arable farms in Scotland this leads to relatively small profits from farming and so the need for additional income sources, such as CAP support. 
CAP arrangements will undergo a “health check” in 2008 to assess whether the reformed CAP is working. The whole EU budget will be reviewed at a similar date. (28) It seems likely that radically new arrangements will come into force in 2013, with perhaps the level of payments made to farmers reducing by 50%. Potentially this could mean a loss of income for Scottish farming of one third. These reductions would inevitably fall most heavily on agriculture in less favoured farming areas. Decreased financial support for farming, as identified by the agriculture commissioner, is a consequence of EU enlargement, fiscal constraints, and public preference for more market orientated farming systems.
 “The hard fact is that we will have less funding than we would like from 2007 to 2013. --- National governments decided to take some E20bn off the commissions proposal for rural development” (29)  The agricultural needs of member states will diverge further as new countries join, requiring more localised solutions.”
The combined effects of this range of changes are being acutely felt. Farm incomes are at historically low levels. There is however a range of options for justifying some forms of continued support to agriculture. 






The current plight of dairy farmers in Scotland as seen by the Presbytery of Ardrossan
The key facts surrounding milk production and pricing and the effect this is having on farmers. 
Background
Prior to 1994 dairy farmers had to sell their milk to the Milk Marketing Boards. This was deemed by the E.U. to be anti competitive and the Milk Marketing Boards were de-regulated. This led to farmer owned co-ops taking their place, but with an increasing number of producers selling their milk direct to large processors. For a premium of around ½ - 1pence per litre some farmers sell to processors such as Wiseman, Arla and Dairy Crest. Around 50% of producers currently sell their milk to the large processors. The effect of this is to weaken the position of the co-ops and reduce their collective bargaining power. 
Structure
There is currently a three tier structure in the production and retailing of milk. In respect of customer contact and income this structure places farmers at the bottom, the supermarkets at the top with processors in the middle. To cover the costs of production many farmers need a minimum price of 20 pence per litre. The current actual return is around 17. 5 pence per litre. 
Industry
Many milk producers have in the recent past simply gone out of business. There has been a 50% reduction in the number of dairy farmers in the past ten years. Total milk output has been reduced less as some remaining producers have increased the number of cows and milk yields per cow have risen.
Recent
Over the past two years milk output has fallen by 4%. This is likely to fall further if financial returns do not rise with the real possibility of milk needing to be imported.
Were taxpayer support to reduce it would inevitably result in many changes. Inevitably there would be some reduction in supply. As a result some food prices will rise, counteracting the recent long-term trend. In practice some of the rises which could have an impact on farm incomes would not be perceptible to consumers. A fair price for food seems likely however to be higher than we have become used to paying. Such increases might be acceptable to some consumers as at the present time some consumers are prepared to pay higher prices for food and farming systems that fit their values. Markets for FairTrade, local and organic goods have all shown steady growth over recent years. This means there are options for CAP reform to favour particular types of farming. 
In addition to payment for local and other specified types of  food production public support could be moved from artificially inflating the price of farm commodities and towards direct payments for other goods; a need already recognised by the single farm payment. Such changes recognise the role of the farming industry in maintaining the countryside and our landscapes.  This could be enhanced were Government to remove unnecessary restrictions on rural enterprise. Tourism is by far Scotland’s largest rural private-sector economic activity. Many successful rural businesses that traditionally revolved around farming now provide a range of other services, paths for public access, visitor attractions, and holiday accommodation. Government must ensure our planning system develops in ways which will permit farm based industries of this type to develop.
Rules and regulations are more numerous for agriculture than for any other industry.  Rules which apply to industry in general apply to agriculture. In addition, farmers are required to provide information to government required of no other business sector. Farmers are swamped by paperwork. The move to the single farm payment, decoupled from production, has not reduced the information required by Government in UK. Government still requires detailed cropping information. The list of organisations that require information grows annually. The Water Framework Directive of the EU, administered by Scottish Water, is the most recent.
Government can help both to develop new markets and to correct market failures such as situations where public costs and benefits are not reflected in the price of goods. This is critical in the field of climate change, an area described, in the recent and decisive Stern report for the UK Treasury, as the biggest market failure the world has ever seen. Scotland’s climate change programme attributes 12% of Scotland’s greenhouse gas emissions to agriculture; food processing and transport contribute around the same again, giving a combined total significantly larger than the equivalent at a UK level. Scotland’s soils present another important responsibility. The deep deposits of peat covering around a fifth of our land contain over half of all UK soil-borne carbon. Were a fraction of one per cent of this resource to be oxidised and released Scotland’s greenhouse gas emissions would double. Conversely, if managed well, our soils could absorb much of the atmospheric carbon that is the main cause of climate change. Helping agriculture to make a positive contribution of this type is important in plans for CAP reform and to the future of farming in Scotland.

Chapter 5  Impacts of Consumer Purchasing Trends.
In the 1950’s, the average household spent approximately 50% of its income on food.  Now spending on food is approximately 10%. (35)  We are used to cheap convenience food, and the supermarkets supply it. We think less about food because we are certain we will find what we want when we visit the supermarket. At the present time around 28% of meals are consumed outwith the home. This element is rising at a rate of around 1-2% per year. It includes public procurement (Schools/Hospitals/Prisons/ Government facilities), fast food outlets and the restaurant trade. Much of this sector is controlled by large international catering firms. They buy on a global market and, because of their purchasing power, are able to buy at low prices. Currently much of the food consumed in Scottish institutions is not produced in Scotland. It travels, unnecessarily, hundreds of miles from processor to consumer. This is environmentally damaging and deprives Scottish producers of a market which would aid business stability.
In Scotland, food supply to domestic consumers is predominantly in the hands of a small number of supermarkets. From a 20% share of the market in 1960 the multiples now have over 90%.This share is projected to grow. (30)  Competition from imports depresses the prices received by Scottish producers. Most UK imports of food come from other EU countries: 63% from 8 other EU members. Most trade involves processed goods. (31) Commonly supermarkets and other contractors will buy at the lowest global prices available. This is an issue for Scottish producers because of the sub-optimal nature of the Scottish climate for many crops. 
