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.

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.

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.

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

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

The scale of Italian food fraud

The very complexity of the Common Agricultural Policy provides opportunities for fraudsters. One recalls that a British farmer claimed for fields which turned out to be in mid-Atlantic. A herd of cows was supposedly living on the upper floors of an office block in Rome. Italy has been particularly prone to systemic fraud involving organised criminals.

According to the Rome-based think tank, the Observatory of Crime in Agriculture and the Food Chain, the Mafia have infiltrated the entire food chain. The value of the so-called agromafia business has almost doubled from €12.5bn in 2011 to more than €22bn in 2018 (growing at an average of 10 per cent a year) according to the Observatory. It now accounts for 15 per cent of total estimated Mafia turnover.

According to a recent article in the FT Weekend Magazine 'the cartels have developed white collar expertise in infiltrating the local councils and committees that award tenders and subsidies.' A Mafia family could claim about €1m a year in EU subsidies on 1,000 hectares, while leasing it for as little as €37,000.

In part the Mafia's interest in land deals stemmed from lower earnings from its drugs business and a drop in public money for public works contracts. With margins as high as 700 per cent, profits from olive oil can be higher than those from cocaine and with less risk. According to police, about 50 per cent of all extra-virgin olive oil sold in Italy is adulterated with cheap, poor quality olive oil.

Counterfeited organic food also offers the opportunity for big profits. Italian gangs were discovered importing wheat from Romania and labelling it as organic, which commands a price three to four times higher.

Apart from the opportunities to make money, the move into food also reflected the organisations's growing propensity to enter legitimate businesses. Of course, laundering profits in this way is not a new tactic.

However, there has been a crackdown. Even the smallest leaseholders have to pass police checks, enforced retrospectively, and there have been numerous confiscations of land. Specialist police tasters work to uncover adulterated foods, especially in olive oil.

CAP reform plans fall short

This is not the first time the Court of Auditors has criticised the CAP and it probably won't be the last, given that its findings are generally politely brushed aside: Plans fall short

It is argued that 'The proposed reform of the Common Agricultural Policy after 2020 falls short of the EU’s ambitions for a greener and more robust performance-based approach. The auditors identify a number of other issues with the proposal, notably in terms of accountability.'

The auditors note that many of the proposed policy options are very similar to the current CAP. In particular, the largest part of the budget would continue to be direct payments to farmers, based on a given amount of hectares of land owned or used. However, this instrument is not appropriate for addressing many environmental concerns, nor is it the most efficient way of supporting viable income.

Why operating under WTO rules is not simple

The nature of WTO negotiations is changing, argued Professor Fiona Smith in her inaugural lecture at Leeds Law School last night. The agricultural trade specialist said that diplomatic negotiations were replacing regulation, although it was a messy process, but one that would mean a less central role for lawyers and technocrats. Diplomacy and regulation were in tension in some ways. That tension could be creative, but it could also be destructive.

Without regulation, the strongest and richest could get the best deal. The WTO had been far from ideal for least developed and developing countries, but what had gone before had been worse. For agriculture trade would effectively cease under a hard 'no deal' Brexit.

Professor Smith reminded us of the complexity of WTO rules, 30,000 pages of them and a 500 page handbook. Brexit was not something that WTO rules had been designed for, a country leaving a regional trade arrangement. There was more to trade than goods and services. The trade regime covered subsidies, quality agreements and the environment.

The question of whether the UK was a WTO member had in a sense been resolved, but its schedule of commitments had been absorbed in those of the European Community in 1973. The UK did not have the benefit of an accession treaty, She noted that the UK did now have its own representative in Geneva who was actively attending meetings, although what the UK's stance would be on various issues was unclear.

It was evident from her remarks that following WTO rules was not the simple matter that it was claimed to be. One might add that this is why countries around the world enhance them with regional trade agreements, not least the super regionals like the EU. WTO rules do not accommodate someone leaving a regional trade agreement.

Brexit could push up fruit and vegetable prices

Some of the claims made in relation to Brexit do seem to be exaggerated, particularly when one considers that we do not know what the final settlement will be (my best guess is that the EU and the UK will reach a deal and it will get through the House of Commons with the support of Labour dissidents).

However, this article suggests that higher fruit and vegetable prices could lead to a large number of early deaths: 5,600 deaths a year

Indeed, the article admits: 'Analysing the potential implications of Brexit is a tricky business. The concrete details of Brexit remain unclear. Proposals range from various forms of “soft Brexit” that include a new trade agreement with the EU, to a “hard Brexit” in which the UK falls back on the (higher) tariffs set out by the World Trade Organization.'

What is needed is for domestic policy to have a greater focus on growing fruit and vegetables, both for health reasons and to respond to the greater number of consumers who are vegetarians and vegans. That is lacking in current proposals.

RSA report on food, farming and the countryside

Reports on food and farming keep appearing. The latest is from the Royal Society of Arts and this is just a halfway stage report: Our Common Ground

The basic message is that 'We cannot carry on treating our food, farming and countryside as we do currently. We are failing our citizens, our communities and our environment.'

We are almost at a point where analysis of the problems is far outpacing necessary action, but it was ever thus.

Brexit could compromise biosecurity

The House of Lords European Union Committee has produced a report on plant and animal biosecurity after Brexit: Publication

The report notes, 'The UK currently follows EU legislation on biosecurity, with decisions on implementing biosecurity measures made predominantly at an EU level. The UK also benefits from EU-wide intelligence gathering and disease notification systems, systems for tracing plant and animal movements, and coordinated research efforts. When the UK leaves the EU, it will no longer automatically be part of this framework.'

It states, 'We urge the UK Government to negotiate continued participation in as many of the EU’s notification and intelligence sharing networks as possible. We note also the significant work that remains to be done to ensure the UK has a replacement legislative framework in place, along with the monitoring, inspection and enforcement mechanisms, staff and IT systems to support it, by the time the UK leaves the EU. It seems doubtful this could all be achieved by March 2019, when it would be needed in the case of a "no deal" Brexit, potentially leaving the UK’s biosecurity compromised.'

Brexit and agriculture in Northern Ireland

A House of Commons Select Committee report has just been published on this topic: Northern Ireland

The report states, 'We are concerned that Defra’s consultation on Post-Brexit agriculture policy does not look in detail at the sector in Northern Ireland. We have also heard that there has been little direct engagement with farmers in Northern Ireland on this consultation, and consequently there has been insufficient recognition of key differences between Northern Ireland’s agriculture sector and that of other parts of the United Kingdom.'

'This is a particular concern given the absence of a Northern Ireland Executive, which means that an agricultural policy for Northern Ireland cannot be developed independently at this time.'

The report notes, 'Direct Payments are essential to the viability of much of the agriculture sector in Northern Ireland, and the level of support available to Northern Ireland farms must not be reduced following Brexit. Northern Ireland’s agricultural funding should be maintained until at least 2022.'

The report also notes, 'EU farming regulations have been frustrating for farmers, and at times counterproductive. Brexit is an opportunity to redesign farming regulation and inspection to simplify compliance and to reflect the circumstances in which Northern Ireland’s farmers operate. The Government’s ambition is to introduce smarter regulation and enforcement, but we heard that this may be easier said than done. There is also a tension between reducing regulatory burdens and maintaining the high environmental and animal welfare standards that the public expects.'

Is the UK ready for new challenges in food production?

The Financial Times yesterday had a 'Big Read' article about the transformation of food production by new technology. Like all FT articles on new technology, it's a bit 'gung ho'. It doesn't consider that many farmers may be resistant to new technology or may not have the resources to acquire it. Nevertheless, it makes some good points.

The central thrust of the article is to be found in a sentence some way down: 'Once an unfashionable backwater, agricultural technology has started to capture the imagination of investors.' It reckons that 'annual global investment in food tech, from farm management systems to robotics and mechanisation, more than tripled to $10bn' in the five years to 2017. The main areas of innovation are identified as gene editing, artificial intelligence and digital technology.

Consumer demand is, as always, of key importance. As the populations of developing companies become wealthier, they demand protein products, especially meat. The total amount of meat consumed globally is forecast to rise by 76 per cent by 2050. But, as we know, meat production is not good news for climate change (fossil fuels, methane), nor is increased red meat consumption good for health.

