Back to 1947?

Today I attended a Defra consultation meeting on the agriculture and food green paper in Harrogate. There was a good attendance of over eighty people,including a large contingent of farmers.

Defra personnel insisted that 'nothing was set in stone', but they also said that the secretary of state had set a very clear direction of travel.

The clear view of farmers in the direct payments breakout session was that they wanted an across the board reduction in support, i.e., no capping.

There did seem to be a hankering for the world of the 1947 Agriculture Act. In particular, deficiency payments were mentioned. However, the Treasury would never endorse them as the spend is so variable.

I am not convinced that all the money saved by capping will be transferred to new farm schemes. Many of these schemes may not be accessible to all farmers, so the idea that any money lost in direct payments will be compensated elsewhere is optimistic.

It was argued that the figures that showed a high level of dependency in support payments were too optimistic, i.e., the level of reliance was even greater.

It was evident in a discussion on knowledge transfer that many farmers were benefiting from small self-help groups where they could see new methods tried out in practice. However, it was probably the more efficient farmers that were making use of these arrangements.

Above all, a great deal of uncertainty prevailed given that we do not know the shape of any trade deal with the EU and third countries.

Fruit and vegetable production should get post Brexit boost

The Landworkers' Alliance has issued a report arguing that fruit and vegetable production should be boosted after Brexit: New deal for horticulture

It argues that directing more of the budget towards fruit and vegetables will deliver much of what Mr Gove wants in terms of health and sustainability.

However, it is already difficult to secure labour to pick such crops. Google searches by Romanian, Bulgarian and Polish citizens looking for agricultural jobs in the UK dropped by 34 per cent in the past year, according to a study by GK Strategy and OneFourZero.

The fall in interest from overseas has not been matched by an increase in searches from UK workers for UK farm jobs. Bulgaria saw the largest drop, with 2,000 fewer searches for UK jobs in January 2017 compared with the same time the year before.

The two companies said Google search data was a good early indicator of changing behaviour patterns because people increasingly looked online for job vacancies.

The UK agricultural sector already has a 29 per cent shortfall in seasonal workers. The Government has so far failed to introduce any kind of special scheme.

RPSCA calls for two tier animal welfare support after Brexit

The RSPCA has published a report Into the Fold discussing how animal welfare could be supported as a public good justifying taxpayer support. It suggests a two tier system that limits support to those who go 'above and beyond' the minimum in animal welfare: RSPCA proposals

The RSPCA argues that producers should not be rewarded for 'business as usual' or for being legally compliant. Tier one would be a transitional payment awarded to producers for things such as improving buildings, better stocksmanship or to compensate for higher running costs.

Tier two payments would be awarded to members of a higher welfare assurance scheme, such as RSPCA Assured, covering the whole life of the animal.

The report gives some examples of payments that could be made to farmers and how much they would cost. For example, allowing all pigs access to straw might cost £70 a weaner and would amount to £20m if 25 per cent of the national herd not currently weaned on straw were to take up the support.

Implementing a veterinary plan to cut lameness in sheep might cost £10 a ewe, giving a total bill of £89m annually based on a 25 per cent uptake of flocks not currently covered by RSPCA standards.

These are quite substantial sums given the amount that would be released by 'capping' payments to larger farms and the fact that there will be other claims on that money.

Defra to get big staff boost

Defra gets the second largest additional sum of any department (after the Home Office) to prepare for Brexit, an additional £310m. About 80 per cent of its work is affected by Brexit, given that its main task in the past was to seek to influence EU policy and implement directives It needs to develop new systems for agricultural policy, fisheries management and environmental protection. In particular it needs to develop the Government's rather vague green paper on food and farming into a set of viable policy instruments.

Staff will be boosted by 65 per cent. Of course, in the interim, many experienced staff have been lost. Under New Labour I had a period of secondment with the animal welfare team, and I was impressed by the way they integrated veterinary expertise with more generalist skills. But, like the rest of Defra, they were subsequently hollowed out.

Stakeholders such as the NFU will be giving evidence to the House of Commons Defra committee about the department this morning. It will be interesting to hear what they have to say. The initial discussion seems to be about farm policy rather than Defra's capabilities, but I will watch some more later.

The grass isn't always greener in New Zealand

As Brexiteers point to the sunlit uplands, they draw attention to the way in which New Zealand agriculture has flourished since the withdrawal of subsidies. A number of caveats are necessary. The original measures were accompanied by a devaluation of the New Zealand dollar and an end to restrictive practices in ports. Even so, some farmers did take a big hit and went out of business.

