Wednesday, June 12, 2019

Pesticide rules could be weakened after Brexit

Concern has been expressed about the way in which EU pesticide rules are being translated into UK law by the University of Sussex Trade Policy Observatory: Not just a technical exercise

The commentary notes, "These changes to pesticide regulation in the UK can hardly be characterised as ‘technical’; they will weaken the rigour of the process by which pesticides are approved and monitored in the UK."

The EU could, of course, prohibit the import of crops from the UK produced with pesticides of which it did not approve.

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Tuesday, June 11, 2019

Farmers divided about Brexit options

Farmers are divided about how or whether they want Britain to leave the EU according to the Knight Frank 2019 rural sentiment survey. It should be noted that the sample size is just 200, but it probably does reflect a measure of confusion and uncertainty among farmers.

26 per cent of farmers wanted a 'no deal' Brexit, which would certainly be damaging for at least some of them, but 25 per cent wanted a second referendum leading to a remain conclusion. 22 per cent backed the deal with the EU negotiated by Theresa May and 16 per cent preferred a softer Brexit including a customs union.

30 farmers said they would change how they voted in 2016 and 80 per cent of them would switch from remain to leave. They blamed Brussels for the UK's inability to reach a deal.

51 per cent of respondents said they had no plans to adapt how they farmed to deal with leaving the EU. Those planning for Brexit envisaged diversification, putting more land in conservation schemes and making existing businesses more efficient.

The report can be read here: Knight Frank

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Sunday, June 09, 2019

Warning on government's new farm policy

The National Audit Office has issued a report on the government's new farming policy. Gareth Davies, the head of the NAO comments, 'Defra is moving forward with a policy which is a radical departure from the CAP farm payment regime we have known for forty years. Because it is such a big change, from acreage-based direct payments to an environmental stewardship scheme, we have looked at Defra’s approach to implementing its policy at an early stage.'

'We urge Defra to give itself time and space to fully test and evaluate the policy, and for comprehensive planning, to avoid any unintended consequences for the farming community, our environment or ability to feed ourselves.'

The report notes that 'The government’s new farming policy will be a significant change for farmers in England and the Department for Environment, Food & Rural Affairs (Defra) has a lot to do to prepare for its implementation at a time when its resources are already under immense pressure from its preparations for EU Exit. The National Audit Office warns that government must approach its roll-out carefully to ensure farmers can prepare in the way they need to.'

'The UK farming industry provides over half of the food the UK eats, employs 474,000 people and comprises 217,000 farms. While a member of the EU, the UK takes part in the Common Agricultural Policy (CAP). Under CAP, farmers in England received €2.4 billion in subsidies in 2017. To prepare for exiting the EU, Defra is developing the Future Farming and Countryside Programme (the Programme) to implement a new agricultural policy and regulatory arrangements to replace CAP.'

'The key part of this new programme is the Environmental Land Management System (ELMS). Defra hopes to have 82,500 farmers enrolled on ELMS by 2028. Under CAP, most payments to farmers are based on the amount of land they farm. These direct payments will be gradually phased out over a seven-year period starting in 2021. Under ELMS, farmers will be encouraged to enter into a contract with the government to produce environmental land management plans, and be paid for the environmental outcomes they deliver, often working in collaboration with other farmers. The policy represents a major shift away from traditional farming towards a system that pays public money primarily for delivering environmental benefits.'

'Farmers will have little time to prepare for participation in a three year national pilot of ELMS, which will run from 2021 to 2024, because Defra is not planning to set out the environmental outcomes it will pay for or how much it will pay until April 2020. This is less than a year before the start of the pilot and when their payments will start to be reduced. Defra has consulted with farmers as it designs the Programme, but it has not provided the necessary guidance to enable farmers to plan how to adapt their businesses or how to work collaboratively with other farmers.'

'Defra has recently scaled back its ambitions for the level of take-up of ELMS during the first year of the three-year national pilot, from 5,000 farmers to 1,250, but is seeking to increase participation as the pilot progresses. It is not clear whether this lower number in the first year of the pilot will provide sufficiently robust evidence across the range of farm types and locations to inform further development of the Programme. This means that Defra only has two years to test how well ELMS will work at scale.'

'Defra currently has no plans to test its assumptions about the level of take-up of the new system. If take-up is low, Defra will need to find alternative ways to achieve environmental benefits. Farmers that do not participate may leave farming or replace direct payment income by adopting more intensive farming methods that could damage the environment.'

'The success of the Programme depends on government assumptions about how the farming community will respond to the new policy. Direct payments from the EU currently account for an average of 61% of farms’ net profit. Without these, 42% of farms would have made a loss between March 2014 and February 2017. The Department expects the withdrawal of direct payments to be offset by improved business approaches, new entrants to the sector taking over farms that have ceased to be viable, and productivity gains across the sector. However, there is limited evidence that many farms are equipped to increase their productivity.'