Coincidentally, The Economist has a big feature on the vegan trend. Veganism as such, it concluded, is a niche market, but large numbers of people who are not vegans or vegetarians are interested in healthier eating which has led to an increased demand for plant based products.

One of my concerns about Brexit was the impact of the loss of migrant labour on fruit and vegetable production in the UK. Food miles issues can be exaggerated: it makes more sense to produce tomatoes in Spain in the winter than to heat glasshouses around Littlehampton.

I am somewhat sceptical of claims made about automated picking. The FT notes, 'Given that fruits and vegetables are not of uniform shape and ripeness, the technological challenges are extensive. On top of the mechanical dexterity and spatial cognition that the machines need to demonstrate, researchers hope that AI can help them to learn to pick only the ripe fruit and vegetables.'

The FT rightly praises what is going on in the Netherlands in this area, particularly in 'Food Valley' near Wageningen University (it is, of course, as flat as a pancake). When I was doing research on biological alternatives to chemical pesticides, I was impressed by the way in which the Netherlands was ahead of the curve. As the FT notes, 'The country has made food science one of its strategic priorities and hosts one of the world's most efficient agricultural systems.'

Among the advantages that the Netherlands has is Rabobank, one of the biggest lenders to the food industry and a central location in Europe with an excellent port in Rotterdam.

The FT notes, 'Some investors believe that the food business is about to face the sort of disruption that technology has based on hosts of other industries.' Is the UK ready? Is domestic policy prepared? I doubt it.

Boost for dairy futures

Now that we no longer have devices like milk marketing boards and large scale intervention buying to manage dairy markets (both of which had big problems), there has been an interest in the deployment of novel financial instruments to help farmers cope with market fluctuations. However, you have to be quite a financially sophisticated farmer to be able to use them and they potentially working best in cooperative arrangements.

Indeed, the traditionally conservative cooperatives are now becoming more active as they look for ways to hedge against fluctuating prices. Big processors are using futures to fix their prices and the big retailers are also involved.

A total of about 20,000 tonnes of skimmed milk powder, butter and whey were traded on the EEX dairy futures market in September, the highest monthly volume on record. Skimmed milk futures were launched in 2010, but there has been a lack of liquidity.

The market is still illiquid, but analysts believe that we are at a tipping point.

Record summer temperatures across Europe affected supply. Brexit is also driving volatility in Britain and Ireland.

John Lancaster, a senior analyst at a commodity broker, told the Financial Times:'It's become more obvious to people that high volatility is not going away.'

Stakeholders prioritise outcomes over process

The Government has issued a response to the EFRA Committee report on its consultation document on domestic agricultural policy after Brexit: Response

The Government praises itself for the extent of its engagement with stakeholders on the trajectory of policy and certainly there is a lot of interest and concern from many different quarters on its future direction and content. Stakeholders are interested in outcomes not process and what those will be remains to be seen.

Defra states that, 'It is incorrect to say that there have been minimal discussions between Defra and the Treasury over the future funding of the new agricultural policy. We have been in regular contact with HMT at both ministerial and official level.'

Again it is not the regularity and level of contacts that matters, but the content of those contacts. We are now in a period where the end of austerity has been proclaimed alongside continued fiscal responsibility. The reality is that it is politically difficult for the Government to increases taxes, but it has pledged substantial new funding to the NHS before one even starts to think about, for example, the needs of the police and the prison service.

Spending on agriculture is likely to be squeezed over the coming years. Normally reliable sources suggest that the Treasury is happy with the direction of travel of policy towards payments justified by public goods arguments. However, they are not impressed by food security arguments, although they are interested in the possibilities of a new technological revolution.

What is still largely missing is any link between agricultural policy and health policy in relation to issues such as obesity. Healthy eating is an interest of large sections of the population, not least younger voters.

The Government's view is that 'eating healthily is ultimately a consumer choice'. This is true, but that choice can be guided and that is what Public Health England is trying to do, possibly sometimes in too hectoring a tone.

The Government argues, 'We take the view that the market remains the best way to reward the production of good-quality food. Paying farmers to produce healthy food would not necessarily result in the desired outcome of a wider contribution to public health. Farmers may be the wrong target to incentivise consumers to eat healthy food, especially where primary produce travels through the supply chain via food processors and manufacturers before it is turned into the final product that consumers purchase.'

Whilst there is something in these arguments, policy needs to go beyond a reliance on the market mechanism. For example, there is a climate change argument for eating less meat. We need to ensure that there is a good fruit and vegetable supply at an affordable price. Of course, that raises much wider questions about the roles of the state and the market.

End of basic payment challenges National Park farmer

It was a pleasure to open my Financial Times on Monday and see a photo of a fellow member of the Farmer-Scientist Network of the Yorkshire Agricultural Society, Richard Findlay. I had just finished the draft of our submission to the EFRA inquiry into the Agriculture Bill which received its second reading this week (attracting attention because the Democratic Unionists abstained).

Drawing on the expertise of our academic and farming members we have made a detailed response which hopefully will appear on our website before long. You can read our earlier reports and documents here: Brexit

Richard has 700 sheep on 1,250 acres of the North York Moors national park. In a good year he makes a profit of about £12,000, but he receives £44,009 in subsidies under the CAP.

As he points out, the moorland is a managed landscape which would revert to trees and bushes if he was not farming it. Hopefully, he will be able to demonstrate that he is providing a 'public good' under the new arrangements, although the income stream is likely to be more uncertain and involve form filling.

GM bonanza after Brexit?

Producers of GM crops have called on ministers to abandon European environmental rules after Brexit. The Agricultural Biotechnology Council repesents BASF, Bayer, Dow AgroSciences, Monsanto, Pioneer (DuPont) and Syngenta.

Top biotech companies have long been frustrated by rules that have prevented the sale and development of new GM products in Europe. They have the support of the American administration which is likely to make access for GM seeds one of the conditions of a US-UK trade deal.

Mark Buckingham, chairman of the council, said that under the existing system 'a generation of British farmers have operated without technology that is taken for granted around the world while the EU is known for its political regulatory decisions.'

Any move to allow the commercial cultivation of GM crops in the UK would be strongly opposed by environmental groups. The Government might wonder whether it would be worth spending political capital on the issue when they are under pressure on many other fronts, but the US would push on the issue. This is a more serious concern than chlorinated chicken, although I am not taking a position one way or the other on GM crops.

It should also be noted that the EU would be unlikely to accept exports of GM grains from the UK, just as they would not accept crops grown with pesticides they have banned. It is not realistic to think that UK agriculture can become a regulation free zone after Brexit, although some farmers may have been swayed by that hope when they voted in the referendum.

The limits of new technology

The new conventional wisdom is that agriculture is on the verge of a fourth revolution and that once the UK has Brexited this digital revolution can get under way in earnest, supported by domestic policy and unshackled from the CAP.

I am no fan of the CAP, but I think that some caution is necessary. One farmer commented to ‘Yes, however, there are challenges with farmers getting to grips with the very many and varied types of tech, as my latest tractor testifies, I am generally mystified by the number of possibilities and so find myself being overwhelmed. Tech needs to be simple and intuitive. It’s also expensive.’

Appropriate policy could, of course, help with the question of expense. But much of the AI and digital tech is still at a relatively experimental stage and not ready for on farm use.

Of course, farmers have been using data from near earth satellites for some time and that is now being supplemented by more fine grained information from drones. That enables decisions to be made, for example, about what quantities of fertiliser or agrochemicals are to be applied where with both business savings and environmental benefits.

It is also claimed that machinery using AI can spot when strawberries are ripe and ready to be picked. A downward facing camera is used. However, the berries still have to be picked by hand.

We do face the challenge of producing more food from a given area of land and in an environmentally friendly way. Technology is the key to sustainable intensification. But we also need to think more broadly. Should we try and move away from meat heavy diets which require large quantities of animal feed and livestock that produce methane, a particularly damaging climate change related emission?

US faces challenge in shifting food mountain

We all know that government policies often have unintended consequences. So it has proved in the United States with President Trump's trade war leading to a mountain of food that hunger charities are finding it hard to cope with.

The US administration intends to buy up $1.2bn of foodstuffs over the next year to help out farmers suffering from new tariffs on their produce in China and elsewhere. Sales of US soyabeans to China have been badly hit while pork, a staple product in many mid-western states, faces a 60 per cent tariff in China and 20 per cent in Mexico. Indeed, nearly half the purchases to be made will be of pork.

