Monday, July 17, 2017

What can the UK learn from New Zealand?

It is often suggested that the UK could learn from New Zealand's experience of abolishing agricultural subsidies, although such comparisons often overlook the way in which the climate there favours pastoral agriculture and the extent to which devaluation assisted the transition (a devaluation of 55 per cent over ten years).

The AHDB has taken a systematic look at what might be learnt from New Zealand, emphasising the differences between the state of the New Zealand agriculture and economy in 1984 and that of Britain today: Kiwi subsidy reforms

Ten per cent of farmers were in serious financial trouble by 1986 and land prices fell by over half.

The principal conclusions are:

  • Should the structure of farm support change there is likely to be a challenging transition period (my view is that phasing and managing this transition is crucially important.)
  • In order for the UK agriculture industry to be successful post-Brexit there will need to be a focus on efficiency and streamlining.
  • There may be opportunities for the UK to carve out niches and for agriculture to thrive through increased vertical integration.
  • Agriculture operates most efficiently when decisions are based on actual market returns.

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