Monday, January 22, 2018

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.

Thursday, January 18, 2018

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].

Tuesday, January 09, 2018

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.

Saturday, January 06, 2018

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

Thursday, January 04, 2018

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.

Wednesday, January 03, 2018

Subsidies to stay for five years after Brexit

Farm subsidies will stay at their current levels (presumably without an inflation adjustment) for five years after Brexit, Michael Gove will announce today: Farm subsidies

After 2024 they will be replaced by a new system designed to secure environmental outcomes and support rural infrastructure. There is also reference to giving greater access to the countryside which may worry livestock farmers who already have problems with out of control dogs.

The extension of subsidies represents a considerable victory for the NFU and gives farmers more time to plan for the future. The downside is that it may lead them to delaying necessary adjustments to their businesses to prepare for a life without existing blanket support payments. It will create something of a 'cliff edge' in 2024. I have always been an advocate of tapering payments to facilitate adjustment.

The largest landowners may have their payments capped before 2024. The government has yet to make a decision on the cap, but it could be implemented using a sliding scale with the 3,500 farmers who receive more than £100,000 each annually getting a lower amount per hectare above a certain number of hectares.

Mr Gove is expected to tell the Oxford Farming Conference today: 'Paying landowners for the amount of agricultural land they have is unjust, unfair and drives perverse outcomes. It gives the most from the public purse to those who have the most private wealth.'

Mr Gove hopes that the UK will leave the CAP when Brexit happens in March 2019. Whether the UK remains a member of the CAP during the transition period is still a matter for negotiation. but most officials in London and Brussels believe that Britain will still be a member for a period of time after Brexit.

Reports on Brexit

There have been a considerable number of reports on Brexit and the agri-food sector and Birmingham Food Council has compiled a list of them with links: Brexit reports