Thursday, August 17, 2017

Ireland position paper raises more questions than answers

That is a general view of the Government's position paper on Ireland, but it applies particularly to agriculture. It is suggested that one option to avoid disrupting the substantial trade in food and agricultural products between Northern Ireland and the Irish Republic could be 'regulatory equivalence.' The UK would agree to achieve 'the same outcome and high standards, with scope for flexibility.' Is the latter phrase some kind of get out clause?

It is difficult to see how one could negotiate trade deals with countries like the US which would want entry to the UK market for its hormone reared beef and chlorinated chicken. Such deals are supposedly one of the benefits of Brexit.

If one had a customs agreement with the EU similar to that with Turkey, it should be noted that this excludes agricultural goods. Agricultural products would then need to be checked to ensure tariffs had been paid and that there was compliance with phytosanitary standards.

I am sceptical about claims that there is a technological fix to these issues, particularly given the current clunky state of HMRC's IT systems. The logical solution would be to have a border in the Irish Sea, but that is politically unacceptable, particularly with the DUP breathing down the Government's neck.

Wednesday, August 16, 2017

The New Zealand question

When Britain was originally negotiating and then confirming by referendum its membership of what was then the European Community, one of the issues was New Zealand agricultural products. I need to go back and read the contemporary literature, but essentially the point was that Kiwi exports of butter and lamb were important to its economy and the UK wanted to continue to have access to them tariff free, so it was agreed that quantities of these products could enter the common market free of tariffs.

New Zealand subsequently adopted a 'scorched earth' farm policy which caused more pain than many of its admirers admit and was also accompanied by a devaluation of the NZ dollar (as well as freeing up the country's ports from various restrictions). New Zealand has thus opened up new markets for its dairy products in East Asia and the Gulf states.

Nevertheless, that does not mean that the European market does not matter. New Zealand has formally objected to a plan that would limit the amount of its lamb sold in Britain. The UK Government wants to share the tariff rate quotas with the EU after Brexit. The hope is that replicating the EU's tariffs and quotas would make matters easier in the World Trade Organisation.

It is somewhat ironic given that it was hoped that one of the first post-Brexit free trade pacts would be with New Zealand. You might wonder what the UK could export all the way to New Zealand, but apparently it is about financial services.

Wednesday, August 09, 2017

The case for small farms

The CPRE are the latest contributors to the debate on farm policy post Brexit and they make the case for the benefits of small farms: Uncertain harvest

The report highlights the declining number of smaller farms. It argues that farm size diversity is a crucial consideration as we move towards Brexit. 'It could help deliver the many public benefits that we need farming to provide and that public funding – and the market where possible – should foster and reward.'

There is a case to be considered here. Big farms generally get a poor press, although many of them make substantial efforts on environmental protection. Moreover, they are potentially more internationally competitive, not that that has ever been a big concern for the CAP.

Monday, August 07, 2017

Migrant labour supply problem worsens

Growers of fruit and vegetables are reconsidering their investment plans as it becomes more difficult to recruit migrant labour from elsewhere in the EU. Some may relocate to eastern or central Europe: Pickers shortfall

According to a report in The Guardian: '“The perception from overseas is we are xenophobic, we’re racist, and the pound has plummeted too. We’ve gone with Brexit and that makes us look unfriendly.” Those are the words of John Hardman, director of Hops Labour Solutions, which supplies about 12,000 workers a year to food-growers. He reckons that when it comes to “food-picking jobs in agriculture – which means everything from strawberries to brussels sprouts”, there is currently a Brexit-related shortfall of about 20%, which chimes with recent surveys by the National Farmers Union.'

Tuesday, August 01, 2017

Farming tomorrow

It's difficult to keep up with the flood of reports on the future of agricultural policy after Brexit. Many of them say rather similar things, which I suppose reflects an emerging consensus focusing spending on 'public goods', although there is still a lack of clarity on the policy instruments that would deliver these objectives. The latest report comes from the Policy Exchange: Farming Tomorrow

It argues that subsidies on food production should be phased out and in the words of Policy Exchange's director, Warwick Lightfoot, be directed 'towards more sustainable goals - the landscape and its appearance.' Tariffs should be lowered unilaterally, so farmers would face a double whammy.

It is argued that the UK should replace the CAP with a new British Agricultural Policy which focuses on payments for ecosystem services (or natural capital) and phases out production subsidies and income support by 2025. Any remaining subsidies should be redirected towards protection for natural and public goods, and increasing R&D to boost innovation and the sector’s long-term productivity. The difficulty is that no one has yet come up with a feasible scheme for pricing ecosystem services.

Professor Tim Lang has described the report on Twitter as a 'clear neoliberal farm Brexit call' while another tweeter commented 'Bye-bye, quality British food.