Monday, July 25, 2016

TFA produce plan for post-Brexit farm support

The Tenant Farmers Association is the first farm organisation to come up with a plan for a post-Brexit domestic agricultural policy. It should be noted that basic payments often go to landlords rather than tenants so their advocacy of the abolition of general support payments is not surprising,

What they propose is a three pillar scheme. There would be a new agri-environmental scheme that would set out a menu of costed options that farmers can choose from to deliver on their farms and would be judged on the basis of outcomes. It would include options for hill and upland farmers focusing on livestock production. Of course, they form a significant portion of the TFA membership, but many analysts think that support payments should move 'up the hill'.

Second there would be a farm business development scheme to provide annual grants of up to £25,000 a farm a year to assist with the implementation of five year plans for farm development. This would take into account economic, social and environmental resilience. It strikes me that the administrative costs of this would be quite high in relation to the amount available, both for government and for farmers.

Third, there would be a package of near-market research and development, technology transfer, promotion, market development, brand development and other supply chain initiatives focused on supporting British-produced food. Our capability to provide scientifically based advice to farmers has been severely diminished and they have become increasingly reliant on private providers such as agronomists.

Public procurement of British food would be part of this effort, something also supported by the NFU. That sounds fine, but if you are a prison governor with a restricted budget but more autonomy to spend it, are you going to want to buy food that is more expensive?

There is talk of a coalition being formed between the NFU, the CLA and the TFA to provide a united front to government. Other groups might become involved such as the Food and Drink Federation and selected environmental organisations, although the NFU do not seem keen on working with them.

UK farmers are less productive than their counterparts in the Netherlands, France and the US. The CLA rightly argues that there must be an attempt to improve the productivity of the worst performers. The top ten per cent of British farmers are twice as productive as the bottom ten per cent.

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Friday, July 22, 2016

Concerns for horticulture

After being hit hard by the living wage which has eroded already thin profit margins, the horticulture industry is now coping with the consequences of Brexit.

Someone familiar with the sector said that growers were 'concerned that Brexit would mean another layer of bureaucracy being placed on top of existing compliance with EU regulations covering plant protection, and that companies would be less likely to get plant protection products authorized in the UK.'

'I can’t see the UK pulling out of [Regulation] 1107 or the Sustainable Use Directive. We would have to comply because of UK exports of cereals and seed potatoes, the press would have a field day (“British farmers to start using bee killing pesticides” etc.) and the retailers would probably insist that their growers comply with EU standards.'

For horticulture, there is already a concern that larger growers will shift their production to EU if they can’t get access to the eastern European labour force. Anything harvested by hand could switch to Poland and other eastern European countries and be sold back to the UK.

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Too cute to kill?

The conference postcard reflects one of the themes discussed: anthromorphism

Yesterday I attended the first day of an international workshop on this theme at the University of Surrey's new veterinary school. I talked once more about that mythical construct, the old rogue badger. There was one other paper on bovine TB by Jess Phoenix.

A lot of the papers were about perceptions of animals in children's literature. Samples of the literature were scattered around the conference space.

I think there is some interesting interdisciplinary work to be done in this area. The challenge is to link framings in literature with what is rather a fragmented and volatile public opinion on issues related to the well-being of animals, and then how this feeds into public policy.

Details of the workshop keep disappearing from the web, but you may find something here: Too cute to kill

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Wednesday, July 20, 2016

The challenges facing Andrea Leadsom

An interesting survey, with many useful links, from Emily Lydgate of Sussex University at the challenges facing Andrea Leadsom as Defra secretary: Angry farmers and environmentalists

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Sunday, July 17, 2016

Farm minister stays in post

George Eustice stays in post at Defra as farm minister, news that will probably reassure the NFU. He was a very active 'leave' campaigner, making some extravagant promises to farmers which will be difficult to deliver on. He may reap what he has sowed.

Lord Gardiner also stays in post. He is a Lord in Waiting and responsible for all Defra ministerial business in the Lords.

Therese Coffey replaces Rory Stewart as the 'Pussy'. Stewart has been promoted to the role of Minister of State at Overseas Development where he will work with Priti Patel.

Coffey is MP for Suffolk Coastal, part of the 2010 intake. She was formerly Deputy Leader of the House of Commons. As well as representing a rural East Anglian constituency, the traditional source of farm ministers, she did work at one time in the food and drink industry for Mars Drinks. She has a PhD in Chemistry.