What strikes me today about the New Zealand economy today is how dependant it is on exports of dairy products and in turn how important the Chinese market is. Admittedly, the share of dairy products in exports peaked a couple of years ago at 35 per cent and has dropped to just under 30 per cent, but that is still a heavy reliance on one set of products. New Zealand does, of course, have an ideal climate for dairying, although there are environmental concerns about levels of water abstraction for irrigation and the pollution resulting from intensive dairy farming: Green image threatened .

The co-operative Fonterra is New Zealand's largest company and the world's biggest dairy exporter. It supplies almost a quarter of New Zealand's exports. China is its biggest customer, consuming a quarter of the milk produced by Fonterra farms.

It will be recalled that in 2008 Sanlu, in which Fonterra held a 45 per cent stake, was involved in a scandal involving infant feeding power which led to the deaths of six babies and left tens of thousands and others in hospital. The Chinese authorities did not hold back and executed two of those involved and jailed others. The scandal helped overseas companies dominate China's powdered milk market. Foreign brands account for about three quarters of powdered milk sales in China - worth $19.7bn a year.

Now Fonterra has lost out in a different way through its minority stake in Chinese infant formula manufacturer Beingmate. It has lost 70 per cent of its market value in three years and has made losses in the last two years, $152.5m in the year ending December 2017. There have been problems with pricing after a clamp down on price fixing, the distribution network and the discovery of counterfeit powder by the Shanghai police which hit revenues.

Farmer members of Fonterra are getting increasingly concerned and urging the co-operative to drop the investment.

A shortage of experts

The Sunday Express once named me as one of the five hundred most influential people in Britain because I was the only person who understood the Common Agricultural Policy. This was wrong on two counts. First, I have never fully understood the CAP: I am always making new discoveries about its complexities.

Second, there are a dozen or so academics in Britain who understand the CAP better than I do from the disciplines of economics (Alan Swinbank, Alan Matthews), law (Michael Cardwell) and political science (Alan Greer). Conspiracy theorists may wish to note that three of them are called Alan: is this a derivation of 'alien'?

Sometimes the media contact me on the assumption that as I know something about the CAP, I must understand the Common Fisheries Policy as well. It is a mystery to me. I know that we have had enough of experts, but the one academic expert on the CFP that I knew has long since retired. I am aware that there are some conflicts about fishing stocks between marine biologists and fisher folk. The best short account I can find of the CFP is here: Senior European Exp**ts

What is clear is that fishermen (they are mostly male) do follow a very dangerous and demanding occupation and live in tight knit communities. They have been vociferous in their criticisms of the CFP and bringing it to an end is one of the core demands of Brexiteers who see it as an affront to British sovereignty and an area where we need to take back control.

The fact that the EU now appears to be using the CFP as a bargaining chip in the negotiation is potentially politically explosive. Continued access for EU fishing vessels to UK territorial waters in accordance with existing fishing rights is being advanced as a trade off against tariffs on agricultural products and, more importantly processed food and drink products to the EU.

But we should remember that this is a negotiation. Each side is going to push its own interests and perspectives, but ultimately there is a mutual interest in finding common ground. Hopefully.

'Flexitarians' are the real challenge

In the latest Farmers Weekly a 'Cotswold farmer' argues that the vegan movement can be defeated by a lack of publicity. 'I would suggest that we as farmers stop trying to justify our industry and ignore the vegan militia. The press will become disinterested with no televised arguments or public squabbles, and the issue will fade from the public eye.'

I think that the issue is more fundamental as it involves moral or lifestyle choices, changing conceptions of personal identity and what constitutes a well lived life. That moral choice is in my view undermined if people are pressured to eat only particular types of food, rather than making a choice based on an assessment of the issues.

The number of vegans (people who consume no animal products, including dairy or eggs, has trebled in the last decade according to the Vegan Society but still only make up about one per cent of the population). About five per cent of people are vegetarian, but 55 per cent of meal alternatives are eaten by non-vegetarians. I prepare vegetarian food for vegetarian friends or a vegan picnic for a vegan friend.

The AHDB states that 'flexitarianism' is a bigger issue than vegans or vegetarians. 'There are more people looking to limit the amount of meat they eat.' They are concerned about health issues and the contribution of livestock farming to climate change. There is an effort to go without meat on at least one day a week (which, of course, used to be Catholic practice). Concern about animal welfare is also on the rise, particularly among younger people.