The purchases will increase by more than 50 per cent the amount that USDA purchases for donation. It is estimated that 40 million households in one of the richest countries in the world are 'food insecure'. However, the challenge is to find enough trucks and drivers to mood the before it spoils. Milk may be the biggest difficulty because of its short shelf life and one is often talking about distances between the producing and recipient areas.

With the average farm business earning 20 per cent less this year, if nothing else it shows the continuing political clout of farmers. There are mid-term elections coming up and although farmers are not numerous, the votes of them and their families can be crucial in tight Senate races, of which there are a number this year. Moreover, many farmers are bedrock Trump supporters.

Brexiteer Dyson sees his farm business make a profit

The farm subsidies given to vacuum cleaner entrepreneur Sir James Dyson's extensive estate have attracted a lot of criticism. In 2017 he received CAP subsidies of £2.8m, up from £2.4m the previous year because of land purchases.

It is thought to be unfair that one of Britain's richest men should be given such amounts, although in fact they go to his farm business (Beeswax Dyson Farming) rather than to him personally. The estate is made up of 35,000 acres of land in Lincolnshire, Gloucestershire and Oxfordshire. No doubt his example has given some impetus to the reduction of subsidies for larger farms after Brexit.

Now the Financial Times has revealed that the business generated a pre-tax profit of £747,000 last year, compared with a loss of £1.53m the year before. Turnover went up 11 per cent to £15.7m. This represents a return of just under 5 per cent. The cost of sales fell by 12 per cent.

He was one of the few prominent Brexiteers from the world of business in the referendum campaign. He has said that he needs EU subsidies to compete against continental competitors. Over the five years he has put £92m into improving the farms, including renewable energy projects. Investment has been directed at such areas as soil health, technology and infrastructure.

Plan A+ and agriculture

No longer responsible for traffic jams, Boris Johnson turns his attention to agriculture.

The Institute of Economic Affairs was founded by one of the first battery farmers and has always take an interest in the way in which agricultural policies perversely disrupt (in its view) the operation of the market mechanism. It is therefore no surprise that its PLan A+ for Brexit, endorsed by leading Brexiteers such as David Davis and Boris Johnson, has a lot to say about agriculture, some of it on very technical matters: Plan A

It is certainly no 'Plan A' from outer space in the sense that it based on a good if particular understanding of how the CAP and international trade rules in agriculture operate.

The report calls for Britain to eliminate tariffs on all agricultural products it does not produce such as avocados, oranges and rice [rice is a significant crop in Italy]. It does allow for the continuation of direct grants to farmers who it admits may face competition from new foreign imports. Tariffs on food should be reduced.

Cargill's central role in food supply

Earlier this week I went to see the brilliant play at the National Theatre about Lehman Brothers. Essentially this was a story about an admittedly always rapacious family company which lost its connection with the family and became even more resolute in the pursuit of money for its own sake, eventually leading to its own demise and its central role in the financial crash of 2008.

Everyone interested in food and agriculture knows about Cargill and what it does, but no one knows too much about it. It has remained a private family company controlled by 100-odd members. About 90 per cent of its common stock is owned by members of the Cargill and MacMillan families, descendants of the man who founded it in 1863.

It is the largest private US company by revenues and plays a central role in global food supply, moving millions of tonnes of agricultural commodities around the world. However, the sector in which it operates has provided its challenges in recent years because of glutted grain markets and an increase in farmers' power in negotiating crop deals.

Chief executive since 2012, David MacLennan. has sought to improve its returns and profitability. He has focused on food and agriculture businesses where it is most competitive. Dividend payments have historically been modest, but it paid $551m to shareholders in the fiscal year to 31 May, up 29 per cent from the year before.

Getting your head round the Agriculture Bill

I was out shopping early this morning and was stopped by an agricultural lawyer. Naturally conversation turned to the Agriculture Bill and she pointed me to a useful essay on Sustain. It answers ten questions and, of course, there are more, but it is a start as I try to get my head round the framework for future English agricultural policy: 10 questions

Strutt & Parker sale will test land market

The sale of the 100-year old business Strutt & Parker Farms (distinct from the estate agent of the same name) will provide a good test of what is happening to the UK land market given the uncertainties surrounding Brexit.

One thing is clear, though, the amount of support available to farmers from government will diminish. However, it is claimed not to be particularly significant for this business given diversification.

At an estimated value of more than £200m it will the biggest farming transaction since the Co-op sold its 16,000 hectare Farmcare business to the Wellcome Trust in 2014 for £209m. Some observers think that there are fewer buyers around than in 2014. Strutt & Parker farms 13,450 hectares, of which it owns around 43 per cent.

It operates in East Anglia across Essex, Cambridgeshire and Suffolk. It is a diverse business with residential, office and other commercial lettings along with renewable energy and a natural burial site. It made a profit of £3.3m on £17m of turnover in the year to March 2017. A new anaerobic digestion plant is expected to boost revenues to £21m in 2018.

There has been considerable early interest from individuals, property businesses, farming companies and pension funds. There are divergent views about whether there should be a premium or a discount for scale. Splitting the land up is unlikely to happen.

The effects of moving away from direct payments

The Government Statistical Service has produced an in depth analysis of the effects of moving away from direct payments to farmers. There is a lot of data there, including some suggestions for farmers.

I am yet to absorb it all, but it looks very useful, even if some of the figures are familiar to those of who have been ploughing this field for longer than we care to remember: Direct payments

Defra faces enormous challenge on Brexit

The Department for Environment, Food and Rural Affairs (Defra) has made good progress in its preparations for exiting the EU, but it faces an enormous challenge. It is now not able to deliver everything it originally intended for a ‘no-deal’ exit, though Defra told us it still aims to have sufficient arrangements in place if needed, says the National Audit Office (NAO).

Defra is one of the government departments most affected by EU Exit. It is responsible for 55 of the 319 EU related work streams across government, covering chemical and agri-food industries, agriculture, fisheries and the environment.

The NAO report acknowledges that Defra has achieved a great deal in difficult circumstances and to a very demanding timescale. For example, Defra has: developed detailed plans for its preparations, secured HM Treasury approval for £320 million spending in 2018-19; started to build new IT systems; recruited over 1,300 new staff by March 2018 [unfortunately inexperienced ones replacing experienced ones who left - WG]; strengthened its project management capability; and published consultation documents on agriculture and fisheries.

Despite these and other developments, the constantly changing environment has made it challenging for the department to make and stick to a robust plan and meet its project deadlines. The risk of Defra not delivering everything it had originally intended for a no deal scenario is high and, until recently, not well understood by the department. In the work streams the NAO examined it found the following examples where Defra would not be ready:

• Exports of animals and animal products from the UK are valued at £7.6 billion. For the UK to continue exporting, it must comply with international health requirements and all exports must be accompanied by an export health certificate. Defra needs to negotiate with 154 countries to introduce 1,400 different UK versions of current EU export health certificates. Defra is focusing on reaching agreement with 15 of these countries which it estimates account for 90% of total exports, but will not reach the other 139 by March 2019. It has accepted the risk that UK firms exporting to countries where agreements are not reached may not be able to do so for a period after EU Exit.
• Export health certificates will also be required for the first time for exports to the EU if there is no deal which will result in a significant increase in certificates needing to be processed by vets. Without enough vets, consignments of food could be delayed at the border or prevented from leaving the UK. Defra intended to start engaging with the veterinary industry in April 2018, but has not been permitted to do so and now plans to launch an emergency recruitment campaign in October to at least meet minimum levels of vets required. It plans to meet any remaining gaps through the use of nonveterinarians to check records and processes that do not require veterinary judgement.
• The fishing industry contributes £682 million to UK gross domestic product. Defra is still developing its plans to strengthen its control and enforcement activities in English fishing waters. Defra hopes to significantly increase vessel patrol hours, but due to delays in procurement and planning is unlikely to reach its originally intended patrolling capacity by March 2019. In a no-deal scenario, Defra may have to scale up its capacity over time, but is confident that it will be able to manage the risk of any disruption in the interim.

There are further challenges that sit outside of Defra’s control. The UK hopes to seek continued participation in the European Chemicals Agency, but this is dependent on a negotiated settlement. Without this, UK chemical manufacturers would no longer be able to export products to EU member states as registrations of products would cease to be recognised by the EU. To recover market access, they would need to reregister their products on the EU's system via an affiliate or representative located in an EU member state. This is a lengthy process that cannot be started until the UK has left the EU.