For junior ministerial changes in general, go here: Salvete, Valete

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Lack of trade negotiators hits home

During the referendum campaign I made the point a number of times that the UK had no experienced trade negotiators which we would need after a Brexit to negotiate with the EU and with third countries. As Ken Clarke noted in a Sky interview when he was up against Nadine Dorries, trade negotiations are not a doddle. They are complex and demanding and require a special skill set. The legal context is baffling and I am pleased that we have two trade law experts on our Yorkshire Agricultural Society working party.

At one point I even thought that I had got The Times 'Red Box' interested, but it all came to nothing.

The only trade negotiators we have at the moment are working for the EU and they may be able to line up other, more lucrative jobs in Brussels where they are probably settled with their families with children attending an international school. The civil services does claim there are 10 or 12 officials 'with direct knowledge on trade negotiations', but that could mean attending as observers or summarising the outcome. Canada, which recently negotiated an as yet unratified agreement with the EU, has 830.

The head of the civil service, Sir Jeremy Heywood, has already spoken to professional services firms (among them Linklaters and McKinsey) but they and law firms are likely to charge an arm and a leg. Nevertheless, the aim is to have 300 experts by the end of the year when Article 50 is likely to be triggered.

Nigel Farage has come up with a unique solution: 'Let's get them from Singapore or South Korea or Chile or Switzerland or any of these countries who've managed to achieve far more in terms of global trade deals than we have', departing from his usual line on immigration.

Poor old Ken, by the way, not only did he have to try and have a serious debate with Nadine Dorries, at a meeting in Skipton where I was the warm up act, an elderly gentleman stormed out shouting 'Traitor' when Ken started to speak. He didn't bat an eyelid and gave his usual polished performance.

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Thursday, July 14, 2016

Andrea Leadsom is new Defra secretary

Andrea Leadsom, formerly a junior minister at the Department of Energy and Climate Change, is the new Defra secretary of state. A Warwick University politics graduate, she stood down from the leadership race against Theresa May after her performance in the referendum debates had raised her profile.

She faces a challenging task. Brexit has important implications for the agriculture and food sector. Food processing is one of the country's most important industries and is particularly significant in the North of England. (The writer should declare that he is a substantial shareholder in Cranswick plc, the Hull-based food processor which is a FTSE 250 company).

One of the challenges is that Defra has been hollowed out as a department. Does it have the capacity and the resources to ensure that agriculture and food is taken sufficiently seriously by the new 'Brexit' department (we await its official title) headed by another Warwick graduate, David Davis?

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What NFU chief is thinking

It was interesting to hear Meurig Raymond talking at the Great Yorkshire Show. The NFU is, of course, going through a big consultation exercise with its members, but it was possible to see some of his thinking.

The balance of payments argument was used extensively in the 1960s as a justification for subsidies to farmers and with the trade deficit at not far off 7 per cent of GDP, it seems that this is to be used again. Of course, much of the deterioration is due to falls in repatriated investment income. The balance of trade in goods, although in deficit, is broadly stable.

It was interesting that he said it was not necessary to match the current sum paid by the CAP to the UK, but this may just be an acceptance of reality.

He was clearly aware of how relatively well Pillar 2 type payments are viewed, but said these should be more oriented to promoting competitiveness on the farm.

He noted that farmers found it difficult to influence the UK Government, noting the recent decision to turn down a revised and reduced application for the use of neonics. Denmark had permitted 100 per cent use.

In reply to a question, he made it clear that the scope for coalition building with NGOs was limited. The focus would be on the NFU's own members.

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Farwell, then, Liz Truss

Liz Truss has been appointed as Justice Secretary to replace Michael Gove, effectively a promotion. It shows how far Defra has fallen down the departmental rankings. Liz was at the Great Yorkshire Show yesterday and met with NFU president Meurig Raymond. NFU types were hoping that the existing team would stay in place.

Who now for the poisoned chalice?

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What I told farmers at the GYS

With Meurig Raymond at the Great Yorkshire Show

Here is the text of my address at the NFU breakfast meeting.

Harold Wilson used to say a week in politics was a long time. We have recently learnt than an hour in politics is a long time. Fortunately, we are now entering a period of greater stability as far as the Government is concerned. We have to wait to see who will be Defra secretary. I would expect Theresa May to approach the start of the Article 50 negotiations with some caution. Little preparatory work was undertaken by government, or at least little that was committed to paper. I think that our YAS report is actually quite helpful in terms of highlighting the issues that need to be considered.