The decline in per capita meat consumption has been masked by population growth. But there should be more marketing opportunities for fruit, vegetables and pulses - if farmers can get the staff to harvest them.

NGOs seek full ban on neonics

Please note that the following is a press release from Pesticides Action Network Europe:

'The European Food Safety Authority (EFSA) published today [28 February] 3 reports on the new scientific findings on the toxicity of imidacloprid, thiamethoxam and clothianidin (neonicotinoids) to bees. The Authority highlights that most studies show that neonicotinoids have a negative impact on bees’ health, from damaging their orientation capacity to impairing their reproductive ability. On 24 March, the European Member States will have the possibility to vote for a ban on neonicotinoids; hopefully these reports will contribute to a total ban.

In the frame of the restrictions on the use of neonicotinoids in 2013, the European Commission committed to initiate a review of the ban within 2 years. The EFSA was given a mandate to collect all available scientific evidence on the toxicity of neonicotinoids on bees. The data were then analyzed by the Authority and today, it has published an opinion on imidacloprid, thiamethoxam and clothianidin.

The Authority concludes that the majority of the studies show a negative impact to honey bees, bumble bees or wild bees. Furthermore, the Authority points at the high level of contamination of the environment as the majority of the studies could not be included in the opinions as their controls were contaminated with neonics.

Based on a November 2016 report from the EFSA, the European Commission has made a proposal to Member States to ban neonicotinoids except for glasshouses. The report at the time indicated that, based on new industry data, there was no safe use of the 3 substances. The proposal was nevertheless not put to a vote in the Standing Committee on phytopharmaceuticals as several Member States asked to wait for the publication of today’s report.

Martin Dermine, PAN Europe’s pollinators expert said: "In 2013, there was enough evidence to totally ban neonicotinoids. In the meantime, an impressive amount of additional evidence has been piling up over the last years and the EFSA reports are a small glimpse of such evidence as the EFSA limited its study to bees and to the evidence available until June 2016. EU pollinators are facing a dramatic decline and neonics have now clearly been shown to be one of the major causes. Member States have no choice but to ban neonicotinoids".

As a member of the Save The Bees Coalition, PAN Europe will be advocating, together with nearly 100 NGOs across Europe, to finally obtain a full ban on neonicotinoids.'

I do not have any reaction from farm organisations at present.

Gove goes for low hanging fruit

The briefing surrounding today's consultation paper on domestic agricultural policy has made it clear that direct payments will be reduced to bigger farms to free up money for other purposes. The paper sets out various ways in which this might be done which then form the basis of consultation questions. At this stage I don't want to get bogged down in the detail, but instead consider the principle.

There is no doubt this will be politically popular. Why should wealthy individuals be subsidised to farm? My sense is that most of the public have rather a sentimental view of agriculture made up of small farms. Another issue here is the vegan campaign run on social media in January. I think this was rather effective and has rattled livestock farmers who often failed to respond very effectively. But that is another story.

I also think that one of the issues here is that tax breaks encourage individuals to buy farms and farmland for tax avoidance reasons. This is a complex subject, as one does not want a tax structure that inhibits succession.

What is interesting is that the issue of competitiveness has dropped off the agenda to some extent. It appears in a form in debates over poor productivity, but they are not a central focus in the way that public goods are. Competitiveness is mentioned nine times in the document, for example in relation to the opportunities offered by new technology, and productivity forty times.

Large scale grain farmers in Northern France and Northern Germany will continue to receive CAP subsidies, albeit somewhat reduced because of the loss of the UK contribution. To over simplify, the international grain market is driven by supply and demand considerations, but price is clearly a factor. The UK needs to be very careful not to use pesticides prohibited in the EU or they may find their exports of grain blocked.

I think there is a better clarity/hierarchy of objectives in the Government's thinking that one found in the CAP. I am not against caps on subsidies. But I do think we need to be aware of the consequences.

The future for food, farming and the environment

The Government consultation document is now available with replies required by May 8th. I have not had time to analyse it yet, but hope to do so before long: Consultation

This is clearly an important stage in the evolution of a domestic agricultural policy after Brexit, although I have some scepticism about how much government is influenced by the responses submitted.

Macron takes on the farmers

No one should underestimate President Macron's determination to modernise France, but farmers are one of the most difficult groups to deal with. They may be only three per cent of the population, but they have considerable public sympathy. British farmers have resorted to direct action from time to time, but if they blockaded roads as often as the French do, public opinion would soon turn against them.

