Farming in the Pyrénées

Near Lescun, France

I am just back from a visit to the Pyrénées, specifically to the village of Lescun which is at a height of around 1,000 metres. Often large flocks of sheep were on the roads as 'transhumance' was taking place from the mountain areas to the valley floors. Read more about 'transhumance' here: Transhumance

The sheep here are used to produce milk from which cheese is made. This creates good value added, and along with subsidies, allows the peasants to survive. I was advised that 'paysan' is not a derogatory word in French: it is simply one of those words that does not translate well.

I also tasted yoghurt made from sheep's milk, although I preferred the product using goat milk.Reference was made to a 'progressive' local dairy farmer who had built her herd up to 20 cows. That would not be seen as viable in the UK, but it is a different style of farming.

The village

The population of the commune has shrunk as pastoralism has declined and the village has a number of second homes. Village children go to a school in the valley. Efforts have been made to ensure that there is good internet connectivity. There is a bed and breakfast (once a hotel) and some tourist activity related to the excellent opportunities for walking.

Aid package for farmers

Dairy farmers in particular have been hit by a global surplus of milk and the Russian embargo on EU produce. Against a background of mass protests in Brussels, the Commission unveiled a package of €500m of aid at an emergency Agriculture Council meeting: Aid package

It was important to avoid any revival of market distorting intervention measures which would be potentially expensive and could have unintended consequences, as well as exacerbating the underlying problems rather than solving them. These measures are directed primarily at farm incomes and include measures such as advancing direct payments which should ease immediate cash flow problems.

CAP expert Alan Matthews provides an in depth analysis of the measures here: Help for dairy farmers

Hogan meets with farm ministers

EU farm commissioner Phil Hogan is holding meetings with farm ministers ahead of an 'emergency' Farm Council meeting next month to discuss the difficult situation facing EU farmers, particularly those in the dairy sector: Phil Hogan

There are calls for a restoration of full blown intervention purchases, but the active use of this policy instrument would be a step back to the past.

Demand growth for food likely to slow

Reports from the European Commission suggest that the growth in demand for food is likely to slow down due to declining population growth and more stabilisation in consumption per capita: Long-term trends

Despite slowing economic growth, China is likely to remain the main target for EU agri-food exports.

All this implies tighter export markets which are likely to restrain prices and make things more difficult for EU farmers.

Crop diversification measures have limited impact on farm income

The controversial crop diversification measures introduced in the last CAP reform have had a limited impact on farm income according to a new study: Crop diversification

However, individual farms may have been more substantially affected with some experiencing an income loss of as much as 10 per cent. However, it should be noted that only 38 per cent are farms are affected by the measure.

The NFU has complained about it a great deal in the UK and these figures question whether the measures are having much impact on their members. However, it may be that what was resented was what seen as an unnecessary intervention in farm level decision-making rather than any financial impacts.

The dairy farming crisis

The chairman of the NFU's south-west dairy board, Mark Oliver, has announced that he is selling his herd and quitting agriculture. He has seen the milk price he receives from his dairy fall from 33-34p a litre a year ago to 25p a litre today, with the prospect of further drops. The break even point is thought to be around 28p a litre, although this can vary by farm.

The price farmers receive does vary considerably. A number of big supermarkets such as Tesco, Sainsbury's, Marks and Spencer and Waitrose pay an agreed amount above the cost of production. This would work out at around 32p a litre. However, fewer than 15 per cent of farmers have the protection of these contracts. Typically, prices in the UK have dropped by 25 per cent over the past year, producing a price of around 20p a litre, although some farmers receive even less.

The underlying drivers are supply and demand. Global milk production is rising by 5 per cent a year while demand is growing by just 2 per cent. The average cow in England and Wales produced 14 per cent more milk in 2013 than a decade earlier.

China's economic slowdown has reduced its demand while Russia imposed a ban on EU dairy products last year. The two countries account for not far short of a third of globally traded dairy products, so have had a significant impact on prices.

Chinese imports have jumped 14 times in the last decade. This is, of course, from a low base with milk and cheese being relatively new to the diet.

The number of dairy farmers in England and Wales has dropped by half over the past 12 years to just under 10,000. However, this means that the remaining farmers have better economies of scale, are generally more efficient and better able to compete internationally.

It's not all doom and gloom in the long run. The International Farm Comparison Network reckons that the world will need 30 per cent more milk by 2024. The demand would come from population growth and per capita dairy consumption rising by 14 per cent.

