Why we need to look beyond subsidies to save UK farming
UK farming is in crisis. Forty per cent of farms make no profit. Farm debt is soaring. Farmers are taking home an ever decreasing share of what we spend on food and, over the long term, food prices have been dropping.
Many farmers are stuck in a cycle of working the land ever harder just to break even. This is taking a heavy toll on the asset that farming relies on most of all – nature – as regular reports from the State of Nature partnership and the Natural Capital Committee make clear.
And soon we will have Brexit. The UK’s departure from the EU will disrupt farming in many ways, including changes to the availability and cost of labour, the size and terms of support payments, the potential imposition of new import and export tariffs, and, should certain trade deals be struck, increased competition from low cost food imports.
Public money for public goods
What can we do about it? A surprisingly diverse group of people agree on the answer: keep public support for farming, at least in the short term, which under the Common Agricultural Policy currently amounts to around £3 billion per year. They also agree we should change how we spend the money so that, rather than rewarding farmers simply for owning land, the support is used to improve ecosystem services. This has been summarised as ‘public money for public goods’. Environmental NGOs, government ministers, farming representatives and even the free market think tank Policy Exchange, have all supported some version of this argument.
If everyone agrees, surely we have the answer? Not exactly. First, no one really knows what they are agreeing on. The public goods to be paid for have not been precisely defined, nor has it been decided how to prioritise the projects that should be funded and those which shouldn’t. And secondly, a narrow focus on the environmental gains we should get in return for subsidies ignores the bigger picture of how post-Brexit policy changes will affect the countryside.
Two alternative visions for farming
The recent Policy Exchange report Farming Tomorrow sets its sights beyond subsidies to include all post-Brexit food and farming policies. In this future, farmers would be either “gardeners” managing the countryside in return for subsidies, or getting on with the business of producing food more efficiently.
The most far-reaching policy recommendation is to dramatically cut the cost of food for UK consumers by liberalising trade. For the UK, the big advantage we have in trade deals will be in professional services. So what concessions could we expect to have to make on agriculture? Policy Exchange highlights three that should be considered: allowing the sale of chlorine-washed chicken, hormone-treated beef and genetically modified food.
They also advocate weakening how we apply the EU’s precautionary principle, describing it as unbalanced and a killer of innovation, suggesting this would enable a review as to whether more widespread use of neonicotinoid pesticides should be permitted.
The conclusion to be drawn from these recommendations is implicit but clear nevertheless: we should be prepared to trade away environmental and welfare standards to lower the cost of our food.
What is the potential impact on farmers of switching subsidies to pay for environmental projects and innovation, whilst cutting regulation and pushing down food prices by liberalising trade with lower cost producers? Not immediately, but gradually, a lot of farmers, mostly small family businesses, would go to the wall. That’s precisely what another report, Uncertain harvest, recently published by the Campaign to Protect Rural England (CPRE), foresees: small farms disappearing within a generation.
Does this matter? Much UK agriculture is not particularly productive by international standards. And as Policy Exchange points out, our system of agricultural subsidies has been a significant contributor to this malaise. Greater specialisation in food production, where we focus on competing globally in the foodstuffs we can produce more cheaply or at higher quality than other countries, could even be a shot in the arm for UK agriculture. But specialisation is not the same as industrialisation, and Policy Exchange’s version of UK farming would be dominated by ever bigger agribusinesses. The size of the farm is not, of course, an indicator of good or bad production standards. But, as CPRE points out, “in most other sectors, small to medium sized businesses are praised for their potential for growth, innovation, dynamism and flexibility.”
What is the countryside for?
The wider point is surely that the countryside is about much more than cheap food and nature oases. The idea of a green and pleasant land is part of our national identity. We also rely on it for clean water, to protect us against flooding in our cities and to help keep the air that we breathe clean. A system that results in pockets of high quality habitats funded by subsidies, surrounded by environmentally degraded food production, is neither a vision that people would welcome nor would it be good for nature, which needs well connected sites to maintain healthy populations and biodiversity. A ‘bigger farms, cheaper food’ outcome would also undermine the diversity of farming styles needed to sustain innovation.
So, yes, we should be working to green agricultural subsidies. But if we want to bring the UK countryside back to health, we will also need to protect hard won regulations, and our hard pressed farmers.