Brussels is on holiday in August. Of course, too long a delay could lead to Article 7 being triggered. This invokes sanctions against an EU member for ‘failing to uphold the values on which the Union is based.’ However, I do not think that would be a very likely scenario.

How long the negotiations will take is a matter for speculation. They have to be completed in two years, but could be completed in less. France has a presidential election in April and May 2017, where the outcome is uncertain, and Germany has a federal election in September 2017. France is trying to carve out a leading role for itself in the negotiations and has set up its own task force led by their secretary-general for European affairs.

A few words about the negotiation process. The role of the European Council in the negotiations is to set the guidelines and key conditions while Commission staff will make concrete recommendations. The Council task force on the UK is headed by Belgian diplomat Didier Seeuws. There was some feeling in the Commission that he had been appointed too early. President Juncker’s chief of staff Martin Selymar is expected to be the Commission’s lead, at least unofficially.

The European Parliament won’t be directly involved in the negotiations, but will try to make itself felt before it carries out its official role, ratifying the final agreement. The Commission is likely to issue progress reports on the talks and the Parliament will vote on non-binding resolutions on them. One of our objectives with our report was to try and get greater attention given to agriculture and the food chain in the referendum debate. We were not very successful and I am concerned that this will happen again in the Article 50 negotiations.

The work of the YAS working party will continue and will have two main tasks:

  • 1. Monitoring the negotiations in terms of their impact on agriculture
  • 2. Contributing to the debate on a new domestic agricultural policy. That will be a policy for England as agriculture is a devolved matter. Up to now the constraints of the CAP have limited the scope for policy divergence. In future I would expect Scotland and Northern Ireland to spend more on agriculture and the rural economy, although budget constraints limit the scope of such divergence. I am less certain about Wales.

I have been asked to be positive today and I will try to be so, but it has to be recognised that farmers face political challenges and no longer have the support of farmers elsewhere in Europe. ‘Time to cut our greedy farmers down to size’ says this article in last Saturday’s Times. It is a very ill informed article and I have criticised it in my blog. The only good point in it is when it says that the NFU is a well organised lobby. But we can expect more of this sort of thing.

Before looking at various areas of policy, I want to say something about sterling. A falling rate against the dollar and the euro brings many advantages to farmers, but also some downsides. Exports become more competitive and the value of EU subsidies rises, but the cost of inputs such as fertilisers and soya increases. Fuel prices also increase, which is why the future of red diesel is something that needs to be watched.

The future of subsidies is clearly a matter for concern as for many enterprises they make the difference between running at a profit and a loss. Pillar 2 subsidies are in many cases protected by contracts that run beyond 2020, but we were also confident in our report that there was a strong domestic coalition of support for the continuation of agri-environmental subsidies, but hopefully putting right some of the failings in the existing scheme. There needs to be some discussion about whether subsidies should move up the hill to livestock farms.

We were much less confident about Pillar 1 or basic payment subsidies. We didn’t think they would be abolished, but we did think they would be a target for the Treasury. It has to be recognised that falls in tax revenue, some of which may be longer term, will put public expenditure under greater pressure, even though the budget surplus target has been rightly abandoned.

Inertia would suggest that a modified form of the basic payment would be used, hopefully with fewer form filling complexities and payments being made to farmers on time. I am clear that there will be no return to the deficiency payments that were used in the past because it is difficult to forecast how much they will cost in any one year.

The justification for general subsidies (or support payements) needs to be articulated. In my view the strongest argument is the need to maintain a level playing field with farmers elsewhere in Europe that will continue to receive CAP subsidies. There are also food security arguments given that our ability to grow temperate foodstuffs has declined over time. One also needs to consider environmental protection and the maintenance of the appearance of the countryside.

As far as regulation is concerned, hopefully we will see the back of the monoculture regulations that interfered in farm decision-making without making any contribution to environmental objectives. I think that it should be possible to eventually get rid of the Nitrates Directive in its present form and some aspects of the Water Framework Directive.

It does need to be recognised, however, that there is a strong coalition of domestic lobbies - environmental, conservation, animal welfare, consumer, public health – that often do not have a good understanding of the challenges that face farmers.

Take the case of badgers and bovine TB which I have written about a lot, indeed I am giving a presentation at the vet school at Surrey University next week. In forty years of working on agricultural policy, I have never encountered such an intractable policy problem in which emotion often trumps the evidence.

