Monday, July 31, 2017

A new and lasting food governance

Tim Lang, Erik Millstone and Terry Marsden call for a new and lasting food governance in a paper on 'Food Brexit: a time to get real': Food Brexit report

They argue, 'Brexit could, all too easily, diminish food security in the UK, where parts of our food system are already far too insecure; this rich country is pocketed with real food poverty, for example, and diet-related disease is part crippling the NHS. We understand food security to be the achievement of a system that provides food that is sufficient, sustainable, safe and equitable.

Brexit could, however, undermine all four of those aspects, in what is an already insufficiently secure food system. Moreover, the UK food system should not only aim for domestic security, it should also not undermine food security in any of the countries from which we buy, or to which we sell, foodstuffs.

This briefing suggests changes that the UK food system should be undertaking if its long-term structural needs are to be addressed. Our case is that the UK food system is highly vulnerable to the rising costs of diet-related ill-health, ecosystems damage, economic dependency, and social reliance on migrant and relatively low-waged labour.'

As far as the CAP is concerned, they state, 'So far, the national UK discussions about the various options for, and effects of, Brexit on food and agriculture policy have been discussed as if they were separate and independent variables, rather than interconnected.'

They note, 'The Brexit process is happening at a particularly vulnerable time for the UK food system - a time when it has become excessively dependent upon imports, while some of its population face worrying levels of ‘food poverty’, i.e. poverty which affects food consumption, 119 and while its productive base is declining, in terms of the number of farms and of small independent businesses, upon which it has historically relied.'

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Benefits of high animal welfare standards

The House of Lords European Union committee has produced a report on Brexit and farm animal welfare, emphasising the many benefits brought by the high standards adhered to in the UK: Animal welfare

The report states that 'the UK has some of the highest farm animal welfare standards in the world. UK producers are rightly proud of these standards, and there is cross-sector support for maintaining high levels of farm animal welfare after Brexit.

In order to deliver on its commitment to preserving these standards, the Government must transpose existing EU law on farm animal welfare into domestic law so as to be effective on day one after Brexit. Thereafter, the Government, in consultation with the industry, consumers and other relevant stakeholders, will be able to consider whether to improve these standards.

Scientific evidence and advice should be at the heart of any farm animal welfare policy decisions, and the Government must ensure that withdrawal from the EU does not lead to a shortfall in funding for farm animal welfare research.

The Government must also bear in mind that while high farm animal welfare standards can be a selling point for UK producers, they also increase the cost of production. In the event that post-Brexit trading relations with the wider world, and if standards diverge over time with the EU, lead to increased imports from countries operating lower farm animal welfare standards, UK producers could become uncompetitive. This could undermine the sustainability of the industry or incentivise a race to the bottom for welfare standards—contrary to the wishes of the UK industry.

The Government must negotiate to include provisions regarding farm animal welfare in future free trade agreements. There is some doubt, however, over whether animal welfare can be used as a rationale to restrict imports from other countries under WTO rules. The Government must therefore explore the extent to which developments in World Trade Organization (WTO) case law allow the use of farm animal welfare as grounds for restricting imports under WTO rules.

The demand for high-welfare products is ultimately driven by whether consumers prioritise purchasing those products, at added cost, rather than buying cheaper, lower-welfare products. Labelling systems should be simplified, thereby helping consumers to make informed decisions about supporting farm animal welfare. Farm assurance schemes also help build consumer confidence through their high standards, inspections and associated labels. The Government should encourage the uptake of voluntary farm assurance schemes in the UK.

High farm animal welfare can be seen as a public good. We invite the Government to consider whether the delivery of this public good should be supported through agricultural funding after Brexit, bearing in mind that any such funding must respect World Trade Organization rules.'

The suggestion that funding for animal welfare could be part of a future domestic agricultural policy is an interesting one, although it is not easy to envisage the policy instruments that might be used. I also doubt whether it is technically a 'public good', more of a 'merit good'.

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Saturday, July 29, 2017

Thinking out of the box

Somehow I missed this comprehensive report by three leading agricultural economists and an environmental specialist when it first came out. It considers the issue of further modernisation of the CAP: RISE Report

The analysis laid out in this RISE Foundation report shows how the current CAP does not make best use of the considerable resources deployed to support land managers through the necessary transition.  The largest instruments of the CAP, the pillar 1 direct payments, which account for over 70% of CAP funds are ineffective, inefficient and inequitable.  It is suggested that these direct payments should be systematically reduced and resources switched to provide targeted assistance, including transitional adjustment assistance to help farmers adapt and rise to the specific challenges of improving productivity, resource efficiency and risk management and to pay farmers to provide specific environmental and other public goods.