'Defra is starting to specify its digital requirements for the Programme before key decisions have been made about how the new policy will work in practice, increasing the risk that it will need to make significant technology changes late in the Programme. For example, Defra has not yet decided which environmental outcomes will be rewarded or how much farmers will be paid.'

'The NAO recommends that Defra gets a plan in place with realistic timescales, that has sufficient flexibility to allow changes to be made as more is learned about how farmers react to the new farming policy. It should extend participation in its pilots to a wider range of farmers and land managers to test their willingness and ability to participate in ELMS, and determine the level of ELMS take-up it needs to justify investment in its design and development.'

The report can be found here: New farming programme

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Friday, May 31, 2019

Defra pledges to cushion basic payment withdrawal

Defra has pledged to cushion the impact of the withdrawal of the basic payment against a background of concern about the mental health and well-being of farmers: Defra pledge

Defra’s own statistics show that 16% of farm businesses are already unprofitable – even while direct payments continue to be made. That would rise to 42% without direct payments, which the government intends to phase out over seven years from 2021.

Much emphasis seems to be placed on resilience, and farmers are resilient, perhaps sometimes too much so for their own good. However, resilience can turn into a resistance to adaptation to changing circumstances.

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Friday, May 24, 2019

Spanish interlude

I recently spent a few days in the vicinity of Alcalali in the Jalon Valley in Spain which is roughly halfway between Alicante and Valencia. Farming in this area is focused on fruit and vineyards. Oranges are not getting a good return with competition from South Africa and it is sometimes hardly worth picking them: I saw 5 kilos of oranges for converting into juice offered at one euro and there weren't many takers. Almonds, lemons and avocados are among the other crops grown.

In many ways vineyards are potentially a commercial crop and I saw an extensive flat area planted with vines. I visited the cooperative in Jalon (aka Xalo, depending on the language used).

This was set up in 1962 and takes grapes from a radius of 15-20 kilometres, all organically grown. The plant is highly mechanised.

In some ways it was the marketing techniques that interested me. They have a very impressive shop, beautifully laid out, with a range of wines (and spirits). This generates 20 per cent of their revenue. It is possible to fill reusable plastic containers of wine for just a few euros and this is clearly a very popular offer. A very acceptable bottled white retails for just under three euros.

However, they do have high end wines at, for example, 18.5 euros. I saw a case of a dozen of these being dispatched to a purchaser in the United States. Once again farmers outside the UK show an ability to cooperate which is far less common here.

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Wednesday, April 17, 2019

Farm income drops under two Brexit scenarios

The AHDB has modelled two Brexit scenarios, UK-EU free trade area and WTO UK tariffs: Assessment report

Farm business income drops under both Brexit scenarios for nearly all of the farm and enterprise types covered. For most sectors the main driver of the fall is expected increase in labour costs. However, in the Less Favoured Area (LFA) and lowland beef and sheep farms falls in production returns (from cattle and sheep sales) are much more substantial.

Most sectors fare significantly better under a UK-EU FTA scenario. In general terms trade impacts vary depending on whether the UK is a net importer or net exporter. Net importing sectors generally gain from rising prices, whereas net exporting sectors see falls. Under the WTO: UK tariffs scenario some net importing sectors (beef and pigs) also experience a price fall as the model expects cheaper world market product to make its way to the UK market.

As with the original 2017 study there is substantial variability of results by farm size and performance levels. The high performing farms, in terms efficiency of converting inputs to outputs, remain profitable under both scenarios.

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Sunday, March 03, 2019

US opens offensive on agricultural trade

The United States is playing hardball on agricultural trade as part of any future US-UK trade deal after Brexit. Last week the office of the US trade representative (in effect, America's trade minister) issued a document that said the US was seeking 'comprehensive market access for US agricultural goods in the UK' through the reduction or elimination of tariffs. The US is also looking for the removal of 'unwanted barriers' related to 'sanitary and phytosanitary' standards.

The US Ambassador followed up with an article in the Daily Telegraph on Saturday which said that the UK risked getting trapped in the EU's 'museum of agriculture' approach: Smears on US farms

The EU has shown itself more than capable of innovation in agriculture with a new era opening up with the digital revolution. However, what the so-called 'museum of agriculture' about is a vision for European farming which emphasises the production of high quality products in an environmentally sensitive way, including observing animal welfare standards. An ecosystems compatible agriculture reflects the preferences of European consumers and voters who have no enthusiasm for corporate, industrialised American models.

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