There has been a long history, nearly 50 years, of support by the government for farming in the upland areas and the modern schemes continue the essential features of support that have been developed over the years. However the justification for the support has changed with time, from maximizing production to more social issues. It is now being recognized that the hill farmer's efforts have helped create and maintain one of our most attractive national assets and it is this environmental benefit which increasingly provides much of the justification for continued public support for hill farming. So the government's policies are important in two respects: the vital rôle of economic support and the encouragement of farmers to manage their land with greater concern for the environment.

On the economic front, one of the most important ways that support is provided to upland farming is through HLCAs. Also vitally important are the EC sheepmeat regime and the changes made to that regime and the EC beef regime in the recent CAP reform settlement.

The government's encouragement of farmers to manage their land with greater concern for the environment is increasing in importance and there are a number of ways in which this encouragement is delivered. The government has built on the success of Environmentally Sensitive Areas. As well as ESAs, there are other schemes available to farmers such as the Farm and Conservation Grant Scheme. In addition, an opportunity to develop a coherent framework for the delivery of a number of environmental schemes has presented itself as a result of the CAP reform. However, Government support should not be thought of as the only source of extra income for hill farmers. The farmer and the farmer's family should use every opportunity open to them to maximize their income.

The arguments presented in this paper strongly support the stated intention of the European Commission that farm product prices must be set more competitively with the world market. Indeed, they go further. The only long-term sustainable agricultural policy for the European Community is to let farm products compete unsupported on a free-trade world market (the ultimate objective of the GATT negotiations). This does not deny either justification or need for some form of compensation to the present industry for the loss of support. However, the argument does clearly require that such compensation should be ‘neutral’ — that it should not distort or alter production and allocation decisions from those which would be taken in the absence of such compensation. The only genuinely neutral compensation would be single lump sum capital transfer through a government bond issue. However, failing this, definitely limited annual support payments independent of current production decisions and relating to past production quantities less than those which would be produced under uncompensated free-trade would be ‘quasi neutral’, and might as a result be acceptable as non-distorting under GATT. In this sense, the price reduction proposals currently being discussed are a definite step in the right direction, especially for cereals.

Nevertheless, agriculture faces a continued period of difficult adjustment, especially difficult in the hill and upland areas. As far as conventional agriculture is concerned, there is little prospect of these areas being able to compete directly in the final consumer markets at world price competitive levels. Their comparative advantage will lie with the production of breeding and store animals, to be finished on grass or grain in more productive locations. Fewer people will be able to earn a full-time living from agriculture in these areas and other things being equal, hill and upland farms seem likely to become even more extensive ranching operations than is the case at present. However, other things are not equal. It seems likely that society will continue to value the non-productive elements of hill and upland agriculture, which in many cases are seen as adding to the amenity and landscape qualities of these regions. Since the demand for these features will grow, ways will be found to supplement farming incomes in these areas (especially) in order to conserve the landscape, wildlife and amenity characteristics.

Change in the semi-natural vegetation of the hills and uplands of the UK is a relatively slow process. Whilst exogenous influences, such as climate and air quality, can influence the rate of change, the principal means whereby more rapid change can occur is through the actions of man in managing such resources to meet a range of objectives. Burning and grazing by large herbivores are the two most important management practices adopted and their interaction is central to the maintenance of vegetation in its current state and to its direction of change. This paper reviews how vegetation change associated with grazing occurs, how it can be measured, what the critical levels of grazing are for the most abundant species and what the implications of grazing are for nutrient supply for animal production systems.

The imbalance in area of conservation to grazing has resulted in systems which attempt to maximize grazing and minimize winter feeding. This is rendered more difficult by the short growing season and generally poorer quality of indigenous vegetation when compared with, for example, perennial ryegrass and white clover. Recent changes in government policy discourage land improvement and emphasis nowadays concentrates on maximizing use of, for example, moorland whilst at the same time maintaining its longer-term production and environmental quality. Sward height guidelines can be used to optimize production and utilization of sown grassland for sheep and cattle. Information is also available to integrate heather moorland into farming systems, as a result of an increased understanding of grazing preferences. It remains as important as ever to maintain production from the limited area of improved ground, and improvements in perennial ryegrass and white clover varieties can be introduced successfully into hill and upland systems. Change in such systems however is often constrained by both social and economic factors and this needs to be acknowledged if the agricultural emphasis in the hills and uplands is to have proper direction.