Due to the shortage of parliamentary time available, there is a high risk that Defra will not be able to deliver all of its legislation by March 2019. It has three new bills and 93 Statutory Instruments to convert EU law into UK law and is now having to prioritise.

Defra has not been able to fully support businesses in their preparations. As a result of government restrictions, communicated through DExEU, it has not been able to hold open consultations with stakeholders on their preparations for a no-deal scenario. It has also, until very recently, been prevented from issuing specific information for the chemical industry or food importers and exporters.

Amyas Morse, the head of the NAO, said: 'The scale and complexity of what needs to be done to leave the EU is a significant challenge and Defra is impacted more than most. It has achieved a great deal, but gaps remain and with six months to go it won’t deliver all it originally intended in the event of no deal, and when gaps exist, it needs to focus on alternatives and mitigations.'

'Like other departments, it now must ensure its voice is heard by the centre of government to provide an accurate picture of what is possible if a negotiated settlement is not reached, and even if it is.'

The full report can be found here: EU exit

Agriculture Bill to be published today

The Agriculture Bill which sets out the framework for domestic agricultural policy after Brexit is to be published today: Delivering a green Brexit

Direct payments will be paid much as at present in 2019 and 2020. They will then be phased out between 2021 and 2027 which gives farmers plenty of time to adjust, although the fact remains that many of them are reliant on these payments to make a profit.

Those with the highest payments will see the biggest reductions initially. This will have popular support, but it may also affect the ability of more efficient farms to invest and improve productivity.

However, there will be measures to improve productivity and invest in R and D. As with much else, the devil will be in the detail.

The Defra statement makes no mention of devolution and it as well remember that this is essentially a measure for England. The distribution of responsibilities and cash between Westminster and the devolved administrations has yet to be agreed and remains controversial.

New SAWS scheme to be trialed

A new scheme to enable migrants to work in UK agriculture in the picking season after Brexit has long been awaited, but is now about to be announced.

It appears that Downing Street was blocking the scheme. Why this should be the case is not clear, but Theresa May has taken a hard line on migration issues, evidenced by her insistence that students should count as immigrants.

In any event, Home Secretary Savid Javid and Defra Secretary of State Michael Gove have been able to push the scheme through.

It will be a trial scheme for two years and will cover 2,500 workers which is a small number given that 75,000 seasonal workers are estimated to have been employed in 2016. The current shortfall is about 7,000.

The scheme would be for those from outside the EU and the regulations that would apply to temporary EU migrants remain to be resolved. Countries that might supply workers under the trial scheme could include Ukraine and Morocco. However, Germany has offered 60,000 visas to workers from the Ukraine.

Under the old SAWS scheme, which ran from 1945 to 2013, farmers could employ overseas workers for up to six months to pick fruit and vegetables. Workers were recruited and vetted by four authorised agencies (the pilot scheme will be run by two yet to be selected).

Farmers and growers have been dealing with significant shortages of labour, reflected in the Radio 4 fictional serial, The Archers. The weakening of the pound and the buoyancy of economies elsewhere in Europe has slowed the number of workers arriving.

One of England's biggest fruit growers, Hall Hunter Partnership, have tried an innovative approach on their seven sites. They have tried to improve workers' productivity to enable pay to rise. As a result, more than 70 per cent of the pickers they hire are returning to the UK each year, well above the sector average of 40 per cent.

The proposal has been broadly welcomed by the NFU who see it as a success for their lobbying.

Read more about the proposal in this report from Farmers Weekly: Visa scheme

Imperfect strawberries

British supermarkets have been increasing their willingness to sell fruit and vegetables that do not meet high cosmetic standards in terms of shape and presentation: Wonky veg

However, it has been the more upmarket supermarkets such as Waitrose and Sainsbury's who have been at the forefront of these developments. Hence, I was interested to find in Tesco today 'Perfectly imperfect strawberries' grown in Hereford, stated to be 'less than perfect, just as tasty.' The shapes weren't that odd and they were certainly just as tasty.

This has to be a win-win: food waste is reduced, consumers get a 'five a day' product at a very competitive price and growers are able to get a return on produce that would otherwise go unused.

All we need now is for the Government to get its act together and come up with a successor to the Seasonal Agricultural Workers Scheme so that the fruit can be picked. Judging by the speed with which Michael Gove has fulfilled his pledge to do 'whatever it takes' to deal with the consequences of the summer drought, I wouldn't be too hopeful.

On the drought issue, read the NFU's views here: Failure to act

Could government change its stance on subsidies?

The National Trust is worried that the Government may cave into pressure and preserve many subsidies to farmers. They and other green groups fear that the farm lobby has succeeded in ensuring that food production and agricultural productivity will also be listed as 'public goods'.

This would go beyond the definition of what is a public good in economics, but the definition tends to be elastic in public debate and tends to encompass what would properly be termed merit goods.

Of course, the political calculus behind using farm payments to incentivise environmental benefits was to appeal to the urban electorate (many of them members of the National Trust) and that calculation remains a powerful one.

I do not think that there is a general case for subsidies for food production (many food security arguments are spurious) but there is a case for doing more to boost agricultural productivity which is poor, particularly through encouraging the use of new technology.

There is a £60m Countryside Productivity Small Grant Scheme to assist the purchase of new farm equipment: Farming productivity fund. However, the maximum grant is £12,000 which doesn't go a long way to buying sophisticated kit. Also, farmers applying for the scheme consider that they get caught between demonstrating that the farm business is viable, but not too viable otherwise it would not need assistance.

Farm payments if there is no Brexit deal

The Government has published its guidance, but it doesn't add very much to what we know already. It is full of well-intentioned hand wringing on subjects like Ireland: Farm payments

Is anyone going to be convinced by the claim that 'negotiations are progressing well'.

The NFU is concerned that organic food products might not be allowed into the EU for nine months after a no deal Brexit: Food export concerns

Where are we with agriculture and Brexit?

I gave a presentation on Brexit and agriculture to a group of insurance providers and brokers involved with farming at Bishop Burton College this week.

I started by emphasising that it is important to bear in mind that farm businesses vary considerably and this affects their ability to respond to Brexit. Some of the key variations are:

• Climate/terrain
• Soil type
• Ownership structure: owned, tenanted, mixed (increasingly common)
• Size of farm
• Diversification: how much of the farm business is dependent on farming? Most common: agricultural contracting; tourism; on farm niche value added production, e.g., cheese, yoghurt, ice cream; farm shop and/or café. Most of the low hanging fruit has been taken. One needs the right management skills and management resources can be taken away from the farm business.

What does this imply for farms? It is important for farms to spend some time and effort (and probably money) analysing their businesses and how they will be affected by Brexit Is this a commodity business pursuing economies of scale or a niche business? Should we expand or downsize? Succession issues require attention.

The CAP has been a dysfunctional policy. It was not designed with UK agriculture in mind or contemporary problems. Basic payments have been only tenuously linked to outcomes Policy instruments have been poorly designed and often impact farm businesses without securing desired outcomes. It has encouraged the intensification of agriculture.

There is an opportunity to design a better domestic policy, but whether this will be seized is open to doubt. Current proposals are too concerned with pleasing an urban electorate.

I outlined three broad brush scenarios for Brexit:

• Leaving with no deal on WTO terms
• Some kind of less than satisfactory deal
• A comprehensive agreement. The last is very unlikely given the time that is left and the difficulties that have been encountered in the negotiations so far.

Could the negotiating period be extended? Extending the negotiating period would require the consent of all 27 member states. The EU does have a history of ‘stopping the clock. But I have looked at the ways in which constitutional lawyers say this might be done and none are very convincing.

The UK has a governing party that has been negotiating with itself, but also a split opposition party with unclear policies. There is no sure majority in the Commons for any path to Brexit. A second referendum would shift the decision from a deadlocked Parliament to a deadlocked people, and what would the question be?

It is in the interests of both the UK and the EU to come to some sort of agreement. There have been some signs of a softening of the Commission position. At some point the member states are going to have to get more involved, in particular France and Germany, but they have different positions: France hopes to poach UK jobs and business and German domestic politics are fragile.