The major supermarkets active in the UK are global businesses. They source food from across the world. Although most of the food sold by supermarkets does not come directly from farms they influence farm profitability through their influence on the prices which processors and wholesalers can pay to the farm sector. Currently milk, wheat and beef are supplied, either directly or via wholesalers or processors, by Scottish agriculture to the supermarkets at a price which, for many, is less than the costs of production. While supermarket margins on turnover (commonly around 3-4%) are not as such excessive, the size of their total turnover leads to large profits. In a UK context their profitability seems to be geared to buying-prices which are just enough to keep the domestic food production and processing industries alive. As an element in this supermarkets rely on the existence of CAP support to producers. This precludes the use of the single farm payment as a means of restructuring the farm business.  It precludes its optimum use as development funding and for the delivery of environmental goods.
In the current international market place it is unclear how supermarkets could be persuaded to pay more for domestically produced food products. Essentially, why should they pay more than they need to pay? The primary responsibility of the supermarkets is to their share holders. Progress in strengthening the influence of farming on the supermarket sector seems most likely to come through both a strengthening the competitive position of Scottish agriculture and an enlargement of the supermarket vision of what is entailed by corporate responsibility to all of their stakeholders. 
The development of alternative sales outlets for farm produce and the generation of specialist rather than commodity products would both help to move a balance, at present overwhelmingly in favour of the supermarkets, in the direction of the producers. The current structure of the food chain from producer to consumer places most of the market power in the hands of a small number of multiple retailers. Were there more outlets for food produced in Scotland and if the industry produced a wider range of branded products then the producer margin would be likely to increase. 
Although the supermarkets have had negative effects on the prices received by Scottish producers the efficiency with which they work and their purchasing power has been a significant contributor to the relatively low price of food. This is a feature valued by consumers as is the year round availability and the range of “exotic” foods which they routinely stock. They and the food supply chain, over which they have a high degree of control, are seen as key to national food security. A food market which is market-led rather than supply-driven has weakened the influence of farming on Government policy. 

The relative size of the major components of the UK food supply chain
* Primary production, farming and fishing: £5.6bn gross value-added; 552 k jobs.
* Agricultural support industries: £1.8bn gross value-added; 47 k jobs.
* Food and drink manufacturing: £21.5bn gross value added; 419 k jobs.
* Catering: £21.1bn gross value added; 1377k jobs
* Grocery retail: £ 18.8bn; 1160k jobs
* UK consumers(60mil): catering service expenditure £75bn, food and drink expenditure £79bn. (32)
The above factors have not been good for domestic agriculture; a point emphasised by the Rural Development Committee of the Scottish Parliament in their study of the Food Supply Chain (33). This concluded 1) farmers and food processors needed more market power, 2) the executive should promote the procurement of local produce and further develop diversified sales routes such as farmers markets, 3) the burden of regulation falling on producers should be reassessed 4) business support for diversification should be reappraised and 5) the executive should engage in dialogue with the supermarkets so as to influence their contract practices. Similar issues are being studied in a Competition Commission study of the groceries market (34). The primary position, on such issues, of organisations such as the Office of Fair Trading, tends to be set by the requirement to see issues primarily in the short term and in relation to effects on prices to the consumer. If supermarkets reduce prices to the consumer then it is normally assumed that this must be to the consumers benefit and so acceptable.
Food culture has never been as strong in the UK as in other parts of the EU. Recent years have seen a reduction in traditional meals as a major element in our culture. This has led to a use of pre-prepared meals and each family member eating at their own time. This issue links with major changes in our overall culture, e.g. the length of working hours, time pressures, but has been significant in the devaluing of food within our cultural heritage. Changes in the secondary school curriculum; food-related subjects are optional, have not helped. Despite these changes, food from Scottish farming and an improved diet can positively influence health.
While future policy changes must be fair to Scottish producers they must also be fair to consumers. This is important for an industry benefiting from significant public support. How food is produced in Scotland can appeal to ethical consumers. However even they need to be assured that purchasing decisions have impact on either or both food quality and/or the environment. (37)  It is important that Scottish producers deliver the quality wanted by the public.  Public policy should ensure that all income and age groups have access to fresh and quality foods. This is not currently the case. Access goes beyond presence on the shelves of the multiples. Consumers need to be confident about using such foods. The recent UK debate over GM food demonstrated a real ability to see the ethical issues that take food beyond chemical analysis. On GM foods the view of the public was clear. It was disappointing that Government, ignored the ethical issues, focussed on economic issues and ignored a clear public view.
Public procurement provides a real opportunity for Government to support Scottish farming. EU rules influence public procurement but flexibility in attitude as to how EU regulations are interpreted is possible as shown by the E. Ayrshire school food initiative at Hurlford Primary School. (36) There is a clear need for government to assess how it might use procurement to aid domestic production rather than simply buying the cheapest available, regardless of freshness and means of production, and using EU rules as a justification.

Chapter 6 How Might Scottish Agriculture be sustained and developed?
Greater Trade Justice
The development of a fair food policy which would benefit Scottish producers but without being at the expense of producers in developing countries would require a range of related developments. Clearly trade justice is as important to Scottish agriculture as to producers else where. Scottish farmers and crofters need a fair return for their labours. There remains a strong case for part of this coming from general taxation as a means of linking the delivery of public goods, e.g. care for the environment, to farming. The FairTrade mark, that is applied to produce from the developing world, has had a major and positive effect in those sectors to which it applies. It allows consumers to identify those products for which a fair price has been paid and helps the ethically-minded consumer to make purchasing decisions based upon their values. A similar, but not identical, branding system for home produce could help Scottish consumers identify food for which a fair price had been paid. It would in addition encourage consumers to take more interest in the means of production and help re-establish links between producer and local consumer
Changes to the CAP
The CAP has been likened, by a recent government report, to the Corn Laws of the 18th century. It has been seen as restricting imports and inflating prices. (38) The continuation of public financial support for agriculture after 2013 is thus far from certain. What is clear is that public opinion will have major influence on government’s willingness to continue to pay farmers for the delivery of public goods such as environmental management.  Developing the case that living on food, which appears cheap at the point of purchase, but which is provided at that price at the expense of farmers and the environment is important. It represents a role which sits clearly in the traditions of Scottish Churches. It is important however that any restructuring of CAP should recognise that present rules encourage some real injustices for producers in developing countries. Restructuring should revisit the issues of why agriculture is entitled to public support and where does it have real positive effects on, environmental care (locally and globally), national cultural heritage, food security and health. It should aim to help those who fund the CAP through their taxes to identify the real contribution of agriculture to real sustainability. As part of these discussions there is a need to recognise the issues of those living in the poorer areas of our country. However they also have much to lose from the adverse consequences of issues like global climate change. 