The Middle East and North Africa have seen rapid expansion of their dairy markets. While world trade of dairy products has doubled in the last decade, Middle Eastern imports have trebled and Maghreb countries have seen a 3.5 times rise. One of the main attractions of the region is the scope for processed dairy products such as cheese. In Asia the market has been mainly focused on milk and powdered milk.

What would British withdrawal from the EU imply for British farm policy?

Farmers are uncertain what impact a British exit from the European Union would have on their businesses. This is not surprising as so far there has been little systematic exploration of these issues, says the Farmer-Scientist Network which has been set up by the Yorkshire Agricultural Society.

The Farmer-Scientist Network is based at the Great Yorkshire Showground, and has assembled a working party of CAP experts from economics, law and political science chaired by Professor Wyn Grant of Warwick University. North Yorkshire farmer, Bill Cowling, who is best known as the Honorary Show Director of the Great Yorkshire Show, is a working party member and is helping to identify the issues that concern farmers in particular.

He comments: “The impact of a possible withdrawal from the EU cannot be under estimated. The Yorkshire Agricultural Society was established to drive forward developments in farming, and it is anticipated that this Network will encourage a more informed debate in the event of a referendum.”

The Network has raised the point that Britain would be outside the Common Agricultural Policy (CAP) and would have to devise its own agricultural policy. The shape of that policy would, however, be influenced by the form that the relationship with the EU took after exit and obligations under the international trade regime as Britain would remain a member of the World Trade Organisation.

Over the next few months the working party will examine:

• Financial support for farmers post exit
• The tariff regime that would be followed outside the EU
• What would happen to environmental regulations
• The availability of migrant labour

The productivity puzzle

Britain's recent poor productivity performance, which necessarily has an effect on real wages, is the issue that dares not speak its name in the general election. It doesn't reflect well on the Coalition Government, but Labour has not pushed the issue, perhaps because they have no answers.

Britain's record in agricultural productivity has been poor. Between 1900 and 1984, yields of wheat trebled from one tonne to three tonnes an acre. Since then, although there was some improvement in the late 1990s, productivity has more or less flat lined.

Using USDA and OECD data, England ranks seventh out of eight countries on ratio of farm outputs to inputs by value (excluding subsidies). The World Bank calculates that the country produces less cereal per hectare of harvested and than Belgium, France, Germany or the Netherlands.

To put it another way, if we start with a 1990 index of 100, Britain's agricultural productivity was around 118 in 2011. The US was on over 140, the Netherlands and Germany in the 170s, New Zealand near 220 and Denmark over 220.

The high price of agricultural land in Britain doesn't help. It's a popular, lightly taxed investment asset, also popular for sporting and lifestyle purposes. Its steep rise in value absorbs funds that might otherwise be used for investment.

There has also been a sharp fall in applied research and development with a number of public research institutes wound up in the 1980s. Over the past two decades the country's spending on agricultural R & D has fallen by an average of 6 per cent in real terms.

The UK did launch an agri-tech strategy in 2013 with cross-party support, but it is open to question whether the £160m allocated to it is enough or whether it has come too late.

Balls in less farm subsidies shock

There was what I found to be a rather surprising exchange on agricultural policy at the end of the questioning of Ed Balls as Shadow Chancellor on Sky this afternoon. Someone from the farming industry asked him about declining self-sufficiency in UK agriculture, no doubt him expecting to say that targets to increase it should be set. The NFU has just tweeted that she is one of their members.

Instead he said that he believed in international trade and that this gave consumers a wider choice of products in the supermarkets and this kept prices down for consumers. He was also critical of the CAP, although that is standard for UK politicians.

He was then asked by the facilitator whether he favoured more farm subsidies or less and he unequivocally answered, 'Less'.

Campaigning for farming and food in the general election

The general election is an opportunity for farming and food issues to be debated and the National Farmers' Union is fully entitled to brief its members with questions to be asked of candidates. Indeed, the NFU has posed very interesting questions about any referendum on membership of the EU and what the implications of 'Brexit' might be for British agriculture, an issue that requires more systematic attention and exploration.

What I think is less helpful is any suggestion that we need self-sufficiency targets which can all too easily smack of Soviet central planning. The NFU has warned that by 2080 less than half the nation's food needs will be met by UK farming. This date is a long way away and it is not clear whether this is a figure for temperate foodstuffs or whether it includes tropical products like the ever popular banana.

