Thursday, August 17, 2017

Ireland position paper raises more questions than answers

That is a general view of the Government's position paper on Ireland, but it applies particularly to agriculture. It is suggested that one option to avoid disrupting the substantial trade in food and agricultural products between Northern Ireland and the Irish Republic could be 'regulatory equivalence.' The UK would agree to achieve 'the same outcome and high standards, with scope for flexibility.' Is the latter phrase some kind of get out clause?

It is difficult to see how one could negotiate trade deals with countries like the US which would want entry to the UK market for its hormone reared beef and chlorinated chicken. Such deals are supposedly one of the benefits of Brexit.

If one had a customs agreement with the EU similar to that with Turkey, it should be noted that this excludes agricultural goods. Agricultural products would then need to be checked to ensure tariffs had been paid and that there was compliance with phytosanitary standards.

I am sceptical about claims that there is a technological fix to these issues, particularly given the current clunky state of HMRC's IT systems. The logical solution would be to have a border in the Irish Sea, but that is politically unacceptable, particularly with the DUP breathing down the Government's neck.

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Wednesday, August 16, 2017

The New Zealand question

When Britain was originally negotiating and then confirming by referendum its membership of what was then the European Community, one of the issues was New Zealand agricultural products. I need to go back and read the contemporary literature, but essentially the point was that Kiwi exports of butter and lamb were important to its economy and the UK wanted to continue to have access to them tariff free, so it was agreed that quantities of these products could enter the common market free of tariffs.

New Zealand subsequently adopted a 'scorched earth' farm policy which caused more pain than many of its admirers admit and was also accompanied by a devaluation of the NZ dollar (as well as freeing up the country's ports from various restrictions). New Zealand has thus opened up new markets for its dairy products in East Asia and the Gulf states.

Nevertheless, that does not mean that the European market does not matter. New Zealand has formally objected to a plan that would limit the amount of its lamb sold in Britain. The UK Government wants to share the tariff rate quotas with the EU after Brexit. The hope is that replicating the EU's tariffs and quotas would make matters easier in the World Trade Organisation.

It is somewhat ironic given that it was hoped that one of the first post-Brexit free trade pacts would be with New Zealand. You might wonder what the UK could export all the way to New Zealand, but apparently it is about financial services.

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Wednesday, August 09, 2017

The case for small farms

The CPRE are the latest contributors to the debate on farm policy post Brexit and they make the case for the benefits of small farms: Uncertain harvest

The report highlights the declining number of smaller farms. It argues that farm size diversity is a crucial consideration as we move towards Brexit. 'It could help deliver the many public benefits that we need farming to provide and that public funding – and the market where possible – should foster and reward.'

There is a case to be considered here. Big farms generally get a poor press, although many of them make substantial efforts on environmental protection. Moreover, they are potentially more internationally competitive, not that that has ever been a big concern for the CAP.

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Monday, August 07, 2017

Migrant labour supply problem worsens

Growers of fruit and vegetables are reconsidering their investment plans as it becomes more difficult to recruit migrant labour from elsewhere in the EU. Some may relocate to eastern or central Europe: Pickers shortfall

According to a report in The Guardian: '“The perception from overseas is we are xenophobic, we’re racist, and the pound has plummeted too. We’ve gone with Brexit and that makes us look unfriendly.” Those are the words of John Hardman, director of Hops Labour Solutions, which supplies about 12,000 workers a year to food-growers. He reckons that when it comes to “food-picking jobs in agriculture – which means everything from strawberries to brussels sprouts”, there is currently a Brexit-related shortfall of about 20%, which chimes with recent surveys by the National Farmers Union.'

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Tuesday, August 01, 2017

Farming tomorrow

It's difficult to keep up with the flood of reports on the future of agricultural policy after Brexit. Many of them say rather similar things, which I suppose reflects an emerging consensus focusing spending on 'public goods', although there is still a lack of clarity on the policy instruments that would deliver these objectives. The latest report comes from the Policy Exchange: Farming Tomorrow

It argues that subsidies on food production should be phased out and in the words of Policy Exchange's director, Warwick Lightfoot, be directed 'towards more sustainable goals - the landscape and its appearance.' Tariffs should be lowered unilaterally, so farmers would face a double whammy.

It is argued that the UK should replace the CAP with a new British Agricultural Policy which focuses on payments for ecosystem services (or natural capital) and phases out production subsidies and income support by 2025. Any remaining subsidies should be redirected towards protection for natural and public goods, and increasing R&D to boost innovation and the sector’s long-term productivity. The difficulty is that no one has yet come up with a feasible scheme for pricing ecosystem services.

Professor Tim Lang has described the report on Twitter as a 'clear neoliberal farm Brexit call' while another tweeter commented 'Bye-bye, quality British food.

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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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