Not all new legislation, and the resulting paperwork, is bad.  Farmers appreciate the need to be accountable. Animal passports have made the tracking of livestock easier. However, the sheer number of agencies requiring information and/or documentation is excessive.  Consideration should be given to the information being given to one body and then dispersed to other agencies.
Diversification of On-Farm activity 
One of the greatest contributions which Government could make to the regeneration of agriculture would be to aid the development of a greater diversity of farming activities and  assist  the development of alternative outlets to supermarkets.
Agriculture related developments which have, currently or in the future, potential to diversify the options for selling Scottish food
Farmers markets (and the promotion of means of selling to those parts of the retail market not entirely dominated by the supermarkets e.g. independent butchers and greengrocers).
Electronic markets linking producer and food processors/ restaurateurs/ charity groups like churches
Diversification and differentiation of food product e.g. Organic production/non-GM products/ environmentally sensitive production scheme products, permaculture.
Increased range of local processed products e.g. cheeses, yogurts
Pre ordered box subscription schemes aided by IT support
Supply to public procurement aided by encouragement from government
Products with clear links to health
Fresh and local products
Branded seasonal products
Farmers markets have benefited many by providing an alternative sales outlet. Specialist products have increased the return on a unit of production. Organic production methods have been recognised by consumers as justifying higher prices as a consequence of their focus on eating quality, health benefits and contribution to environmental care. New information technologies such as electronic bazaars, through which producers could contact potential purchasers wishing to source local or specialist food items, have the potential to improve the ability of farmers to understand their costs and enhance their sales strategies. 
There are examples of farm businesses in Scotland where diversification or specialisations have led to increased revenue or where different approaches to marketing have allowed a new entrant to establish in the industry.
Examples of Scottish farming and food businesses which have had a national impact
ANM Group is one of the largest farmer owned businesses in the UK. It was established in 1870. It has 7500 farmer share holders, annual sales of £150m. The core of the business is livestock marketing and meat processing. It has pioneered electronic and video auctions, extended its meat business into ready meals and moved into quality catering. It also has interests in the land market, in non agricultural auctions and in the catering and hospitality industry. There are 10 companies, including Aberdeen and Northern Marts, Highland cuisine, Yorkshire Premier meat, Scotch Premier Meat, Highland Country Foods, within the group. 
Cream o’ Galloway began production of Organic Ice cream in 1994 using farm buildings as their production base. The product is now marketed throughout Scotland and in SE England. 
Mackie’s of Scotland diversified from a predominantly milk production base into ice cream in 1986. They now produce 7m litres of luxury ice cream a year and employ 70 people. The ice cream uses a mix of Jersey and Holstein milk. The ice cream is exported to South Korea and Norway as well as being sold throughout the UK. The milk production makes use of crops grown on the farm while the dairy is powered by a wind turbine.
An alternative approach to marketing:
Whitmuir Organics have developed a membership scheme which allows members to subscribe a monthly amount and to receive a box of mixed produce on a monthly basis or when it is wanted. For example the April box would usually contain a chicken, rhubarb, radishes, potatoes, leeks and a tray of herbs. The subscription scheme allows the farm to produce for people it knows and to provide fresh food in season. The concept is an extension of growing your own food.  The production of consistently high-quality produce should be encouraged and rewarded. Potentially, this could impact positively on the nation’s health. 


Food Quality and the Scottish Diet
The cheap food policy of the past has seen significant use of salt and sugar as alternatives to flavour. Flavourings, such as mayonnaise, are commonly used because of poor quality ingredients. Farm produced foods were the basis of the nation’s health. They could be again. This would mean such foods being truly accessible by all. While the average consumer spends a small percentage of their budget on food, this is not the case for all. Scotland still has many for whom food is a major item of expenditure. Many of these Scots do not have easy access to healthy or quality food close to where they live. (39) Few of the major supermarkets are located close to the poorer areas of our nation. Food deserts, areas where access to grocery retail outlets and healthy food is limited, remain a fact of life. Tackling poverty is a priority for Scotland, as is improving accessibility to quality food. Reducing the price of food by reducing returns to primary producers so as to give food to the poorer members of society is neither sensible nor effective. Poverty and the quality of the national diet are both important. There is a clear role for churches and other voluntary bodies to make a difference by providing healthy products through community ventures serving young mothers or the elderly and by such ventures developing food preparation skills.

Chapter 7  Trade justice issues for developing countries
Background and generic issues
Throughout history, international trade has been one of the most powerful engines for creating both wealth and conflict.  However, our modern trading system remains deeply flawed, especially in food and agriculture.  For many, in many countries, international trade has been a source of development, and even affluence but for others, including many in developing countries, it is associated with poverty. If developing countries in Africa could increase their share of the world’s exports by just 1%, this would generate an additional $350 billion between 2005 and 2010, or 14 times as much as the Gleneagles G8 promised Africa in additional aid over the same period.  Making trade work for the poor is therefore key to tackling global poverty.
More than 50 developing countries, including a majority of the least developed countries, depend on the export of three or fewer agricultural commodities, typically products such as bananas, coffee, cocoa, fisheries, timber, sugar for  20 -90 % of their foreign exchange earnings. Some developing countries have managed to shift production and trade into higher-value added sectors. (40). This is not true for poor countries, or poor farmers. At the same time cheap agricultural imports from the US and EU have flooded domestic markets across the South, undercutting the prices that small farmers can get from selling their produce into their own local markets.  Unable to compete, millions of small farmers throughout the developing world have been unable to sustain viable livelihoods from agriculture and have been forced from the land. 
Farm production and the food trade are far from fair. Escalating tariffs bar entry for many processed goods.  Production and export subsidies to developed countries’ farmers and food processors mean that they can produce more food than would otherwise be possible, and export the surplus at rates, below the average price of production.  This inhibits imports from developing countries and damages the home markets for food in developing countries.  And things are not getting better.  The level of farm support in developed countries remains high. The OECD estimates that supports to producers were worth $ 280 billion (€ 225 billion) in 2005, 15% higher than in 1986-88 and slightly above the 2003-05 level (41). 