I am no expert on France, but it does seem to me that food is absolutely integral to the national culture. Apart from perhaps Italy, there is no country where I can eat so well so consistently at reasonable prices.

I also happened to be up in the mountains the year before last when transhumance was taking place and this gave me some idea of how important farming is culturally in France. Britain is a much more urbanised nation in outlook.

Emmanuel Macron endured jeers and whistles on his first visit as president to France’s largest agricultural fair amid growing tension between his government and the country’s farmers, although earlier in the week 700 farmers have been invited to the Elysée Palace in a charm offensive. Mr Macron was confronted by hostile crowds on Saturday as he toured the showground in southern Paris, underlining the difficulties he faces in winning over France’s powerful agricultural lobby, which has been angered by EU trade talks and Chinese land purchases. Last year the acquisition of 900 hectares of farmland in Allier and 1,700 hectares in Indre by Chinese investors caused alarm.

In a tense exchange with a farmer over a weed-killer which the government has said it will ban, a visibly angry Mr Macron said he would find solutions for farmers who were unable to replace glyphosate, which is claimed to be carcinogenic. The Salon de l’Agriculture traditionally brings France’s political class into close, and often confrontational, contact with the country’s farmers. Last year, Mr Macron was hit by an egg when he visited as presidential candidate.

Macron wants farmers to move away from an over reliance on EU subsidies and to move towards less intensive production methods.

He has said that he will curb the forces of globalisation represented by Chinese land purchases. But he recognises that the EU will not have as much money for farm subsidies when Britain leaves, reducing net income by about eight per cent or some €15bn. (Sometimes I wonder if it might have been in the EU's interest to offer Dave Cameron a little more).

CAP is being eyed by Mr Macron as a French 'taboo' that needs to be revamped. 'We have come to this paradoxical situation in which the CAP has become a French taboo while our farmers continue to criticise the way it works', Mr Macron said in a speech at the Sorbonne last September.

Macron is prepared to pump in €5bn to help farmers to switch to environmentally friendly methods, find successors for their land and bring on a new generation of agricultural entrepreneurs. He wants 22 per cent of farmland to be managed organically by 2022, compared with 6.5 per cent today (ambitious in my view). He is also going to fund much needed early retirements. What he didn't seem to have much to say about were the efficient, competitive grain farmers in the Paris Basin.

As someone who has been wary of France and the French, my attitude is I admit paradoxical. I don't like their arrogance and elitism, but I would also admit their étatisme has brought some remarkable achievements. In a way I think they are most effective when they are assertive, which is why I like Macron and wish him well. But he has a tough task with the farmers.

This one slipped in underneath the radar

It is generally accepted that farmers are going to face a more competitive environment after Brexit. Support payments will be lower; there may be more competition from cheap imports; exports could be disrupted.

At the very least, farmers might expect a level playing field domestically. But that has not been the case for some time. Power has moved down the food chain to retailers. They are engaged in intense competition, not least against the interlopers Aldi and Lidl. The most important element in that competition is price. So they ask farmers to produce high quality goods at the lowest possible prices.

I have been told some stories of retailer sharp practice over the years by reliable individuals that give me cause for concern. I cannot repeat them because I do not have an evidence base. Evidence is difficult to obtain because producers fear retailer reprisals.

The Groceries Code Adjudicator (GCA), sometimes referred to as the 'supermarkets ombudsman', was designed to tackle these problems. With modest resources, some progress has been made. However, in an announcement slipped out this week when other agricultural and food stories were dominant, the Government has said that it will not extend the remit of the GCA.

It suits the government to have intense competition between supermarkets which keeps down food prices. But farmers are left as price takers.

The letter from the minister to the chair of the Defra committee can be found here: Adjudicator

Brexit and food

The House of Commons Defra Committee has issued a critical report on this topic: Brexit and food

It states, 'The Government has offered no clarity to the agricultural industry on its post-Brexit policy. The Government must offer this clarity and stability so that the industry has the confidence to invest and take advantage of the opportunities offered to the sector post-Brexit. We would like to see the Government offer policies that would stimulate home grown food production.'

'The UK has an international reputation for high animal welfare, environmental and food standards. These must not be sacrificed on the altar of cheap imports. Doing so could undermine the premium British brand and might affect our ability to negotiate trade deals with other countries. We will hold the Secretary of State to his assurances that there will be no compromise on animal welfare, environmental and food standards.'