Northern Ireland is the most difficult issue. Original EU proposal in March would have given EU courts and regulators near unimpeded jurisdiction over the province. The EU is now considering limiting powers of EU authorities to make checks on UK territory and giving the ECJ only indirect authority. However, the Democratic Unionists are capable of vetoing any solution that outsiders might consider reasonable.

A no deal exit has been talked up. Some of this is people playing political games to suit their own ends. There is also an element of brinkmanship as the case in many negotiations A no deal exit is certainly possible, and it is a scenario I will consider in relation to agriculture, but I don’t think it is the most likely outcome.

An eleventh hour fudged compromise is more likely. EU decision-making characterised by last minute deals. This would leave many issues unresolved that would have to be addressed during the transition or implementation period. But during that period economic relationships would continue much as before.

The fudged compromise still leaves some problems. The Basic Payment is the difference between profit and loss for many farms. It will be phased out (in England & Wales) Public good payments will be more unpredictable, they may involve higher transaction costs and they are more likely to yield income for upland farms.

It's decision time for farms. Do they continue in business? One consequence could be a consolidation into larger units. Land prices could be driven down and they have constituted a barrier to new entrants. However, land prices are also boosted by tax benefits and interest in the sporting value of estates.

The growth rate of productivity in farming is poor (0.9 per cent a year, USA 3.2 per cent, Netherlands 3.5 per cent). Brexit might shake out less efficient farmers who are ‘making do’. Younger entrants might be more open to the possibilities of new technology.

Farmers have shown themselves to be resilient and many are innovative. They may have to rethink idea that expansion was always the answer. They need to analyse their individual farm business.

Are the NFU crying wolf?

Britain would run out of food on this day next year if it had to be self-sufficient after a no deal Brexit claims the National Farmers Union: Run out of food

This is a bit misleading as, although a no deal Brexit would disrupt food supplies, it would not mean a complete absence of imports. Ireland, for example, would be keen to continue to sell its produce to us.

It is true that self-sufficiency has declined, but I find the idea of a self-sufficiency target a bit Stalinist. If we were reliant on just one or two countries for our food, there would be cause for concern, but there are many countries keen to sell to us.

I think that a no deal Brexit would be damaging for all sorts of reason, but we need to be careful about the arguments we use against it.

Farm expansion may no longer work after Brexit

Leaving the EU will bring a more challenging and more commercial environment in which farmers will have to watch net margin rather than gross cash flow, according to Jeremy Moody, secretary and adviser to the Central Association of Agricultural Valuers.

The commercial realities of farming will focus rental values more on the productive capacity of land. Decisions about land occupation will include a consideration of fulfilling new requirements under a domestic farm policy including environmental public good.

In the past businesses have tended to become larger as they seek economies of scale, but this may not be the pattern in the future. Some will find under the new regime that land they have taken on to expand will no longer perform financially.

Scale will probably still be a goal for commodity producers but with a sharper business focus.

Farmers want to remain

It is a deeply embedded myth that farmers voted in favour of Brexit. In fact there is no evidence base in favour of that view other than a Farmers Weekly poll in which respondents were self-selected rather than based on a sample.

However, for what it is worth, Farmers Weekly has done a new poll on how farmers would vote in a three way referendum. 64 per cent selected remain, 28 per cent backed the Chequers deal and just six per cent wanted to leave without a trade deal.

Food security after Brexit

The Food Research Collaboration has published a report authored by Professor Tim Lang and three other leading analysts on food security after Brexit: Feeding Britain

Three main issues are considered:

• The question of whether the Government is paying enough attention to agri-food in the negotiating process, given its central role in both public well-being and the national economy.
• The threat a careless Brexit poses to the UK’s short-term food security – and any long-term attempt to develop a genuinely sustainable food strategy for the whole of the UK.
• The risk generated to the UK’s status as a potential trading partner of the EU by the Food Standards Agency’s decision to press ahead with major reform of UK food safety regulation, at a time when regulatory stability and clarity have never been more important.

The report notes, 'Like all systems operating to finely tuned specifications, the UK food system is fragile and vulnerable to disruption. Contracts for food supplies are typically set 12 months ahead. UK food comes via a complex logistics system run on a just-in-time basis, i.e. three to five days’ supply. There are only tiny food stocks, commercial or public, held in the UK’s food distribution chain.'

Agriculture in Wales after Brexit

The Commons Select Committee on Welsh Affairs has produced a report on Welsh agriculture after Brexit: Report

The report emphasises the contribution of agriculture to community life in Wales and the health of the Welsh language.

The report notes, 'UK-wide common frameworks could be established in a number of different ways, but it is still not clear where they will apply, what they will look like, how they will work, or how any disputes would be resolved. It is imperative that these frameworks are agreed mutually between the UK and devolved governments and ensure the unique issues that face each of the administrations are given due consideration. We believe that these frameworks will need to be supported by robust and transparent intergovernmental mechanisms.'

The Welsh Government's own proposals for phasing out the basic payment had not been well received by farmers. There is a case for retaining some form of basic payment in less favoured areas to support remote hill farms.

How changing food cultures challenge agriculture

One of our leading rural studies experts, Professor Michael Winter looks at the challenges and opportunities agriculture faces from changing food cultures: Food cultures

His report considers how changing food cultures and the need for a healthier human diet might impact on agriculture in the UK. He says, 'I look at what people are eating, where and how, and I consider some of the key trends in food consumption behaviour, that clearly feed back into what UK farmers produce and where and how their products are marketed.'

The chapter on agriculture looks at the ‘fitness’ of the industry to adapt to change and examines some of the market and science-derived opportunities for farmers to diversify the food commodities and products they produce including the breeding of improved varieties of cereals and reviving ancient varieties, and increasing the production of fruit and vegetables. Key to the approach required is for Sustainable Intensification, as the way ahead for agriculture in a resource-constrained world, to bring human nutrition more fully into its orbit.

He concludes (and I agree), 'There is a need to develop a food and farming strategy for the delivery of safe, nutritious and affordable food in the UK, which will allow UK farmers to respond with confidence to the concerns and opportunities presented by civil and consumer society. There is a clear policy imperative to support farmers through the transition to post-Brexit agriculture and policy needs to be designed to ensure that a strong, competitive and food health oriented industry emerges. Agricultural policy should be more focused on health and nutrition. Nutritional security should be seen as a "public good".'

EU needs to offer leadership on global trade

Alan Swinbank looks at Brexit, Trump and the unintended consequences of incomplete agricultural tariff reform: Incomplete CAP reform

He points out, 'Export subsidies are no more. Taxpayer support for Europe’s farmers is largely decoupled, and unthreatened by WTO disciplines. Despite successive reforms of the CAP, bringing down domestic support prices, these excessively high tariffs remain in place, rather like a whale’s carcass left stranded on a beach.'

'If the global trading system is to be saved, the EU needs to lead. Why not counter Trump’s threats and offer to unilaterally reduce farm tariffs?'

Will it be all right on the night?

The Future Farmers of Yorkshire event at the Great Yorkshire Show

What follows is the text of my talk to the Future Farmers on Yorkshire on Wednesday 11th July.

For a long time farmers have had to deal with uncertainty about what Brexit will mean for their businesses. The Government has set out a direction of travel for domestic agricultural policy after Brexit in their admittedly somewhat vague Green Paper and this will be made firmer in the forthcoming Agriculture Bill. There hasn’t been much time to digest the 44,000 responses that were made to the consultation, including the detailed response made by the Farmer-Scientist Network of the YAS.

What is clear is that the Government intends to direct future funding towards the provision of public goods and that direct payments will be phased out. Whatever one thinks of Michael Gove, he does have a clear strategic vision, albeit one designed to appeal to urban electorates. If he had replaced David Davies as Brexit secretary, we would have had a further period of instability at Defra.

Unfortunately, Defra lost a lot of its experienced staff and although it has recently made new hirings, they are generally relatively junior and inexperienced in agricultural matters.

What we do not know is the shape of the final settlement between the UK and the EU which could have profound implications for farms. The Chequers compromise seemed to provide a basis for moving forward, but now looks shaky as arguments continue within the Conservative Party, although I think it would command a Parliamentary majority.