Plant protection legislation has not worked well in the EU. The internal market is not complete. Many of the national agencies suffer from very serious problems. There is too great a willingness to accept hypotheses about risk which are not evidence based. However, the UK Government is not necessarily sympathetic, as has been shown by the recent decision to reject a revised application to use neonics this autumn. It won’t be too easy to operate a pesticides regime in the UK that is at odds with that in the EU.

Trade agreements between the EU third countries or groups of countries, of which there are over fifty, provide one of the greatest challenges, although my guess would be that probably only fifteen of these are really important for agriculture. Trade negotiations are very complex and we lack enough experienced trade diplomats, although I believe that the Government is thinking of hiring them in from private firms, which will not be cheap.

There is a major issue about migrant labour which is particularly important in terms of planting and harvesting field vegetables and fruit. I don’t have time to go into this in detail, but in my view the way forward is through a revised version of the SAWS scheme that extends to specific countries beyond the EU. As far as the border with Ireland is concerned, I think that the most likely solution is to move it back to England.

The NFU is undertaking a major consultation with its members, probably one of the biggest it has ever undertaken. I await the results of that with interest, but in the meantime the work of our working party will continue.

Sources close to the NFU suggested to me later in the day that the biggest challenge would be managing the expectations of farmers.

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Sunday, July 10, 2016

'Time to cut our greedy farmers down to size?'

I am required to be positive when I address the Future Farmers of Yorkshire on Wednesday at the Great Yorkshire Show and I will do my best. When I was going round talking to farmers before the referendum, many of them were confident that there would be plenty of money to carry on paying subsidies at much the same level, presumably from the alleged £350m a week that was going to the EU, and was in any case spent many times over.

The smarter farmers realised that there were a lot of political forces ranged against them and they would no longer have political back up from farmers elsewhere in the EU.

An opening shot was fired in The Times yesterday with an article by Emma Duncan, who is apparently the editor of 1843 magazine. She starts with a good joke about the recent headline on the NFU website, 'Brexit may not be beneficial to UK farmers' which reminded her of Emperor Hirohito's surrender statement in 1945, 'The war has not necessarily developed to Japan's advantage.'

She starts with a critique of the amount spent on the CAP as a proportion of EU spending and levels of tariff protection. Both in my view are higher than can be readily justified.

So far, so good. But then she apparently wants to remove all of this and 'let our farmers compete in world markets just like our manufacturers'. The problem is that most other countries subsidise and/or protect their farmers. The clear exception is New Zealand which has a very favourable climate for farming. Australia is not as clear a case as it appears as drought payments (no doubt justified) have been used as a less transparent form of payment to farmers.

If we cut subsidies, she says that food prices will fall (not necessarily if there is a sharp fall in domestic production). Land prices will fall and more will be released for housing (do we want the better quality land to be used in this way?) Some land will return to wilderness which will be a good thing (scrub and bracken is not good to look at and not good for biodiversity). The only losers will be the farmers, although she thinks that one problem is the strength of the NFU as a lobby.

Farmers do need to develop an evidence based case for support, and also about whether subsidies should be redeployed. Remember that we will now have an English agricultural policy as farming is a devolved matter which has hitherto constrained by CAP. I would expect the devolved administrations in Scotland and Northern Ireland to be willing to pay more to support agriculture and rural areas (the Welsh case is less clear).

What we do need is a debate that is based on policy objectives and identifying the best means of pursuing them.

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Saturday, July 09, 2016

Is there a migrant labour crisis?

I had to do a pre-record for ITV Yorkshire about the potential migrant labour crisis in agriculture, more specifically in field vegetables and horticulture (there are also many Fillipinos working in the dairy industry).

I think there is a potential crisis, indeed some signs of strain are already emerging, but there is also a potential partial solution.

The pound is 13 per cent weaker against the Polish zloty since January and salaries are rising there. Polish shipping agents are reporting increased business.

The solution would be to restore a version of the Seasonal Agricultural Workers Scheme (SAWS), but to extend it outside the EU. As far as I am aware, this could be limited to specific countries.

A SAWS type scheme does impose additional administrative costs compared with the free movement of labour. There is also some risk of those on temporary work permits disappearing into the illegal labour market.

However, the alternative scenario is a reduction in the quantity of fruit and field vegetables grown in the UK, reducing even further the percentage of temperate foodstuffs we can supply ourselves. Prices would be pushed up, as imported fruit and vegetables are generally moe expensive, especially if sterling is weak.

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