The report argues that the two principal aspects of the CAP requiring the most attention are land management and risk management. Where land management is concerned, the greatest worry is that the current environmental standards are not being met. The report therefore proposes a redesigned, more integrated tiered structure of supports with clearer targets on the environmental outcomes sought.

The core issue concerning risk management is that the present approach in the CAP towards market orientation has not gone far enough. Indeed the sheer scale of direct payment inhibits farmers from better mitigating the risks they face.  The report outlines the full range of instruments that are most appropriate for managing risk at the farm level, market level and nationally at times of catastrophic risk.

Finally, following the lessons that have been learnt from previous successful reforms, the report suggests some procedural changes to kick-start a more effective reform process which brings together more constructively the conflicting interests in agricultural policy. This is particularly important given the difficulty of securing effective reform in the past.

It is suggested that the Commissioners (and their Directorates General) for Agriculture and Rural Development, for Climate and for Environment15, should be tasked to work jointly to produce the next reform proposals for adoption by the College of Commissioners. Following this, the co-decision process should be correspondingly adapted. This might involve the proposals being considered by an appropriate configuration of the Council Ministers who normally serve on the Agriculture, Environment or perhaps Energy Councils.

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Friday, July 21, 2017

Gove to outline farm subsidy plans

Michael Gove will outline his plans for the future of farm subsidies today: Green Brexit

Farmers will have to earn support in the future by providing environmental benefits, although it looks as if there will be some scope for assistance with investment and food promotion. Upland farmers will also continue to receive support.

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Monday, July 17, 2017

What can the UK learn from New Zealand?

It is often suggested that the UK could learn from New Zealand's experience of abolishing agricultural subsidies, although such comparisons often overlook the way in which the climate there favours pastoral agriculture and the extent to which devaluation assisted the transition (a devaluation of 55 per cent over ten years).

The AHDB has taken a systematic look at what might be learnt from New Zealand, emphasising the differences between the state of the New Zealand agriculture and economy in 1984 and that of Britain today: Kiwi subsidy reforms

Ten per cent of farmers were in serious financial trouble by 1986 and land prices fell by over half.

The principal conclusions are:

  • Should the structure of farm support change there is likely to be a challenging transition period (my view is that phasing and managing this transition is crucially important.)
  • In order for the UK agriculture industry to be successful post-Brexit there will need to be a focus on efficiency and streamlining.
  • There may be opportunities for the UK to carve out niches and for agriculture to thrive through increased vertical integration.
  • Agriculture operates most efficiently when decisions are based on actual market returns.

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NFU suggests solutions to seasonal worker crisis

The NFU has warned that the supply of agricultural workers on UK farms is now 'in jeopardy' for the next two growing seasons. They have produced a report on the subject: Access to a Competent and Flexible Workforce

The options they suggest are:

  • Reintroduction of a seasonal agricultural workers scheme
  • An Australian style points based immigration scheme
  • A UK points system to attract non-UK nationals
  • Retaining an element of free movement

I would prefer a new SAWS scheme as there is already experience in operating such a scheme which has worked smoothly in the past.

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Wednesday, July 12, 2017

Match fit for Brexit

Wyn Grant with Professor Rob Edwards (left), chair of the Farmer-Scientist Network at the Great Yorkshire Show.

'Match fit for Brexit' was the theme of a seminar sponsored by the Farmer-Scientist Network of the Yorkshire Agricultural Society at the Great Yorkshire Show, chaired by the writer and led by James Severn and Richard King of farm business consultants Andersons. They are offering a 'Match fit for Brexit' business review to farmers for £650 plus VAT.

Andersons realistically see area payments ending and they see the following possible forms of support in the future with a budget half of the current one:

  • A wildlife and landscape scheme, agri-environmental, building on the platform of current schemes such as environmental stewardship
  • Support for hill farmers which could be in the form of an area payment
  • Productivity (research and development, knowledge exchange, training, capital investment
  • Food promotion at home and abroad (my question here would be, is this cost effective?)
  • Revenue insurance to guard against price volatility (I remain sceptical about whether this is the solution)
  • Natural resources, focused on water and soil in catchment areas (more than one farmer I spoke to at the show highlighted the problem of soil exhaustion)

One point made in discussion was that the payments available in agri-environmental schemes might not be sufficient to motivate farmers to participate.

Andersons used their three 'model' farms to predict the impact of Brexit. (Note that their profit figures are after making allowance for 'drawings', i.e, a wage for the farming family). The arable 'Loam' farm makes a healthy £248 per hectare a year at the moment. This would go down to £108 in 2025 with good access to the EU and still over £60 with poor access. (My view is that cereal farms with no stream of income from non-farm businesses, which is the case for many of them in East Anglia, would be particularly exposed to price volatility).