The World Bank, IMF and WTO economists, captivated by the western business model, appear to prefer the economically efficient and huge coffee plantations in Brazil or Vietnam to the small and less economically efficient coffee farms in Ethiopia. World Bank, IMF and WTO economists don’t live in Ethiopia where coffee makes up 42% of the country’s GDP, 80% of its employment and 63% of its exports.  They do not belong to an Ethiopian coffee co-op struggling to win a bigger share of markets for the only crop they can viably grow on their own land.  They do not know what it is like to live in a country ranked in the bottom 10 of the UN human development index of income, health and education.  It is unclear whether they give any thought to small farmers in their future visions for global agriculture. What is clear is that millions of small farmers through out the developing world are becoming unable to meet their own or their community’s food needs or gain a viable living from agriculture. In the era when climate change has been recognised as a market failure it is important to see  that such issues matter as much to western consumer as to those in the developing countries.
The WTO (Appendix 4) was set up in 1995 with a remit to remove barriers to global trade. It impacts massively on small-scale agriculture across the developing world.  That impact will only be positive, if they both adopt the principles of trade justice and fair trade.  The current negotiations in the WTO aimed at reforming international trade in agriculture have stalled. The suspension of the Doha round of trade negotiations was in large part due to the intransigence of the US and EU, which have refused so far to commit to reducing the levels of their trade-distorting farm support and export subsidies (42).  Developing countries have certainly not benefited from the suspension (43).  However, by July 2006, negotiators had virtually come to agreement that all export subsidies and similar measures should be abolished by 2013.The abolition of such subsidies, and improvements in market access for developing countries should be major priorities. Tariffs in developed countries still remain excessively high on many products, especially on competing processed agricultural goods. Export subsidies still harm the prospects for developing countries to produce and sell farm products.
The concept of FairTrade is now well established in Scotland.  Our major supermarkets are well stocked with a range of FairTrade products. We have a growing number of FairTrade churches, towns, cities and local authorities.  Along with Wales, Scotland is set to become one of the world’s first two FairTrade Nations.  The FairTrade label guarantees producers in the developing world a fair price, social premium and long-term stable relationships for selling their products.  In countries like Scotland it is one of the fastest growing grassroots social movements on the modern scene.  World-wide, more than 5 million producers are protected by its guarantee. Yet it remains a relatively tiny fraction of overall global trade.
In considering issues in respect of the developing world the concept of trade justice needs to be considered as well as that of FairTrade. (44) Many more producers across the developing world would benefit if the principles of trade justice were applied to global trade.  Changing the global rules that govern trade to deliver justice to rich and poor countries alike would lift millions out of poverty. This would mean changing the trade policies that dominate the thinking of governments. It would mean an end to forced liberalisation and privatisation.  It would mean recognising the right of developing country governments to decide their own trade and economic policies.  It would mean opening up rich country markets to processed foods from developing countries.  It would mean recognising that justice is the only basis for trading relationships.
Why do the benefits of food trade so heavily favour rich countries?  The Structure of developing countries’ exports.
Traditionally, many agricultural exports from developing countries were plantation or extensively farmed commodities (e.g. tea, coffee, sugar, bananas, beef), developed in the colonial period.  These, and newer export-oriented crops (e.g. cut flowers, horticulture) often meant monoculture, large-scale development.  The structures that grew up around these exports were not necessarily optimal for the economic and social development of the countries concerned. For some products (such as bananas and sugar), the structure of colonial preferences was carried forward by import tariff preferences and price supports in the EU.  Phasing out or changing such supports (as was recently seen in the bananas case) can mean severe pressure on incomes and livelihoods in some Third World economies. But maintenance of the supports can also block diversification into higher value-added products and encourage vested interests, not necessarily those of poor farmers. 
Over the past 20 years, the value of world trade in processed agricultural products grew more quickly (6% per year) than trade in primary products (3%). As a result, the share of processed products in agricultural trade increased from 60 percent in 1981-1990 to 66 percent in 1991-2000. Growth rates were exceptionally high for processed cereals, fruit, vegetables, pulses, tropical beverages and poultry products. Although some developing countries increased their share of this trade, the developed countries captured most of it. The share of all developing countries in world exports of processed agricultural products decreased from 27 % in 1981-1990 to 25 % in 1991-2000, and least developed countries (LDCs)’ share fell from 0.7 % to 0.3 % over the same period. (45)
Distorted Rules
At present, there is very little “free” trade in food and agricultural products. Most trade takes place under highly distorted conditions. The playing field is tilted by tariffs and other barriers to trade, on the one hand, and by developed market support to farmers, on the other. In addition, just as in developed countries, individual producers have very little bargaining power when confronted with large-scale traders (such as supermarket chains or multinational buying groups).  Global trade rules for agricultural goods are enshrined in the World Trade Organization’s Agreement on Agriculture.  Its objective is to reduce tariffs and other distortions in agricultural trade through negotiations. However, the Agreement still allows rich country governments to maintain high tariffs and pay substantial production and export subsidies. Such subsidies boost production and encourage low-cost exports of agricultural and processed food products.


Four principal types of measures inhibit developing countries’ trade:
(i) High tariffs inhibit access to developed markets.  Particularly harmful are tariffs that escalate as stages of production increase (higher rates for processed goods or finished products, as compared to raw materials) by increasing the “effective” tariff on the value added in processing.  This discourages the development of processing industries in Third World countries. 
Examples of tariff escalation in the EU
Unroasted coffee enters the EU duty free while roasted coffee pays a duty of 7.5%. Raw cocoa enters the EU duty free while the tariff on manufactured chocolate, with high sugar content, reaches up to € 419/tonne + 8% on the value.  Milled rice pays a duty, based on weight, almost twice the level of that on unmilled rice, and the EU also maintains a “special safeguard” on rice under the WTO Agreement on Agriculture.
(ii) Export subsidies and other export support measures maintained by developed countries (mainly the US and EU, but also including Japan and Switzerland) inhibit the export of competing agricultural products from developing countries by competing in third markets at lower prices.  They can also damage domestic markets for farm-based products in developing countries by offering low prices that make domestic production unprofitable.
(iii) Domestic support in developed countries for goods that compete with products from developing countries places an extra burden on Third World farmers. Such measures include the “Green Box” (Appendix 5) support, which has been excluded from reduction commitments under the WTO. 3.
