Thursday, February 04, 2016

Brexit report out

The report from a working party set up by the Farmer-Scientist Network of the Yorkshire Agriculture Society on Brexit and agriculture is now out: Brexit

The working party was made up of academic specialists from the fields of law, agricultural economics and political science, as well as farmer members.

The report highlights the complexities and uncertainties associated with Brexit, particularly given the absence of any Plan B for agriculture produced by the UK Government.

Among the topics covered are the future of farm subsidies, international trade, the devolved administrations, plant protection, animal health and welfare, GM crops, geographical indications and migrant labour.

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Wednesday, February 03, 2016

CAP reform fatigue

EU agriculture commissioner Phil Hogan is open to a mid-term review of CAP reforms next year, but says that there is 'reform fatigue' among decision-makers and stakeholders: Mid-term review

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Monday, January 25, 2016

Farmland prices fall

The cost of prime arable land fell last year for the first time in 13 years, according to estate agents Savills. It is estimated that prices fell 1.7 per cent last year, after rising 12 per cent in 2014.

The main reasons for the fall are thought to be falling commodity prices and uncertainty about what would happen to farm subsidies if the UK left the EU. Farm subsidies have tended to push up prices.

The 25 per cent fall in wheat prices last year had a particular impact on demand, especially from farmers looking to expand. Farmers with high debts or no successors may have cashed in last year while prices remained high. Farmers accounted for 50 per cent of farmland sales last year, the highest proportion for seven years.

Arable land values in the eastern counties of England, where prices have been the highest, fell most compared to other types of land. They remained stable in Scotland and the north of England.

Savills said that the fundamental factors driving UK farmland value growth remained: 'Supply is historically low, the product is finite, competing land uses and ownership motives will all support farmland values growth in the long run.'

High land prices remain a significant barrier for new entrants to farming who do not inherit a farm.

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Monday, January 11, 2016

Brexit could hit farmland prices

It is unlikely that the current level of €3bn a year direct support would be maintained after Brexit. The Treasury would see it as an opportunity to reduce subsidies to farmers.

The value of prime agricultural land would be unlikely to be affected. High quality land has been selling at £1,000 per acre with investors looking to diversify assets and preserve capital values. The price of the best land in East Anglia and the south east has risen fourfold over the last decade.

However, the value of land used for dairy farming, lowland beef and sheep farms could be hit much harder. Ian Ashridge, a partner specialising in agriculture at Bidwells, told the Financial Times, 'You would seem some sectors affected severely. Those investors who have acquired land that supports more than one enterprise are likely to be affected much more seriously by any reduction in support.'

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Tuesday, January 05, 2016

Brexit and agricultural trade

Alan Matthews takes an in depth look at the implications of 'Brexit' for agricultural trade: WTO and Brexit

Certainly in the work we have been doing in the Yorkshire Agricultural Society working party on Brexit, we have found this to be the most complex issue.

Matthews concludes: 'There must be a high risk that Brexit would lead to disruption to supply chains (in the case of imports) and to export sales. Also, the time pressure on the UK to secure agreements will leave it in a relatively weak bargaining position vis-à-vis its trade partners implying that it may have yield more concessions that might otherwise be the case in order to secure these agreements.'

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Tuesday, December 15, 2015

Why isn't food in the Brexit debate?

The fact that food was not being talked about in the Brexit debate was a political failure said Professor Tim Lang, introducing the 2015 City University Food Symposium on the topic.

Professor Alan Swinbank outlined four broad possible scenarios post Brexit, reduced from a long list of eleven:

  • More highly protected agriculture with a self-sufficiency objective
  • Freer trade
  • Recreate the status quo
  • Some tweaking to enhance environmental credentials

Any free trade area negotiated with the EU was unlikely to be a simple deal. Internal market rules and geographical indications would have to be respected.

Peter Backman of Horizons FS said that what was distinctive about food service industries and catering was that they relied - and he emphasised the word relied - on migrants.

Ian Wright of the Food and Drink Federation said any impact on access to imports would have a detrimental effect on business. We would cut ourselves off from the talent pool in the EU when the industry had a skills gap of 100,000 workers. He predicted that the UK would break up in a post-Brexit world.

Martin Haworth, acting director-general of the NFU, said that agriculture had 34,513 full-time employees from outside the UK. The EU did lead to some inappropriate or disproportionate regulation. Legislation was the price of single market access.

Kate Trollope of EU Food Policy said that as a third country, EU approval would be required of manufacturing and processing plants in the UK. Border inspections could lead to time delays. There would also be import fees.

David Baldock of the IEEP said that it would be difficult to envisage the Treasury requiring anything other than significant cuts in payments to agriculture. The exit scenario was not one for the UK to dictate, it had to be negotiated.

Former civil servant Andrew Jarvis warned, 'If you are not at the table, you are not on the menu.'

Polls taken showed that those in the room overwhelmingly favoured staying in the EU, whilst the latest opinion polls show public opinion evenly split.

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Monday, November 23, 2015

Big mergers in input industries?

A series of major mergers is in prospect in the agricultural input industries. Having seen off repeated approaches from US rival Monsanto, Swiss group Syngenta is now seeking to combine its strength in crop chemicals with other groups' leading positions in agricultural seeds. Other leaders in the business including Monsanto, Dupont's seed business Pioneer and the agricultural units of Dow Chemical, BASF and Bayer.

Syngenta chairman Michael Demaré told the Financial Times, 'On the crop chemical side, we are the strong leader. On the seed side, Monsanto and [Dupont's] Pioneer are the key leaders. The winning company in the future will be the one that can combine these two strengths and have an integrated offer.'

Further concentration among the 'big six' would have implications for competitiveness. It would also enhance the global political influence that these companies are able to exert. There is often an under estimation of how influential the input industries are in supporting agriculture politically.

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