The Freisian dairy farm makes a modest £4.4 per hectare at present, this would go down to £3.4 under good access and a bare margin of £0.6 per hectare under poor access.

The 'Meadow' mixed farm, which it was admitted in discussion, is not a well-run business, makes £35 a hectare at present. This would be a loss of £72 per hectare under good access and a big £233 under poor access.

The core message was that farmers should not worry about the figures they can't control like the Brexit negotiations and focus on how well prepared their own business is prepared to respond to the impact of change (albeit that the form of that change is very uncertain). There was a time window for adjustment, given a relative status quo over the next few years and a boost to prices from devaluation. Farmers need to step back from their businesses and review them. For example, farms need to look at their debt structure. Could machinery and labour be pooled with neighbouring farms?

There was some discussion about whether Brexit could lead to land abandonment, but it was felt that most available land would be farmed by someone who could do a better job with it. There was scepticism about whether there will be a big fall in land prices or rents given all the factors that are in play apart from CAP support.

Drones and precision farming

The following session dealt with this topic with speakers from Newcastle University. Precision farming was defined in terms of more correct decisions per area of land or unit of time.

Drones can provide very high resolution images across a wide spectrum, more so than near earth satellites, and they can fly under clouds. However, they cannot be used in anything more than light rain or winds above 23 mph (and winds are often higher above the ground).

The sophisticated cameras cost more than the drones, the cost of which is falling. A question that arose was whether the information gathered for an average sized farm for about £100 would bring a sufficient return in terms of lower inputs and higher outputs.

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Monday, July 10, 2017

The biggest receipients of direct payments

Three conservation organisations are among the biggest recipients in the UK of area based payments. The National Trust receives £1.64m, although the bulk of that is for agri-environmental schemes. RSPB receives just under £1m and Natural England just over £850,000.

The biggest private recipient is Beeswax Farming owned by Sir James Dyson who has two big estates in Lincolnshire. He received £1.60m. He is listed 14th on the Sunday Times rich list with an estimated fortune of £7.8bn.

Scottish farmer Frank A Smart receives £1.45m. Farmcare Trading got £1.16m. It is owned by the Wellcome Trust and was formerly Co-op Farms.

These figures will increase the pressure for an end to area-based payments, reinforced by a likely reduction in CAP subsidies in the 27 member states which will undermine the argument that UK farmers need subsidies to create a 'level playing field'.

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Thursday, July 06, 2017

Trade deal with Japan offers boost to farmers

A trade deal between the EU and Japan, which has required four years of negotiations, will provide duty free access for almost all agri-food exports, although there will be a transitional period. For example, transition periods for phasing out all tariffs on hard cheese will last 15 years. It does cover pasta, confectionery and chocolate.

Current duties on food are high, ranging from 15 per cent on wine to 30 to 40 per cent on cheese.

A major stumbling block in the talks was Japan's reluctance to open up its dairy sector to European imports. There will be full tariff elimination for some cheeses and other dairy products, while in other cases a quota system would apply under which duty free access would be granted up a threshold. Soft cheeses will be covered by a duty free quota larger than the current volume of exports.

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Wednesday, July 05, 2017

Agri-environmental policy after Brexit

A group of academics funded by the ESRC has produced an authoritative briefing paper on agri-environmental policy post Brexit: New Dawn?

The report states,'By recognising the wider role of farming in the landscape, agricultural policy can become part of a wider sustainable Land Use Strategy, which seeks to end the decline in environmental quality and to enhance that quality through restoration.'

The policy brief concludes, 'There is a risk that future policy will be constrained by the legacy of past policies and practices. Whilst a transition arrangement between current and future policies is both sensible and inevitable, it is important to grasp this opportunity to remake our rural development and agricultural policies and avoid “lock-in” to unsustainable practices.'

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Environmentally sustainable agriculture

The Parliamentary Office for Science and Technology has produced a short but informative briefing note on environmentally sustainable agriculture: Research Briefing

The note places particular emphasis on the notion of 'natural capital'. As part of a new domestic agricultural policy, measures could be taken to achieve natural capital targets referring to the elements of nature that directly or indirectly produce value to people.

It also notes that the Conservative Party manifesto contained a proposal for a 25-year environment plan, but this was not included in the Queen's Speech. If it was proceeded with, it would have implications for a number of aspects of agricultural practice. Among them would be water pollution; greenhouse gas emissions (GHG) from crops and livestock; soil compaction from machinery and livestock; the effects of pesticide use on pollinators; and, the degradation and fragmentation of natural and semi-natural habitats.

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