The NFU's report entitled Backing British Farming in a Volatile World said that 85 per cent of consumers wanted to see supermarkets selling food from British farms. This is a bit like asking people whether they are in favour of motherhood and apple pie.

There are food security issues to be discussed, but as Tim Benton of Leeds University, the UK's global food security champion, commented: 'It remains an "open question" as to what the optimal level of self-sufficiency should be.' I would argue that there is no methodology that can tell us, given all the uncertainties. That may, of course, represent a case for being cautious, but I don't think that target figures are the right way forward.

The NFU claims that more than half the income of an 'average' farm comes from single farm payments (soon to be the basic payment). This suggests an over dependence on subsidy, but the NFU says they are needed to protect against price volatility. What would perhaps help more is a supermarkets ombudsman with more powers and a staff of more than three to ensure more of a level playing field. But then governments like low food prices.

You can read the NFU report here: Backing British Farming

Mid-term review on the cards?

Many observers of the CAP, particularly environmentalists, were disappointed with the last reform of the CAP. They argued that it was not a reform at all, which has been true of many so-called reforms of the CAP, honourable exceptions being those initiated by Commissioners MacSharry and Fischler.

Commissioner Hogan has responded to the criticisms, saying that there could be a mid-term review of the CAP in 2017, leading to more reforms: Mid-term review?

Some scepticism is in order, as a mid-term review may lead to little more than some tweaking and cosmetic changes. However, at least it shows that the possibility of a renewed reform debate is not dead.

Huge growth in price of best arable land

The average price of UK farmland reached a record of just over £10,000 an acre in the second half of 2014. This is 8.3 per cent up on the previous year and the 11th year in a row that prices have broken the previous record. However, the average price masks a growing gap between the price of top quality arable land and ordinary pasture.

The price of prime arable land, mainly in East Anglia, rose by 277 per cent in the decade to 2014 according to figures from Savills. These figures beat prime London property, up 127 per cent over the last decade, the FTSE All-Share index and even gold. Rumners Farm, a 560-acre North Cambridgeshire arable estate sold for about £2.75m in 2007. Now it is back on the market at £8m.

Investors are pushing up the price of the best land. Bagless vacuum cleaner magnate Sir James Dyson has been buying up land in Lincolnshire. He now has 25,000 acres, having recently purchased the 3,000 acre Cranwell and Roxholme estate. According to Mark McAndrew of Strutt & Parker private investment competition can push up the price from £7,000 an acre to £12,000-£13,000.

Investors are interested in land as a counter-cyclical safe asset. With a growing world population, food prices should rise in the long term.

Other hotspots include Hampshire, Berkshire and Oxfordshire, 'Home Counties' that are within easy reach of London and appeal to lifestyle buyers who may want to breed horses.

What is curiously missing from the reports I have read is any mention of the CAP. The subsidies it provides make land a more attractive asset and push up prices. It then becomes difficult for new entrants unless they inherit, become farm managers or are prepared to start with a marginal livestock enterprise. The sector may be deprived of innovative new talent.

Rising land prices do nothing for the 30 per cent of farmers who are tenants. For dairy farmers under the cosh from falling prices for their milk they offer the prospect of a better return if they sell up as many are doing. However, their farms are rarely in the most lucrative areas.

Complex picture on cutting payments to big farms

A common complaint about the CAP is that too high proportion of the subsidies go to already prosperous farmers. The counter argument is that these farmers are the most efficient and the most internationally competitive. It all comes down to what you think the CAP is for and there has always been confusion about the objectives and their relative preference ordering.

From this year all member states are obliged to apply a 5 per cent degressivity tax on payments over €150,000. Let us suppose that you are an East Anglian grain baron receiving €1m in subsidies. This means that you would appear to lose €42,500 of your subsidy, but then the 30 per cent greening subsidy is exempt, so the actual sum comes in at under €30,000 (obviously the amount received in pounds is sensitive to the pound-euro exchange rate). The amount lost would be significant but not devastating.

However, any member state or region can impose their own cap. This option has been chosen by all the devolved regions in the UK, but on a different basis in each case: It's your choice

Northern Ireland has imposed an absolute cap at €150,000. There are not many farms in Northern Ireland who would receive more than this. Wales has come up with a particularly complicated system, but again there are not that many farms in Wales who would qualify for relatively large payments. Scotland, where there are some large farms, has set the cap higher. Indeed, their €600,000 starting point is the highest notified by any EU country or region.