'The Government must make it clear to industry how it intends to deal with potential regulatory divergence with the EU, and the mechanisms it will put in place to track divergence in the future.'

As a divided Government has difficulty in deciding what its policy should be on Brexit generally, I am doubtful that clarification will be forthcoming.

Dyson defends subsidies to big farms

Sir James Dyson has written to the Spectator in response to an article that said that subsidies 'absurdly' favour bigger farms.

He writes: 'My family's farming business, Beeswax Dyson Farming, farms 33,000 acres directly and has invested £75m in technology, training, soil improvement and environmental stewardship over the past five years. Subsidies we receive go directly into the activities they are designed to support but are dwarfed by our own investments.'

'If Britain wants an internationally competitive agricultural sector, rather than a domestic theme park, we must encourage investment in innovation and stewardship. Removing subsidies from efficient farms simply because they are large would remove their incentive to invest at scale. This will hurt the farming economy as we become increasingly uncompetitive against our EU counterparts.'

The 'big farms bad, small farm good' orthodoxy does need to be challenged. It is also important to raise the issue of international competitiveness which is rarely mentioned in discussion of the future of UK farm policy. Post-Brexit, UK farmers will be competing against farmers on the near continent still receiving CAP subsidies.

However, when one pays out blanket subsidies, there is no means of tracking or ensuring that they are used for investment rather than consumption. Sir James evidently does use them for investment, but this cannot be guaranteed.

Regulatory alignment needed to avoid high market access costs

The NFU's director of strategy Martin Haworth told a Euractiv seminar in London: 'We need to explore the markets in China and the United Arab Emirates, but the chance of these replacing the EU market is remote. Without regulatory alignment, the costs (of accessing the EU market) could be really high.'

Tom Hind, director of strategy at the AHDB emphasised the importance of investing in the agricultural sector, noting that 'Brexit or no Brexit, productivity will have to be addressed as the imperative facing our industry.' The sector is currently ineffective in 'translating innovation into practice. The sector needs to seize the current opportunity presented [by Gove] to enable us to be more competitive and maintain market share.'

The views put forward by a range of industry leaders at the seminar can be found here: Invest to compete

In this short video speakers emphasise their key points, Martin Haworth noting that Michael Gove speaks only about public goods and environmental payments and nothing else: Video highlights

Farmers need financial guarantees

Farmers need financial guarantees from government post Brexit if a decimated industry is to be avoided, argues former Labour agriculture minister Lord Rooker: Need to avoid Brexit cliff edge

He said that there was no sign of the promised agriculture bill and no indication of what might be in it. [It looks as if the first step will be a white paper and a period of consultation].

Farm policy after Brexit

My latest reflections after Michael Gove's Oxford speech: The future of farm policy after Brexit

Productivity challenge

The AHDB has produced a Horizon report on the productivity challenge facing UK farming: Driving Productivity

British farmers are falling behind their competitors in terms of productivity. For example, the USA and the Netherlands have raised their annual agricultural productivity by 3.2 per cent and 3.5 per cent respectively in recent years, while the UK has been limping along at 0.9 per cent.

The report argues that spending on research and development is heavily skewed towards 'blue sky' rather than 'near market' research and is heavily fragmented. There is also a lack of training with British farmers under investing in their skill base.

The migrant labour crisis is already here

It's an argument we've made before, but this is a good blog article by Richard Byrne at Harper Adams pointing out that the migrant labour crisis is already here and cannot be solved in the short term by agri tech: Migrant labour shortage

Irish beef exporters remained concerned about Brexit

Irish beef producers have not been reassured by Theresa May's pledge that cross-border trade would continue uninterrupted after Brexit. The promise of regulatory alignment was essentially a fudge that got round an awkward issue and allowed talks to proceed to the next stage. It was kept vague for political reasons.

Ireland's beef exports to the UK are worth €4.4bn a year. The largest groups have operations in the Irish Republic, Northern Ireland and mainland Britain.

Beef exporters remain concerned that the UK might yet seek to enforce different food safety and animal health rules to the EU. They fear delays when exporting to the UK; disruption to meat shipments to continental Europe via Britain; and the prospect of having to compete with cheaper imports from the likes of Brazil.

There is a concern that without full regulatory alignment, the UK could take imports from the US, Brazil and Australia - countries with different food safety and animal welfare standards to the UK.