(iv) Health and sanitary regulations, geared to first-world production standards, may be used as devices that can create difficulties for developing country exports. Such measures may include increasingly stringent production standards (SPS), laborious inspection procedures, use of specific laboratories, etc.  Importing countries often impose SPS requirements that are stricter than international norms. For example, the EU has special requirements concerning meat processing plants.(46) The complexity of such measures, and rapid changes in regulations, can handicap developing countries that do not have adequate qualified personnel and infrastructure (such as testing laboratories) to fulfil developed markets’ demands. It is important that such measures are not used arbitrarily to restrict trading opportunities for developing countries.
CAP, WTO and the Developing World
The rules of the CAP not only protect production in Scotland and other EU nations, but permit off-loading of surplus foods into third world markets. Fairness would suggest that the EU and its members should not seek to recover some of their financial outlay by damaging the prospects of third world farmers.  Of commodities produced in Scotland, probably only milk, as skimmed milk powder, is exported under subsidy.  Thus, at the present time Scottish agriculture is a minor contributor to this problem. However, at EU level products such as apples, butter, cheese, chicken, rice, and tomatoes are subsidized exports.  (47)  
A challenge for Church members:  how to help make trade conditions more just?
Church members can take every opportunity to buy, support and expand the scope of FairTrade and other ethically traded goods.  (48) In twenty years, the ethical trading movement (including FairTrade) has become more than a niche in marketing. It has extended beyond coffee, tea and bananas to fashionable clothing based on fairly traded cotton and leather, and jewellery. (49)  That supermarkets and major food producers now market their own FairTrade products shows they recognize the power of the movement.  The challenge is to ensure that as the markets for ethically traded goods grow and diversify the principles are maintained.
Secondly, church members can give their wholehearted support to the campaign for Trade Justice mounted by Christian Aid, Oxfam and their sister agencies.  Scottish Kirk Sessions can lobby their local MSPs, MPs and MEPs to promote “trade justice” at home and abroad.  
This point was made in the 2004 Church and Nation report:
 “Several responses spoke powerfully of the need to change global trade rules, not simply to produce a level playing field for competition and trade, but so that the system actually works in favour of the poor and offers protection to the weak and vulnerable.  There is a willingness to put pressure on politicians on this issue, in particular to reduce unfair subsidies...” (50)

Chapter 8 Conclusions
Farm Size and Structure Issues
The issues facing Scottish farming are not unique. The EU, as a whole, has similar problems within all areas dominated by small farming. Farming also has issues in respect of its age structure. The average age of farmers would be a major source of concern for most other industries. There is a clear need to attract both younger people and people from non farming backgrounds to the industry. There is also a need to consider the boundaries of agricultural practice and associated with this what changes might be needed to planning legislation at Scottish , UK and EU levels to positively aid agricultural and rural development. Less than a century ago, as well as providing food, agriculture was the basis of health and clothing. A wider breadth of impact than is currently the case could be achieved. Structural issues of this type need action at EU levels. Both the future development of CAP and societies view of domestic agriculture will be critical. If food security is no longer the primary justification for farming then the future role of all farming needs to be clarified.
Supermarket issues
The major buyers of domestic production are the Supermarkets and their suppliers. They control most of the food bought for home consumption. Major catering outlets service much of the third of meals eaten outwith the home and much of public procurement. Directly or through the food supply chain farmers must sell to large multinational businesses. The current distribution of resources within the food supply chain is out of balance with effort and risk. The food supply chain represents a very real market failure. There is need to increase the bargaining power of primary producers if they are to survive. The power of the multiples and the detached attitude of Government seem likely to result in an increasing proportion of UK consumption being sourced from outwith the UK. In the short term this may result in lowered prices at the till.  In the long term this seems likely to be less good for consumers: Food security and the environment seem likely to suffer. These are issues needing consideration by OFT. To pay more for food than the market rate might seem contrary to supermarkets responsibility to their shareholders. However this market rate is determined by these major buyers. Change in practice would require a revision of the current concept of corporate responsibility. This and the attitude of Government can only be changed by public opinion, especially the buying decisions of church members. There would seem to be the need for a clear national debate on these issues.
There are other ways in which farming can be helped. Developing local procurement, (which is possible under EU rules), more creative use of country of origin labelling (51) more use of fresh foods and emphasis on traceability would all help. Of these using existing rules on public procurement to help local production has the greatest potential for a rapid effect. Plans to centralise public procurement, beyond the current situation, need to be resisted. Making primary producers more effective sellers e.g. through increasing the quality of market information, developing alternative outlets e.g. electronic bazaars, facilitating value adding activities e.g. turning milk into cheese and  a real opening of public procurement would make the distribution of resources within the chain fairer. 
A FairTrade label for Scottish produce, which permitted consumers to see where a fair price had been paid, would be of significant value and should be explored as a real initiative by government.
CAP
Support through the single farm payment is independent of particular commodities. The current rationale is to maintain a wider rural sector, a quality environment and the ability of farm businesses to restructure. Funding from EU makes up around two thirds of the income of farmers but is under review. It is unlikely to survive beyond 2013. Direct funding for agriculture, the single farm payment, is currently under pressure from proposed changes in the rate of modulation. Modulation is a process which removes direct support and makes it available for specific activities within the rural sector such as the Rural Development Programme. Currently there is a suggestion that the amount subject to modulation should increase from 5% to 15% over the period to 2013. It is clear that modulation at this suggested level would have significant impact on many in farming and reduce the ability to adapt to the larger changes ahead. What does seem to be clear is that a revised CAP, or a new mechanism for rural support, is needed if agriculture is to remain a substantial industry.
The current CAP results in the low cost export of foods surpluses to developing country markets. In Scotland probably only skimmed milk powder is within this category. Fairness dictates that EU policies should not damage the prospects of third world farmers and their markets. This is a significant issue for WTO.
Food Pricing
There is a real need for Scottish consumers to better understand cause and effect in relation to food production. Food has long been at the heart of societal interactions. The relative cheapness of food and increasing urbanisation, have reduced foods importance. For others the struggle to make ends meet reduces the importance of quality. There is need to increase the status of food. Despite current Government attitudes home produced food seems likely to remain important both for its contribution to heritage and because of its links to natural environment. 