Broadly speaking, one may suggest three scenarios:

• 1. A failure to reach any agreement which would lead to trade being conducted on WTO terms. This would be highly disruptive. Last week, the British Retail Consortium warned, ‘'[The] supply chain is fragile. Failure to reach a Brexit deal – the cliff edge scenario – will mean new border controls and multiple "non-tariff barriers" through regulatory checks, creating delays, waste and failed deliveries. This could lead to dramatic consequences, with food rotting at ports, reducing choice and quality for UK consumers.’
• 2. ‘It will be all right on the night’. Both the UK and the EU have an incentive to reach an agreement, although the incentive is stronger for the UK with its 64 million population than the EU with 500 million. There would be some kind of initial compromise and then the real negotiations would take place during the transition or implementation period which could be extended.
• 3. A comprehensive agreement. Whatever happens Britain is not going to have access to the single market on the same terms as at present. One cannot leave a club and continue to receive its benefits. The EU is resistant to the UK to having its cake and eating it. Apart from anything else, it does not want to encourage other member states to think that they might secure the benefits of the EU without staying as members.

It seems to me that a comprehensive agreement will not be achievable given the political constraints in the UK and the EU. Even getting some sort of interim arrangement is not going to be easy. Time is running out and the UK Government has spent a lot of time negotiating with itself. Too often the result of these negotiations is a position that is not acceptable in Brussels. For its part the EU has been distracted by a number of other problems, most notably the migration crisis.

No one has really come up with a feasible solution to the problem of Ireland which has a successful integrated agri-food economy. The technological means of tracking the movement of goods do not exist and would take a long time to put in place and made to work properly. However, some sort of temporary arrangement might be possible. The declared intention to have a common rule book with the EU for agri-foods is a step in the right direction. It may be possible to buy time on this issue through a fudge, but Ireland will not be easily satisfied.

Some of the biggest challenges for farmers arise from future trading relationships, both with the EU and the rest of the world. Under the worst case scenario, sheepmeat producers would face substantial tariffs at the EU border. These would effectively deny them competitive access to the EU market which accounts for around 40 per cent of UK production. This would be devastating for sheep farmers. However, I remain reasonably confident that we can avoid this worst case scenario and that sheepmeat exports will continue much as they do at the moment.

What is perhaps of greater concern is the trade treaties that the UK intends to subsequently negotiate with third countries such as the United States. It should be noted that the intention to align with EU rules on agriculture and food after Brexit will make securing a trade deal with the US much more difficult, given the US interest in having access for chlorine rinsed chicken and hormone treated beef which are banned under EU rules. Nevertheless, my concern would be that agriculture would not be high up the list of government priorities and would be used as a bargaining chip to obtain concessions on manufactured goods or services. For example, Australia would like greater access for sheepmeat to UK markets.

However, I do think that these treaties will take some time to secure and probably will not be possible until after the implementation period. This will at least give farmers a breathing space. The risk in the longer run is that cheap food imports will arrive in the UK market, having not been produced in accordance with the exacting animal welfare standards required in the UK. Price is a big driver for consumers.

It should also be noted that farmers in France, Germany and elsewhere in Europe will continue to receive direct payments, albeit at a somewhat reduced rate because of the loss of UK funds. British farmers will not be competing on a level playing field. The total sum made available to farmers in support payments will surely be reduced. Public goods payments may be more complicated to access and will certainly be distributed in a different way.

Hopefully, post Brexit, there will be more opportunities for a decentralised agricultural policy for England, not just for the devolved administrations. Yorkshire needs more opportunities to develop its distinctive agri-food offer of which we can see many splendid examples round the showground today.

How can farm businesses succeed post Brexit? Each farm business is different and faces its own challenges and potential. What is certainly worth doing at the very least is a SWOT analysis in terms of strengths, weaknesses, opportunities and threats. Some types of activity may no longer be viable and new opportunities may open up. For some farms, the efficient production of commodities securing economies of scale may be the best way forward. For others, there may be opportunities for niche forms of production which add value and involve direct relationships with consumers.

These different approaches require different management skills. Above all, there has to be an openness to new ways of doing business which is an area in which Future Farmers have much to contribute.

Robots ahoy!

Harrogate: We don't value the soil to the extent that we should argued Clive Blacker of Precision Decisons Ltd. at a seminar om Precision Farming and the Hands Free Hectare at the Great Yorkshire Show, The trend towards even bigger machines was driven by a number of factors and they caused soil compaction.

He envisaged a future with swarms of small robots and their tractor outside looked dinky and not a threat to anyone. Fortunatey, the tractor is now driving in straighter lines than last year.

How soon commercialisation could occur was uncertain with cost a key factor. However, there could be contracted weed removal services.

Shortage of skilled labour was a constraint, but Brexit would get rid of people who weren't interested in learning or training, The project was intended to appeal to the younger generation.

Insurance was an issue. Who was to blame if the owner changed the programme and the machine crashed? Or supposing it was hacked into and went walkabout?

It needs to be remembered that new technology has to be socially acceptable. Someone was telling me about a robot that would trundle round the countryside zapping weeds with a laser and no doubt announcing 'This vehicle is exterminating'. Would you like to meet that walking your dog?

'Policy is coming home'

Harrogate: That was the message from NFU Deputy President Guy Smith at the Future Farmers of Yorkshire meeting on how to succeed post-Brexit at the Great Yorkshire Show today. Policy was going to be made back in the UK for the first time in 40 years.

Government had to help farmers to harness new technology and boost productivity. Farming was essentially a risky business. One was never sure of the value added going forward. That was why governments helped farmers across the world.

In discussion it was noted that people's relationship with food was changing. Nutrition had to be embedded as a value in food.

It was possible to under estimate the resilience or extent of innovation in the sector.

I will post the text of my talk later in the week.

Will biocontrol work for arable farmers?

Harrogate: This was the subject of a seminar organised by the Farmer-Scientist Network of the Yorkshire Agricultural Society at the Great Yorkshire Show today.

Dr Roma Gwynn of Biorationale said that there was no precise definition of biocontrol, but it was about substances based in nature, There was a global annual growth rate of 20 per cent in biopesticides compared with five per cent for chemicals. 30 per cent of active substances registered in the EU were now biocontrol and 50 per cent of those coming through. They were extensively used in horticulture, but there was considerable scope in arable.

Professor Rob Edwards of Newcastle University said that diagnostics helped us to decide where we should and should not use chemicals. A spring wheat trial had been carried out in 2017 and a winter wheat trial on three sites in 2018 to see what worked with different resistance and different treatments. We were going to have to wean ourselves off pesticides. Roma Gwynn said that we should make those we do have last as long as possible.

No difference had been found between treatment regimes and varieties, but there was more protein in biocontrol treated plants. The objective was to enable plants could better access nutrients by placing microorganisms around the root. A more plant centric approach was needed.

It would be 10 to 15 years after Brexit before any distinctive UK legislation would be possible. The project was the beginning of a much longer story.

Rob Edwards said that we had to move from fixing things that were broken to stop them happening in the first place. We were using old fashioned testing criteria for new varieties.

Dr Gwynn said that the project had the potential to drive the conversation, to take evidence to government.

Rob Edwards showed a kit which gives an idea of how strong the resistance trait was. One was managing blackgrass rather than total eradication which was not feasible.

In discussion the importance of healthy soil was emphasised. There were benefits from growing crops together, a polyculture type of production. The challenge was to match that up with modern machinery. Growing clover as a cover crop benefitted the soil, nitrogen input was reduced. Monoculture was a perfect system to encourage pests and disease.

Biocontrol is variable, affected by the weather, not as consistent as conventional chemistry. There was a need to do a lot of things together [implying more demanding management and a higher level of skill].

Work was needed on public perceptions of biopesticides. There were a lot of preconceptions in the public and a need to understand what these were. People would happily buy biocides, but once technology went into food, perceptions changed easily.

A farmer questioned the compartmentalised terminology which was not helpful. What was conventional agriculture?

Rob Edwards noted that alternative UK technologies were used extensively in sub Saharan Africa. Roma Gywnn observed that Kenya had established biocontrol and integrated pest management before Europe had moved. The Kenyan Government had listened and changed regulation.

Wales needs a 'farming plus' policy

Wales must develop a 'farming plus' policy post Brexit to ensure a sustainable agriculture argues Professor Terry Marsden: Post Brexit Farming Model

He concludes, 'Developing a reinvigorated and branded quality agri-food strategy, based on a more diverse set of farming practices, thus becomes a critical element of the post-Brexit approach in Wales.'