Pressures to reduce stocking densities (extensify) are arising for a number of reasons. There are two main options once the decision to reduce stocking occurs: (1) to maintain management and physical inputs pro rata to remaining livestock which may or may not have full access to the same land area; (2) to reduce management and/or physical inputs to remaining stock because of real or perceived increases in availability of grazed resources to remaining livestock. These two options have widely different implications for the health, welfare and performance of the extensified systems. A third option open to producers is merely to reduce inputs, de-intensify, without reducing stock numbers. All the options raise major questions in relation to their benefit or otherwise to ecological or landscape values which tend to be underpinning these initiatives. However, significant uncertainty arises as to how producers will respond. Economic factors will play a part in justifying changes and levels of compensation deemed adequate. Levels of animal performance are crucial in terms of economic viability and as an indicator of animal welfare. Three programmes of research work are in hand in the UK which address these concerns and the associated impact on the environment. At ADAS's Redesdale and Pwllpeiran Farms the experimental protocol has been to reduce stocking rate with no change in inputs per ewe. At SAC's Kirkton and Auchtertyre unit a different farm scale strategy has been adopted. Here stock numbers have been reduced, but alongside these physical (food) and management inputs (labour) have also been reduced. Preliminary data on animal performance from all experiments suggests no improvement in animal performance as a result of reduced stocking density. In the latter study, where inputs per ewe have also been reduced, reduced output per ewe has been found, partly as a result of increased lamb mortality.

The principles of genetic improvement apply to hill sheep and cattle in just the same way as they apply to other livestock species. However, the breeding goals often differ, and will continue to change in the light of new economic and political circumstances. Also, there are particular problems of implementing breeding programmes in some of these areas, which do not apply to other livestock species. In this paper we aim to review or discuss (i) the current structure of the livestock industry in the hills and uplands, (ii) strategies for genetic improvement, (iii) the results of relevant selection experiments and industry breeding schemes, (iv) some of the difficulties of implementing breeding programmes and possible solutions, and (v) new opportunities for the genetic improvement of animals in the hills and uplands.

The options for diversification in the hills and uplands of the United Kingdom are constrained by environmental and nutritional factors to the production of meat, animal fibre or both meat and fibre from deer, sheep, goats and camelids. To be successful, novel animal systems must also produce a commodity for which there is a strong demand and be wholly acceptable as regards both animal welfare and environmental impact. Immediate economic viability is not a prerequisite as levels of support to traditional and alternative enterprises can be changed at any time. Red deer farming and fibre production from fine-wool sheep, Angora and cashmere goats, and guanacos are all considered to be technically possible on hill or upland resources. Fine wool and cashmere have the greatest potential for diversification as they are dual-product enterprises with a balance between meat and fibre which accords with predicted market demands. The realization of the potential of these enterprises will require financial support equivalent to that given to the traditional forms of production if they are to be competitive and constitute realistic opportunities for diversification.

Together hill and upland agriculture (LFA) currently utilizes from 44% of the land area of the UK and employs directly some 126,000 people. An estimate of gross output from these sectors in 1990 was around £1.3 billion. These data indicate that there can be little doubt about the significance of agriculture and livestock production in hill and upland areas. Since the Second World War output has increased substantially by virtue of a better control of sheep diseases, improved grazing management, sheep and cattle husbandry and the financial incentives offered by successive governments for land improvement, fencing and buildings. However, these incentives have not in themselves led to an economically viable agriculture for most hill and upland areas.

It is questionable if it was ever the intention of any UK government that financial support for the hill and upland livestock industries to improve productivity was the sole objective of their policies for hill and upland areas. While it has always been the case that Agricultural Departments have had the major responsibility for administering the major financial support, the reason for doing so has been as much to do with a social policy of making it possible for people to live in the remoter countryside as it has been to do with improving the output and viability of agriculture.

It is therefore inconceivable that support for hill and upland economies will be withdrawn. It may be, however, that the amount of support will become less as the Common Agriculture Policy is reformed and that element of support which is currently attached to product price is progressively removed. For the future, the indications are that support is much more likely to continue on the basis of headage payments related to breeding livestock quotas and linked to specific management protocols to meet conservation and wider environmental objectives.

Even with the levels of financial support that can be reasonably expected over the next decade, the financial constraints upon, or the opportunities that may arise for individual land owners will inevitably lead to land being removed from agriculture.

However, it is likely that livestock production will continue to dominate much of the hill and upland areas within a management context which will reflect the size of the business, the need to meet specific environmental objectives and the range of other activities and employment opportunities with which the farm household is involved.

Although we must expect that the economics of animal production in the hill and upland areas of the UK will no longer justify a continuation of farming in some areas, the great majority of farms will continue to adopt more efficient technologies, improve their breeding programme and adapt their land management rôle to meet the needs of conservation and the maintenance and enhancement of landscape quality.