Alternatives to Economics
The needs of supermarkets and global food businesses control the range of crops being produced. Power and control of our food has in too many cases passed out of UK hands. It is arguable that at the current time in UK that we have more power and influence as consumers than as citizens. We need to refine our influence. There is a clear need for government to take greater interest in food and the rural sector. This need not be a return to any form of central control but a move to real partnership with what is an important sector of rural activity at every level. There is need for public debate, in advance of CAP changes on the topic, of what we expect of our agriculture, how important we rate food security and what we would wish CAP reform to achieve.  This is particularly important in relation to traditional ways of life such as the types of production and environmental care which characterize the Crofting Counties. Trade discussions need to recognize the importance of wider issues while decisions on trade move beyond mere economics. The recent identification of global climate change as the world’s greatest market failure asks for review of every sector of human activity. Rural land use in Scotland represents both a potentially serious source of Carbon emission but also a major option for carbon sequestration. It is important that changes in regulation and structural support should recognise the real opportunities which agriculture presents.
Developing country issues
To discuss subsidies to agriculture within the EU and USA without acknowledging that there is little or no free trade in agriculture, that bargaining and buying power is seriously imbalanced and in the hands of large and rich countries and companies, who determine access to developed country markets and administer the current subsidies, is to fail to recognise the core issues at the heart of the current world structure. This clearly represents a significant abuse of the democratic principals which we claim to support. On a world wide basis trade rules need to be re-orientated in favour of the less powerful. This involves actions to change the ways of working of organisations such as WTO but also the World Bank and the International Monetary Fund. The relationship between carbon emissions and farming systems is very real in this context. A world approach to this issue must encompass the issues related to trade in food.
Developing Country farmers often sell produce at prices which do not provide an adequate margin and in the worst cases do not cover production costs. Competition from European and American farmers who receive support in a variety of ways from their governments is an element in this. Such support lowers both home and world market prices to levels below where they would be in the absence of subsidies. Home market stability for developing countries is damaged by subsidized exports.
Small third world farmers struggle to have influence and impact in the market. To earn exchangeable currency developing country farmers must produce commodity crops for export. This exposes them to the pressures of world market trading. The present unfair structure of world trade in agriculture may be valuable for the developed world, but it inhibits the development of home markets and damages communities in developing countries.  It may also lead to damage to the local and global environment. Current trade practices undermine democracy in the developing countries.
The World Trade Organisation has the potential to protect the interests of the developing countries. Ineffective as it may have been in the past it is the one world body which has the potential to make trade work under agreed rules and to restrain the financial power of the major world powers.  The alternative is bilateral or regional agreements. Here the power of the individual developing country is liable to be less than in a WTO where working alliances among countries with common interests can be concluded. The WTO needs to be developed, not abandoned.
Our role
Consumers can influence those who make decisions on world trade. They can support of existing FAIRTRADE programmes and argue for the extension of this approach both for the developing countries and for Scottish farmers. Christians can question the appropriateness of applying traditional economic models to food and agriculture. In the era of global climate change awareness it matters to recognise that the need to be financially cost effective can result in environmental damage. This is becoming of greater importance as we become aware of the carbon footprint of our various activities. Trade benefits need to be seen in relation to associated environmental and sociological costs. Means of helping developing countries to benefit from the income that trade can bring but without the threats to the environment and to the stability of communities need to be found. Churches should provide advocacy for the FairTrade and Trade Justice positions
Our vision for Scotland is of revitalised links between producers and consumers, of public faith in those farming our countryside of wholesome food from sustainable systems – a future where farming once again enjoys the respect so clearly portrayed in the scriptures.

Appendix 1: Membership of the Group
David Atkinson (Convener), David Sinclair (Secretary), Richard Frazer, Marjory Lawrie, Maggie Lunan, John McAllion, Hugh Raven, Peter Tulloch, Arrick Wilkinson


Appendix 2: Those from whom the group took evidence
Bill Adamson, Food Standards Agency (Scotland)
Andrew Arbuckle MSP
Meredith Cochrane, Campaigns Manager, FairTrade Foundation
Ron Duncan, Small Farmer
Ross Finnie MSP
Robin Harper MSP
David Henderson Howat, SEERAD, Scottish Executive
Jonathon Hill, Head of Rural Policy, SRPBA
Gillian Kynoch, Food and Health Coordinator, Scottish Executive
David Lamb, Marketing Consultant, SAC
James Logan, Farmer, Athelstaneford Mains Farm
Dr Maitland Mackie, Mackie’s
Clare Melamed, Christian Aid
Brian Pack, CEO ANM Group
Pete Ritchie, Small Farmer, Whitemuir Organics
Andy Robertson, CEO, NFUS
John Scott MSP

Appendix 3  
The International Stakeholder consultation at St Georges House, Windsor Castle
Remit: Agricultural Support: Does it distort Trade? Can it now be justified? What are the alternatives?
Consultation context: Well publicised instances of the adverse impact of EU exports on the developing agriculture of Third World Countries have again raised questions about the current organisation and value of the Common Agricultural Policy (CAP). Deficits in the funding of basic services in UK, such as health care, have renewed the questioning of its opportunity costs. Another round of discussions about the reform of the workings of CAP is around two years away. The European Council will review the whole EU Budget including CAP in 08/09. The will also be a Commission health check during the same period. The increasing complexity of these discussions suggests that now is the correct time to begin to ask fundamental questions. These must be about 
1) the impact of current CAP arrangements  on the agriculture of the Third World 
2) how current trade arrangements influence the viability of farming and rural communities at home and overseas and 
3) precisely what elements of current EU agriculture justify continued supported by Government and why this is needed?
Windsor Agriculture Consultations held over recent years have discussed a number of aspects related to the reform of UK agriculture and the impact of CAP regulations. The most recent consultations have focussed on the impact of changes in EU and UK society, and current expressions of National priorities, on expectations of domestic agriculture and on our “food culture“. Discussions have centred on subjects such as who are now the real customers of agriculture? What do they really want? How widely do we now interpret the meaning of agriculture? What would be the consequences of farming in a wholly decoupled world? And how should planning at an individual farm level be best attempted? These issues continue to be important. However against the international background, which increasingly colours the evolution of CAP and thus sets the agenda for home production, it has become important to assess a wider tapestry of issues and perhaps most especially the impact of current world trading arrangements for food and agricultural produce.