Food could rot at ports in the event of a 'cliff edge' Brexit

The British Retail Consortium has warned that there will be food supply issues in the event of a 'cliff edge' Brexit: Food supply issues

The retail organisation warns: '[The] supply chain is fragile. Failure to reach a Brexit deal – the cliff edge scenario – will mean new border controls and multiple "non-tariff barriers" through regulatory checks, creating delays, waste and failed deliveries.'

'This could lead to dramatic consequences, with food rotting at ports, reducing choice and quality for UK consumers. It could also lead to higher prices as the cost of importing goods from the EU increases.'

Scotland to cap basic payments

Defra has moved away from capping Basic Payments to farmers as they are phased out. However, in its consultation paper on post Brexit policy, the Scottish Government suggests capping payments at £25,000 a farm. This would affect 5,000 farm businesses and raise £140m. An alternative option would see payments capped at £200,000, affecting just 50 farm businesses and raising only £4m.

Money raised would be used to support new entrants to farming and smaller businesses, although there is scant detail on how this would be achieved.

Trump administration looks to bail out US farmers

The Trump administration is looking into ways of offsetting the financial losses American farmers have suffered from its trade battle with China. Beijing is set to raise duties by 25 percentage points on Friday on $34bn of US goods in retaliation for new American tariffs. Among the biggest targets are soyabeans, the largest agricultural export to China.

The threat has pushed the US soyabean price below $9 a bushel, an unprofitable price for many farms. Last week, futures slid a further 4 per cent.

Consideration is being given to using the Commodity Credit Corporation set up in 1935 by President Roosevelt. It has $30bn in borrowing authority from the Treasury and latitude in how its funds are spent. Congress in March broadened its authority by lifting curbs on its authority to support crop prices and remove commodity surpluses.

Farm groups have set to head off President Trump's aggressive trade tactics against China, Mexico, Canada and the EU without success. There is concern that in the lomg run tariffs could lead to more land being converted to soyabeans in Brazil.

Cheese mountain in the US

The US has amassed the large stockpile of cheese since records began 100 years ago. If gathered together. the different varieties of cheese would weigh 630 million kilograms and occupy roughly the same amount of space as the Capitol building in Washington DC.

Stocks have increased because processors have more milk than they can cope with, and it is easily stored as cheese. Milk production has reached record levels thanks to selective breeding and consolidation in the agriculture industry, but consumption has fallen as consumers have embraced non-dairy alternatives such as almond milk. The average American now drinks 18 gallons of milk a year, barely half of what they drunk in the 1970s.

In 2016 the US agriculture department bought more than 40 million kg of cheese to reduce a surplus that was 16 per cent smaller than the current one.

When the EU had extensive intervention buying, cheese was not included with one or two minor exceptions.

Animal welfare standards at risk after Brexit

Animal welfare standards are at risk after Brexit according to a report from the Food Research Collaboration at City University: Low standard imports

Macron is president of cities says French farm leader

Just as England's NFU has a woman leader for the first time, so does France's leading farm lobby, the FNSEA. Christiane Lambert, a 56-year old pig farmer, does not hold back in giving it large to President Macron. She says that his image is as a president of the cities who had no idea how farmers lived and worked.

She thinks that French farmers stand to lose €5bn over the next budgetary period if cuts in the CAP budget are confirmed. She thinks that Macron is dithering over the issue. Last year the number of farm bankruptcies in France rose by seven per cent.

More competitive countries such as Germany and the Netherlands have pushed down the prices of beef. dairy and pork products and gained market share abroad. Ms Lambert thinks that labour intensive farming activities have suffered from distorted competition from German producers who employ cheap labour from Bulgaria and Romania.

French farmers are resorting to their usual direct action tactics, planning to block 13 oil refineries tomorrow. The farmers are protesting against imports of palm oil to make biofuels.

Committee report criticises Defra

The House of Commons Defra Committee has produced a report in response to the Government's consultation on the future of agriculture: Report

It states, 'The evidence from a range of agricultural businesses indicates that their sectors will face significant impacts from the proposed withdrawal of Direct Payments. The level of impact will vary by sector as the economics of each are so different. There are likely to be particularly damaging effects on grazing livestock, cereal and mixed farms and the withdrawal of support and any subsequent closures of businesses could have wide reaching impacts on the rural economy and its communities. As in our Brexit: Trade in Food report, we were disappointed that these impacts have not been thoroughly assessed by Defra on a sector-by-sector basis, to then inform future agricultural policy.'

The report notes, 'The consultation paper lacks discussion of wider food policy and has failed to link agricultural policy to wider public health goals and reducing diet-related diseases. Healthy food makes a wider contribution to public health, which is in the public good and we recommend it should be supported as such under the new model of awarding payments to farmers.'

The future of agriculture

The Defra consultation on a future domestic agricultural policy received 44,000 responses, among them that from the Farmer-Scientist Network of the Yorkshire Agricultural Society which you can read here: Consultation response

I think that we submitted particularly strong sections on public goods, international trade and animal welfare.

Choices on food policy

The House of Lords European Committee has published a report on Brexit: Food Prices and Availability: Food Prices

The report finds: 'If an agreement [with the EU] cannot be negotiated, Brexit is likely to result in an average tariff on food imports of 22%. While this would not equate to a 22% increase in food prices for consumers, there can be no doubt that prices paid at the checkout would rise. To counteract this the Government could cut tariffs on all food imports, EU and non-EU, but this would pose a serious risk of undermining UK food producers who could not compete on price.'

'At least as significant as tariffs are the non-tariff barriers that may result from Brexit. The Government remains confident that it can secure an agreement that would allow ‘frictionless’ imports of food from the EU to continue, but it is unclear how that would be possible outside of the customs union. Any such agreement would be likely to require the UK to mirror all EU standards and regulations; a condition the UK Government may find politically difficult to accept.'

'If no agreement is reached, and food imports from the EU are subject to the same customs and border checks as non-EU imports, the UK does not have the staff, IT systems or physical infrastructure to meet that increased demand. Any resulting delays could choke the UK’s ports and threaten the availability of some food products for UK consumers. The Government’s proposed alternative is to allow EU imports through with no, or very few, checks: this raises safety concerns as well as questions over how customs charges would be processed.'

'As well as securing a deal with the EU that will allow continued tariff-free, frictionless imports of food, the Government must also secure agreements with the non-EU countries from which the UK currently imports food as part of EU trade agreements. 40 such agreements are currently in place, covering 56 countries and accounting for more than 11% of UK food imports. The Government’s belief that most can be simply and easily ‘rolled over’ is not shared by those who have given evidence to previous EU Committee inquiries.'

The report concludes, 'The Government should develop a comprehensive food security policy for the UK. A long-term view is needed on whether to prioritise food standards or food prices, whether to reverse the UK’s declining self-sufficiency or increase imports. Other factors should include workforce shortages, priorities for investment, and bigger, global issues such as the impact of climate change on food production worldwide.'

CAP budget to be cut by 5 per cent

The European Commission's proposals for the 2021-27 EU budget suggest a 5 per cent cut in CAP funding. (Some analysts think that the cut is actually bigger). Direct payments would be reduced by four per cent and Pillar 2 payments would take a fifteen per cent hit: Budget cut

Payments to farmers would be capped at €60,000. This is at the lower end of the €60,000-€100,000 spectrum suggested in the original communication on the CAP last autumn. The relatively low capping figure favoured by the Commission will reassure UK farmers concerned about being put at a competitive disadvantage by the reduction of direct payments after Brexit.

The Basic Payment Scheme will be renamed the 'Basic Income Support Scheme'. This is the first time the EU has explicitly identified area payments as being for the purpose of income support. It is an inefficient means of supporting income as the relationship between farm size and household income is far from straightforward.

Risks for food and drink sector from Brexit

A report from a House of Commons Select Committee on Business, Energy and Industrial Strategy highlights some of the risks that the processed food and drink sector faces after Brexit.

'The processed food and drink sector is the largest manufacturing sector in the UK and contributes £28.8 billion to the economy. Exports were worth £22 billion in 2017 and they continue to grow. The sector directly employs 400,000 people throughout the country, a third of whom are EU nationals. It is characterised by just-in-time delivery of products with short shelf lives and is heavily integrated with supply chains spread across the UK and the EU for sourcing raw materials, processing goods and selling them. Many manufacturers have factories in both the UK and the rest of the EU.

