Monday, January 07, 2019

Public goods scheme may run into trouble

The Government's intention to switch to public goods payments for farmers after Brexit may fall foul of the poor record of implementation of existing agri-environmental schemes. About 30 per cent of the farmers signed up to the various green programmes are still waiting for payments from 2017.

Payments often come up to a year late. By the government's own assessment, delivery of the country stewardship scheme has 'fallen short' and 'the situation is unacceptable' according to the latest annual report from Natural England.

The new schemes are likely to be even more complex and will have more money going through them, making even more delays likely.

Given the likely complexities of making applications, farmers could simply opt to farm their land more intensively, reversing previous environmental gains.

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Thursday, January 03, 2019

Gove warns of Brexit farming woes

The text of Michael Gove's speech to the Oxford Farming Conference: Defra Secretary

He comments, 'I cannot, here, entirely pre-empt the outcome of the Government’s Spending Review.' Indeed, but it is of crucial importance and the Treasury has a long held suspicion of farming subsidies. Gove claims, 'Embracing change, supporting reform is the key to unlocking the Treasury’s special box.'

The Secretary of State admitted, 'It’s a grim but inescapable fact that in the event of a no-deal Brexit, the effective tariffs on beef and sheep meat would be above 40% - in some cases well above that. While exchange rates might take some of the strain, the costs imposed by new tariffs would undoubtedly exceed any adjustment in the currency markets.'

In addition, 'The combination of significant tariffs when none exist now, friction and checks at the border when none exist now and requirements to re-route or pay more for transport when current arrangements are frictionless, will all add to costs for producers. As will new labelling requirements, potential delays in the recognition of organic products, potentially reduced labour flows and the need to provide export health certificates for the EU market which are not needed now.'

'Nobody can be blithe or blasé about the real impact on food producers of leaving without a deal.'

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The CAP and farming resilience

What contribution does the CAP make to farming resilience? An in depth report on the subject: Resilience Assessment

The resilience of farms and farm systems has become more of a concern in agricultural policy-making. In recent years, European farming systems have generally experienced more pronounced and overlapping challenges: on the one hand, a build-up of shocks such as more frequent extreme weather events, increased price volatility on liberalised markets or unpredictable political interventions to trade policies.

These are accompanied by significant long-term stresses, such as changing consumer preferences, climate change, rural outmigration or the lack of skilled labour. The accumulation of these overlapping environmental, economic, social and institutional challenges could render many farming systems in Europe vulnerable and threaten their functions, i.e. the production of food and fibre as well as the provision of public goods.

The analysis reveals that the CAP and its national implementations do enhance the resilience of most farming systems in the case studies. However, there is a clear bias towards a robustness-cum-adaptability orientation. The main reason for this is that the bulk of resources go into payments that provide buffer resources for farms and enable the continuation of otherwise less profitable business models, thereby stabilising the status quo.

Fewer resources are funnelled into measures that enhance adaptability; this occurs mostly through rural development programs and in some cases producer organisations. An open question is whether the relatively ample support for robustness creates disincentives for adaptation or transformation and therefore impedes these other resilience dimensions.

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Monday, December 24, 2018

Demand for oat milk oustrips supply

Global sales of liquid milk from cows fell by 3.5 per cent in the five years to 2017 and one factor has been the growing popularity of plant based alternatives. However, these have not been without their challenges.

Almond-based milk has the largest share of the plant-based market in the US with 64 per cent, but some consumers are concerned about the amount of water used in almond cultivation. Soya milk sales have fallen after a debate about its health benefit and risks.

In contrast oat milk sales surged almost 50 per cent in the US in the twelve months to August. That compares with 9 per cent growth in overall plant-based milk. One reason is that it is really good with coffee and consumers like its texture.

Demand has expanded rapidly that leading Swedish producer Oatly has been forced to pause international expansion so that it can supply existing markets in the US and UK. PepsiCo, owner of Quaker Oats, is hoping to cash in by launching oat milk lines to US consumers.

Biotech starts ups are developing dairy free proteins using biological fermentation techniques.

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Wednesday, December 19, 2018

A crucial turning point for agricultural policy

Dieter Helm from Oxford University in a video presentation of policy options for agricultural policy after Brexit: Dieter Helm

He argues that we are at a critical historical turning point for agricultural policy, as important as the post-war settlement embodied in the 1947 Act and joining the then common market in 1973. We need to be clear about what the problem is you are trying to answer in agricultural policy. Why do we have to intervene at all? Post-war policy across Europe was influenced by a 'dig for victory' narrative which is no longer relevant.