At the heart of this is a reality that current trading relations raise conflicting issues. They do have unwanted impacts on traditional production in the nations of the third world. They do restrict opportunities for export which for some developing countries could be the most appropriate route to economic growth and the relief of poverty. On the other hand and for other countries freer trade would make conditions harder for their traditional producers; just as it threatens to do in the developed countries which are being asked to open their markets. In addition there are serious and unresolved issues related to the ability of many who farm in the UK to obtain an appropriate return for their investments. Current arrangements seem as destructive for traditional producers, especially small scale and specialist producers in the UK, as for some of their counterparts in the third world. In both cases the issues seem to be related to the current form of the food chain and most especially to the current distribution of financial rewards between producers, processors and retailers.
Accordingly there is need to ask whether free trade, as it is currently interpreted, is appropriate for the agriculture of today. This gives rise to questions such as: What scope exists for changes in current trading rules for food? How might the agriculture of the developing world be best helped? How might we manage globalised food and agriculture so as to promote local diversity and identity? What are public goods and how might international trade negotiations give them appropriate weight? How might a more equitable balance in the 
distribution of reward in the food chain be achieved? Do current arrangements inhibit appropriate planning for coping with the increasing impact of Global Climate Change?
This consultation will thus build on the foundation of earlier discussions at Windsor. It will seek however to see arrangements for agriculture in the UK against an international background and to ask how might we produce a system of truly fair trade in food for UK farmers and for the third world.
Speakers 
David Atkinson SEC, Helen Browning, Eastbrook Farm Organic Meats, Richard Carden. International Consultant, Sir Donald Curry, Chair, Policy Commission Future of Farming and Food, John Finn, Counsellor, Agricultural and Commodities Division , WTO, Heather Jenkins, Head of Buying, Waitrose, Peter Kendall, President, NFU, Michael Paske, Horticulturalist and Company Director, Sonia Phippard, Director Analysis and CAP Strategy, Defra, Graham Wynne, CEO, RSPB.
Participants
Prof M Askew, CSL, Defra, Ian Bell, ARC Addington Fund, Prof Sam Berry, UCL, Kevin Bundell, Development Consultant, Richard Butler, Association of Independent Crop Consultants, Tony Cooke, Moorsfresh Ltd., Elbert van Donkersgoed, Christian Farmers Federation of Ontario, Dr Oliver Doubleday, Farmer, Rev Richard Frazer, C of S, Prof. Keith Goulding, Rothamsted Research, Peter Greig, Pipers Farm , Devon, Henrietta Greig, Pipers Farm , Devon, Andrew Humphries, Rural Community Council for Cumbria, Peter Jinman, Animal Health and Welfare Strategy (England) Implementation Group, Prof David Lever, RAC., Alison Mable, Defra, Jenny McClelland, Defra, Joe McClintock, UK Mission to WTO, Geneva, Archie Mongomery, NFU, Tom Oliver, CPRE, Martin Robb, SEC, Rev Dr David Sinclair, C of S, Alan Stevenson, Company Director, Rachel Sutton, UK Food Group, Christine Tacon, Cooperative Farms, Peter Tulloch, C of S, Dr Christine Watson, SAC, Prof John Wibberley, Resource Management Consultant, Dr Derrick Wilkinson, CLA, Jill Willows, Farmer.

Appendix 4 The World Trade Organisation 
Origins of the WTO
1. The World Trade Organization, an intergovernmental rule-making and negotiating body for international trade, was created in 1April 1994, by the Marrakech Agreement which finalized the Uruguay Round of international trade negotiations.  The WTO built on and developed from the previous General Agreement on Tariffs and Trade (GATT), founded in 1947.  
2. GATT itself was the remnant of an unsuccessful attempt, at the end of the Second World War, to establish an International Trade Organization to parallel the International Monetary Fund and the World Bank.  GATT served from 1947 to 1995 as the legal structure for world trade in goods, and a forum for international negotiations on trade liberalization through “rounds” of negotiations.  Its two fundamental principles were “Most Favoured Nation Treatment” – that any trade liberalization undertaken in favour of any other country must be extended to all – and “National Treatment” – which any goods, once imported into a country must be treated the same way in respect of taxation as domestic goods.  
3. The original membership of GATT  in 1947 was 23, including  what are now classed as “developed “ and “developing” countries Australia, Belgium, Brazil, Burma, Canada, Ceylon, Chile, the (then) Republic of China, Cuba, Czechoslovakia , France, India, Lebanon, Luxembourg, Netherlands, New Zealand, Norway, Pakistan, Southern Rhodesia, Syria, South Africa, the United Kingdom, and the United States.  By the time of the creation of the WTO in 1994, there were 75 individual members of GATT; the European Communities were not formally a member but spoke for their member States in GATT meetings.  Currently there are 150 WTO members, with Viet Nam the most recent to accede.
4. The main focus of GATT negotiations was tariff reductions, with the rates resulting from such cuts “bound” as legal commitments. Developing countries are entitled to apply “ceiling” tariff bindings, higher than applied rates – for example a bound duty rate of 50% on a product, as against an actual applied rate of 15%.  This gives developing countries, at least in theory, liberty to raise their tariffs in face of unfair price competition on imports, without being legally challenged.  In practice, few developing countries have been able to do so in face of censure from the IMF or the World Bank
5. As time went on, other elements of “special and differential” treatment for developing countries, including tariff preferences in developed markets, longer time frames for application of various provisions, and differential treatment for developing countries that joined the Tokyo Round codes of conduct mentioned below, or for least-developed countries.  Thus, while the same rules applied to all members, greater flexibility in applying the rules was increasingly available to developing countries.
6. During the lifetime of the GATT, it became evident that there was need to go beyond reductions in tariffs, since many countries were applying subsidies, anti-dumping measures, quotas, health regulations, and other non-tariff barriers to international trade.  During the Tokyo Round of multilateral negotiations (1973-1979), a number of codes of conduct, in which countries could voluntarily take part, were agreed, covering customs valuation, government procurement, subsidies and countervailing measures, anti-dumping, standards and import licensing.  These codes have been carried forward into the WTO Agreement as part of the Agreements on Trade in Goods, to which all members subscribe. 
Structure of the WTO Agreements
7. The WTO legal texts comprise 13 agreements on trade in goods; the General Agreement on Trade in Services; the Agreement on Trade-related aspects of Intellectual Property Rights (TRIPS); four plurilateral agreements, only one of which, on government procurement, has survived; and a variety of ministerial decisions and declarations. 
