The Government’s ‘once-in-a-generation’ plans to shakeup farming could herald an uncertain future, warns Andrew Williamson, Taylor Vinters’ farms and estates specialist.
Environment Secretary Michael Gove has launched a consultation on the future for food, farming and the environment post-Brexit, saying he wants a “more rational, and sensitive agriculture policy which promotes environmental enhancement, supports profitable food production and contributes to a healthier society”.
That would include shaking up the farmers’ subsidy system after Brexit. Currently, direct payments are made to farmers annually from the EU under the Common Agriculture Policy (CAP) based on the amount of land farmed. These payments would revert to a new system which would see farmers paid depending on how they offer wider environmental and public benefits. Other schemes which would be affected by this shake-up such as the Fruit and Vegetable Aid Scheme are not considered here.
Under-estimating global dynamics
On the surface, this sounds like a sensible and worthwhile move, and everyone recognises the need for farmers to actively steward the environment, but in reality, there could be adverse consequences.
One of the biggest concerns is the claim in the consultation paper that the CAP can undermine incentives for productivity improvement and is bad for farmers, taxpayers, consumers and the environment.
This assumes that all farmers have relied too heavily on the subsidy and are running so-called ‘lazy ships’. The theory therefore, is that if it’s taken away, they will be forced to find ways to become more productive and profitable. But this fails to take into account the huge differences in the types of farming in this country.
Over the last few years, cereal and dairy producers have struggled to make a profit, not due to inefficiency, but through operating in a global market with high costs and low commodity prices. These farmers need the subsidy to help them stay afloat. Take it away, and they could be driven out of business. The reforms may also place English farmers at a competitive disadvantage to their European counterparts who can sell at cheaper prices thanks to the more generous CAP subsidy.
That could result in large-scale farmers finding it easier to expand through economies of scale and buyouts, leading to a more homogenous countryside dominated by larger players and, long-term, result in a hike to food prices.
There is also an assumption that the shakeup will force farmers to increase efficiency through technology and skills investment but it is unclear how farmers will afford expensive gadgets when their income has been reduced. Most farmers are already highly skilled innovators juggling multiple roles ranging from mechanics to dealmakers and commodity traders.
Devil is in the detail
A further concern is that many of Mr Gove’s bold statements are missing vital details regarding implementation, including how, exactly, the new measures will be brought in, what payments will be received and what the specific environmental obligations will be.
The Government has a poor track record for introducing schemes of this nature and paying on time. Despite its claim that lessons have been learnt, many farmers will be seeking further assurances.
Risk management has also been given a light touch in the consultation document. Although it is acknowledged in the consultation paper that farming is inherently unpredictable, there should be more support to manage uncertainty, such as easier access to insurance, but the Government has made it clear that they won’t play a role in this.
With consultation still underway and the Government committing to maintaining the money farmers receive in subsidies until at least 2022, it will be a while yet before we see the true impact of these proposals.
At this stage, we are presented with a radical shakeup of the industry, but one that fails to recognise that there are many good reasons for subsidising food production.
Ultimately it is a high risk strategy that’s based on the unproven assumption that removing money will force innovation and create profit.
This could work for the largest and most profitable landowners, but for others it may mark the beginning of the end and that could change the face of our countryside and have a negative impact on the farming industry as a whole.
The consultation on ‘Health and Harmony: the future for food, farming and the environment in a Green Brexit’ will end on 8th May 2018. To view the consultation document, click here.