He argues that we no longer need policies to deal with volatile prices given the availability of futures markets and financial instruments. I am not convinced that these address all the challenges, particularly for smaller farmers.

What earlier policies failed to address were negative externalities and public goods. Economists have a tight definition of public goods, but public perception equates public goods with the public interest. The Treasury may be tempted to transfer non-agricultural policies to the agricultural budget, e.g., rural broadband access.

There is an asymmetric information problem between farmers and those implementing public policies. Helm suggests the use of auctions and discusses this in the context of river catchment areas.

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Wednesday, December 05, 2018

Pesticides policy after Brexit

The Food Research Collaboration has produced a briefing paper on pesticides policy after Brexit: Pesticides at a crossroads

It is noted, 'With Brexit looming, there is an opportunity for the UK to reshape its relationship with pesticides. It could choose to mirror or even surpass the standards of EU pesticide rules. On the other hand, it could bow to the pro-pesticide lobby and use Brexit as an opportunity to deregulate. This would allow a greater variety and larger quantity of harmful pesticides to be used, thereby putting the environment and the public’s health at risk.'

Among the recommendations are that the UK should maintain the EU’s hazard-based approach (rather than revert to a risk-based approach) to pesticide regulation and introduce a clear, quantitative target for reducing the overall use of pesticides in agriculture. A new government body should be created to support Integrated Pest Management (IPM) techniques. A pesticide tax should be introduced to drive reductions in pesticide use and fund research, development and innovation.

Farmers are, of course, concerned about the removal of active substances they see as essential to plant protection.

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Wednesday, November 28, 2018

Panel to look at farm funding across UK after Brexit

The question of how farm funding should be divided up across the UK after Brexit has been a thorny political issue, not least because the Scottish Government in particular has been concerned about a loss of powers. It also has an ambition to continue some form of basic payment after Brexit, although that would depend on funding being available (the Welsh Government does not intend to maintain a form of basic payment).

The Government has appointed an independent panel chaired by Lord Bew to review the issue: Fair funding for farmers. Each of the devolved administrations will be represented on the panel.

It is also stated that the intention is not to maintain the Barnett formula in relation to agricultural spending after the end of the lifetime of the current Parliament.

Under the present distribution of funding, Northern Ireland does best on both a per capita and a per hectare basis: Funding for farming across the home nations

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Tuesday, November 27, 2018

Agriculture Bill lacks clarity

The House of Commons Environment, Food and Rural Affairs Committee’s Scrutiny of the Agriculture Bill report is calling on the Government to ensure imported food products are held to current British standards as part of any future trade deal. The inquiry was launched alongside the Agriculture Bill, which was introduced in the House of Commons in September 2018 and examines the provisions that will be needed in the agricultural industry following the United Kingdom’s exit from the European Union.

Due to the inquiry running parallel to the Bill, the Committee focused on three key areas of the Bill, including future trade deals. The Committee is calling on the Government to ‘put its money where its mouth is’ and accept its amendment to the Agriculture Bill regarding trade. The amendment stipulates that food products imported as part of any future trade deal should meet or exceed British standards relating to production, animal welfare and the environment.

The other two key areas prioritised by this Report are the transition from the EU Common Agricultural Policy (CAP) to a new system based on public money for public goods and fairness in the supply chain The Committee recommended that there should be a multi-annual financial framework to provide a long-term commitment to agriculture. The Committee also concluded that the Groceries Code Adjudicator should oversee the proposed fair dealing obligations for first purchasers of agricultural products, rather than the Rural Payments Agency.

Given the importance of this Bill in shaping UK agriculture in the future, the Committee expressed disappointment that it was not given the chance to scrutinise the Bill pre-legislatively. This unsatisfactory precedent has been swiftly followed by the publication of the Fisheries Bill.

Neil Parish MP, the Chair of the Environment, Food and Rural Affairs Committee, said: 'The United Kingdom currently has exceptionally high environmental and food standards and an internationally recognised approach to animal welfare. This legacy cannot be ripped apart by the introduction of cheap, low-quality goods following our exit from the European Union. Imports produced to lower standards than ours pose a very real threat to UK agriculture. Without sufficient safeguards we could see British farmers significantly undermined while turning a blind eye to environmental degradation and poor animal welfare standards abroad.

This Bill lacks clarity and gives any future Secretary of State the opportunity to avoid scrutiny and make crucial decisions while going somewhat unchallenged. We would like to see sufficient opportunities for parliamentary scrutiny before any new systems or policies are rolled out.

The report can be found here: Defra committee report

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