The success of the UK processed food and drink sector has been so far highly dependent on participation in the Single Market and Customs Union: free movement of goods and people have tipped the UK export balance towards an over reliance on the EU as a trading partner with 60 per cent of UK exports going to EU markets. 50 per cent of total UK food and drink exports go to five countries, four of which are EU member states.

It is crucial that the sector is able to remain competitive when we leave the European Union as failure to do so would not only impact businesses and workers but also consumers at the till point and the choice available to them in shopping aisles all year round.

The sector would undeniably suffer from reverting to WTO tariffs in the event of a ‘no deal’ scenario. The EU’s Most Favoured Nation tariffs under WTO rules would be disastrous for UK exports and must be avoided at all cost. It is unrealistic to expect that the sector will stop relying on the EU as its main export destination at least in the short term. Consequently, the negotiation of a free trade agreement with the EU should be the number one priority for the Government. Should the UK lower or remove its tariffs on imports in the future, the consequences for British farming could be extremely damaging and the positive impact on prices for goods to households is likely to be very limited.

UK competitiveness would also be adversely affected by any additional delays and bureaucracy encountered at the UK-EU border, given the prevalence of cross-border just-in-time supply chains in the sector. The Government should seek to secure as few additional impediments to trade between the UK and the EU as can be negotiated. Frictions at the border between Ireland and the UK are of particular concern as the sector is highly integrated across the two countries. A credible solution to avoiding a hard border must be found as soon as possible.

The EU regulatory regime in food and drink is also highly integrated, and the UK is a full member of the European Food Safety Authority (EFSA). EU food regulation is associated with high safety and quality standards and already allows divergence. The majority of the evidence was in favour of remaining aligned with EU regulation as it is favourable to exports amongst other things but some opportunities from divergence were identified in a few sectors. Nevertheless, all were unanimous in rejecting any ‘race to the bottom’ as UK consumers would not tolerate any lowering of standards. Most stakeholders also supported the UK continuing its membership of EFSA after Brexit.'

The full report can be found here: Report

The future for agriculture

At last week's Agricultural Economics Society meeting, Jonathan Brooks of the OECD convened a panel on the links between agricultural market prospects and policy challenges at the global, European and UK levels.

At the global level, food prices increased sharply in 2007-8, sparking fears about food security as well as about the earth's capacity to produce enough food for a growing and increasingly wealthy population.

World population growth is slowing. The growth in consumption has halved over the last ten years and is not coming from per capita income growth with the exception of Africa. This pattern is different for dairy, sugar and vegetable oils. India is driving dairy demand. Cereal demand is driven by animal feed.

Since 2007-8, world agricultural markets have stabilised, with prices of most commodities well below the peaks of a decade ago. The return to lower prices has led to resurgent demands for agricultural protection, with several large emerging economies now adopting policies previously pursued by high income countries. PSE levels have increased in those countries.

Markets also remain vulnerable to periodic shocks, and many countries have sought to find ways of managing the risks such shocks pose to both producers and consumers, often via policies that may have a significant impact on world markets (such as public stockholding).

Over the next ten years, the demand for most agricultural commodities is projected to slow. This will provide relief to the supply side challenge of feeding a rising world population and provide greater room for policy makers to focus on the parallel requirements of using the world's resources sustainably and making an effective contribution to climate change mitigation.

One interesting point was that a small number of countries dominate the production of particular commodities which does lend some reinforcement to food security arguments. Russia and Ukraine are increasingly important in world grain trade, but could withdraw exports to protect domestic markets in conditions of tight supply.

What can we learn from New Zealand?

One of the most interesting panels I attended at the Society of Agricultural Economists conference at the University of Warwick was on what, if anything, we could learn from the reforms in New Zealand, often held up as an example of the benefits to be obtained from a radical eradication of subsidies. Interestingly, the position first taken in the discussion was that the experiences were so different in terms of geography, the prevalence of cooperatives, the timing and form of subsidies etc. that little could be learnt. However, as the discussion progressed, some lessons were extracted.

It is important to understand the context in which reforms took place. New Zealand was suffering from fixed exchange rates, the Think Big energy projects and high inflation, leading to a fiscal crisis. The subsidies were in place for a relatively short time and were also offered to manufacturing to offset the effects of a high exchange rate. Capitalisation into asset prices did not have the same impact as elsewhere.

For a long time New Zealand agriculture enjoyed preferential access to UK markets at guaranteed prices, but in the 1960s commodity prices fell. There were some really sad cases among farmers, but not that many went bankrupt. Because most farms were family farms, some use was made of unpaid labour.

New Zealand had first mover advantage with exports to China, but failed to follow through on that and let others capture market share. Hence, the first mover advantage was squandered.

New Zealand had 67.8m sheep in 1985 and 29.1m in 2015. The dairy herd has expanded, particularly on the Canterbury Plains, but this has led to concern about environmental impacts in terms of climate change and water pollution.

It was pointed out that the structure of cooperatives allowed the rapid transmission of intelligence from external markets to producers.

Some specific mitigation measures were provided. For example, although subsidies on interest payments were withdrawn, the actual payments were kept at the same level. There was also help with farm business plans.

The UK should aim for value added growth, but what sorts of policies did this imply? One approach might be to enhance the knowledge base.

Food, Brexit and Northern Ireland

Tim Lang and his colleagues have produced an important briefing paper on the issues that arise from Brexit for food in Northern Ireland: The critical issues

They argue, 'Food is central to the economy of Northern Ireland, and the continuing supply of safe, high quality, healthy food is currently dependent on the absence of border controls between Northern Ireland, the Republic of Ireland, Great Britain and the rest of the European Union. Hundreds of thousands of tonnes of food criss-cross these borders every year. They are currently free from inspection because of shared, underpinning EU Single Market regulation. An unplanned or mishandled food border imposition is likely to have powerful, destabilising consequences for the integrated nature of food supply, trade and access within Northern Ireland for many years to come. It would raise important challenges for food safety, put jobs at risk, potentially constrain Northern Ireland’s access to health-supporting foods such as fruit and vegetables, and create opportunities for food fraud and crime.'

They rightly rule out technological fixes for which specific details have never been provided.

Devolution choices after Brexit

The Institute for Government has issued a report on relations with the devolved administrations after Brexit which focuses on agriculture as one of the areas in which key decisions will need to be made. Some of the main points are reproduced below. The report as a whole can be accessed at: Devolution after Brexit

In particular, how can funding be distributed? Option one would be to use the Barnett formula, which would give greater flexibility to the devolved administrations, but leave devolved budgets more vulnerable to UK government cuts.

Distributing this funding through the Barnett formula would mean that the future level of agricultural funding available for the devolved administrations would be tied to policy decisions made by the UK government. While the devolved administrations would gain greater day-to-day control over how their budget is spent, they would run the risk of their budgets being squeezed in the event the UK government chose to cut the English agriculture budget.

Option two: The UK could decide to create a ring-fenced agricultural support budget, which would be the least change to the current arrangement An alternative approach would be for the UK to establish a new agricultural support budget, protected and separated from the wider devolution budget settlement and ‘block grant’.

The initial distribution would likely reflect the current split through CAP and these levels would be maintained until 2022; reflecting Michael Gove’s commitment to match-fund agricultural support payments. After that, there would need to be an agreement on how the budget was agreed for future years.

The Barnett formula would be one option, but the creation of a new, separate budget is an opportunity to take a different approach. A new budget could allow the governments to create a new funding mechanism, taking into account some of the criticisms of Barnett. The budget could be negotiated periodically, formally and at a four-nation level, as part of the UK government’s spending review.

A ring-fenced agricultural budget for each nation would offer a greater guarantee to farmers in the devolved nations, with funding levels set for a specific period of time. It would protect them against money being reallocated to other policy priorities. A ring fenced budget would also make the UK rather than the devolved governments responsible for resolving the difficult trade-offs between agriculture and other policy areas. Ultimately, from the devolved administrations’ perspective, agreeing to this type of budget could be a missed opportunity for greater autonomy in spending decisions, preventing them from making their own decisions around policy priorities and funding.

An important first step will be reaching consensus on what the UK ‘internal market’ is, and where divergence becomes market distortion. Just as the EU’s single market contains provisions to ensure a ‘level playing field’, the UK Government and the devolved administrations will need to consider what a UK level playing field should look like.