8. The WTO also established a binding dispute settlement mechanism, open to all members, which has proved the most successful element of the WTO in terms of enforcing respect for trade agreements.  Previously, the GATT’s dispute settlement system operated on a voluntary basis; members could and did ignore panel findings if they disagreed with them.  And the Trade Policy Review Mechanism, established as an integral part of the WTO agreement, has become a focus for comprehensive review and discussion of the entire range of trade policies pursued by each of the WTO Members.
The WTO and trade negotiations
9. The existence of the WTO Agreements has expanded the scope of trade negotiations enormously. The Doha Development Round negotiations cover trade in agriculture (with cotton as a special negotiating topic; non-agricultural market access (NAMA); trade in services; TRIPS (with public health, and biodiversity and traditional knowledge, as two major break-out groups); trade facilitation; WTO rules on subsidies, anti-dumping, and regional trade agreements (where an agreement was reached at Hong Kong on new transparency procedures); the dispute settlement understanding; trade and environment; electronic commerce; small economies; trade, debt and finance; trade and transfer of technology;  technical assistance and capacity building; least-developed countries; special and differential treatment; issues relating to implementation of the WTO Agreements; commodity issues; coherence between the work of the WTO and that of other agencies, notably the IMF and World Bank; aid for trade; problems of recently acceded Members; and the accession process.  
10. On this Christmas tree of topics, agriculture, NAMA, and (for developing countries) special and differential treatment, are the three key areas.  The following section concentrates on issues in the agriculture negotiations.
Negotiations on agriculture
11. Agriculture, apart from tropical products, was largely excluded from GATT negotiations.  Indeed, some of the more restrictive practices of major trading nations (such as US restrictions and subsidies on cotton, groundnuts, sugar and beef) had been excluded from trade liberalization under waivers of the GATT.  The WTO Agreement on Agriculture sought to remedy this deficiency by specifying that (i) only tariffs, as opposed to quotas or other types of restrictive practice, should be used for trade protection; (ii) developed countries’ tariffs, and the value of their subsidies, on agricultural products should be reduced by 36%; and (iii) that levels of trade-distorting domestic support should also be reduced by 20%, over six years.  Developing countries, other than the least-developed, were to make less deep cuts, over a ten-year period.  But the cost of reaching this agreement was high:  firstly, WTO members were able to define their own levels of the “tariff equivalents” of previously complex trade restrictions (which could reach tariff equivalents of over 1000%); secondly, the main trading powers were able to define, very largely, what would be included in the “boxes” defining measures seen as more- or less-trade distorting; and thirdly, the United States and the other main trading partners concluded a “peace clause” under which until the end of 2003 there could be no challenge in the WTO to measures on agriculture that could be seen as  illegal under the Agriculture Agreement.  Since the expiry of the peace clause, at least one successful challenge to US agricultural subsidies has been mounted:  by Brazil, supported by African countries, against export credits for cotton.  Although Brazil’s challenge was successful, the US has linked its implementation of the dispute settlement judgement to the outcome of the Doha Round.
12. Negotiations on agriculture in the first round of WTO negotiations (the Doha round, sometimes called the Doha Development Agenda) have been unbelievably difficult.  In these complex negotiations, two major traders (the US and the EU) with strong, but differing, protective interests under the Farm Bills and the CAP, face each other and are in turn faced by many countries with differing interests.  These include agricultural exporting countries in the Cairns Group, led by Australia, New Zealand, Brazil and Argentina; the G-20 group of developing countries (which actually comprises 21 members: 5 from Africa - Egypt, Nigeria, South Africa, Tanzania and Zimbabwe, 6 from Asia  - China, India, Indonesia, Pakistan, Philippines and Thailand, and 10 from Latin America - Argentina, Bolivia, Brazil, Chile, Cuba, Guatemala, Mexico, Paraguay, Uruguay and Venezuela, the G-33 group of developing countries which supports allowing developing countries to designate 'Special Products' (SPs) for low tariff cuts based on food security, livelihood security and rural development criteria, and countries like Japan and Republic of Korea, with particular interests (e.g. safeguarding the interests of traditional rice growers) which have joined with some others, including Switzerland and Norway, claiming to protect the “multifunctional” role of agriculture.  The difficulties of negotiating in such circumstances can well be imagined.  Still more difficult to imagine is how small farmers’ interests in each of the members can adequately be represented.
13. Currently (May 2007), the negotiations on agriculture have resumed after a break of around ten months during which the various groups have been consulting in bilateral or plurilateral intergovernmental meetings. The chairman of the Agriculture negotiating group, New Zealand’s Ambassador in Geneva, circulated on 30 April 2007 a paper which presents a number of challenges to all the WTO member governments and is intended to create focus for new negotiations. (See WTO web site http://www.wto.org/english/tratop e/agric e/chair texts07 e.htm)
In this paper he attempts to define centres of gravity among the negotiating parties in the areas of domestic support for farming; export subsidies, credits, food aid and the role of state trading enterprises; market access; and the various parameters of special and differential treatment that may be accorded to developing countries. WTO members in Geneva were, as of 22 May 2007 entering into two weeks of intensive consultations based on the chairman’s paper. 
The WTO decision making process
14. Decision-making in WTO is done by consensus; each member has an equal voice, there is no weighted voting as in the IMF and World Bank. In theory this should be a highly democratic way of operating.  But in practice, it means that nothing can be agreed until all members are at least able to “live with” a proposition.  So the United States can hold up negotiations; but so can Tanzania.  In addition, in the complex type of negotiations that the WTO now undertakes, the working principle is accepted that “nothing is agreed until everything is agreed”.  Thus, unless there is specific agreement that a particular topic will be targeted as an “early harvest” of negotiations, no results on any subject – even ones which may be relatively non-controversial – can be achieved until the whole package is sewn up. 
15. Developing countries are now very active participants in the WTO.  However, their capacities to do so vary enormously.  The EU and its members, the United States, and countries like Canada and Australia have large delegations in Geneva, with expert backup from home and strong private sector and NGO lobbies.  So do Brazil, Mexico, India, China and South Africa among developing countries.  Countries like Senegal, Djibouti, Bangladesh, and the small Caribbean islands are by contrast very limited in resources to deal with complex issues.  
16. To overcome these difficulties, developing countries band together in subject-related groups, as noted above; and a whole industry of agencies and consultancies devoted to assisting developing countries in negotiations has sprung up.  This structure reflects the heterogeneity of, and different interests among, developing countries, larger and smaller, richer and poorer.
17. The