It's not difficult to work out the politics of this. Farmers in Northern Ireland who are Democratic Unionist or Sinn Fein supporters are unlikely to be affected. In Wales, the more Welsh-speaking parts of the country are unlikely to be hit (although other aspects of Welsh Assembly Government policy have been a source of complaint). In Scotland, the Scottish Nationalists do not want to upset any constituency, but the relatively small number of farmers likely to be affected are not significant in electoral terms.

The future of small farms

The president of the Agricultural Economics Society, Steve Wiggins, has written some interesting reflections on this enduring topic in their latest newsletter which I reproduce below.

'Small-scale family farms remain an enduring feature of agriculture across the world, and especially so in the developing world. Some 418 million farms in the developing world, 95%, have less than five hectares, according to broad estimates made by FAO from (inadequate) surveys and censuses. What's more, in most developing countries the average holding size still tends to fall with each decadal census.

Debates over the productivity of small farms and their likely evolution go back to the nineteenth century if not before. The end of the peasantry has been repeatedly announced, yet reality has proved otherwise. Concerns that smallholdings could not be efficient and would never allow sufficient increases in production to sustain development were voiced in the 1950s and early 1960s; but laid to rest when the green revolution showed what could be achieved on the small farms of Asia. Analyses confirmed that many smallholders ran efficient farms and responded to price incentives. Indeed, diseconomies of scale were apparent, since small farms could manage labour better than larger scale farms.

But like Malthusian pessimism, doubts about small farms periodically resurface. The latest bout began around the turn of the new century, inspired by observations of the new supply chains run by supermarkets and exporters springing up across the developing world. Small farmers would be at a definitive disadvantage in these chains, since they could not meet the exacting demands for standard, high quality production, to strict timetables, in large lots and preferably certified and traceable.

Contemporary Asia, where only a small fraction of farms exceed five hectares, provides some insights into changes and likely future trajectories. Even in rural areas well connected to cities, where supply chains are modernising for staples and not just high-value produce, family farms persist. These farms are, however, increasingly differentiated, as a minority specialise in farming and intensify their production; while most farms provide some income for rural households that increasingly rely on non-farm activities and remittances from migrants.

This throws up two challenges. One, land markets need the flexibility to permit some concentration of holdings in larger operating units, while rural households that want to retain ownership, but lack the means or inclination to cultivate, can do so. At issue are small-scale transfers, perhaps temporary arrangements, with rentals, share-crops and loans predominating over outright sale. Tenure policy needs to facilitate these exchanges.

Two, if small farms are to prosper they need to find ways to overcome the failures that typically apply in markets for inputs and credit. That can be done, of course by the state, but the costs can be (ruinously) high. The alternative is to look to private and collective institutional innovations - contracting, farmer associations, local agencies and franchises for inputs and finance, etc. - to overcome current market shortcomings. A plethora of such initiatives can be seen, even if most operate at limited scale. The challenge then is to learn from these, to find working models - not pilots - that can be replicated or adapted to wider circumstances.

Get these two things right and we can hope to see a gentle transition as most smallholders gradually leave farming on their own terms, while allowing specialising smallholders to expand their holdings.'

One might add that many family farms in countries like the US and the UK have become successful large-scale enterprises but that was dependent on a number of factors including: (i) a facilitating legal framework on inheritance; (ii) good infrastructure to get products cheaply and quickly to markets; (iii) mechanisms to learn about and adopt technological innovations; (iv) ready availability of credit at realistic rates; (v) some government financial support for modernisation. No doubt one could add to this list.

Review of the CAP in 2014

Agra Europe have provided a useful review of developments in farm policy in 2014 and a look forward to 2015: Year in review

They claim that it was an 'eventful' year and although decision-makers were certainly busy, it would be difficult to claim that there was fundamental change, although some unanticipated changes such as events in Russia which have added to the problems of the dairy sector.

Will flexibility underline common policy approach?

Will the amount of flexibility allowed in the latest CAP reform package undermine the common policy approach and create an uneven playing field in the European Union in terms of competitiveness? This is the question posed in an informative House of Commons Library briefing paper: Flexibility

The UK and Ireland have made full use of the flexibility allowed around eighty decision points to create bespoke policies, the paper finds.

Phil Hogan approved as commissioner

Phil Hogan has been approved as agriculture commissioner by a majority of over three to one in the European Parliament's Agriculture and Rural Development Committee. He was asked some awkward questions about his career in Irish politics, as well as some standard agricultural questions, but did not encounter the level of difficulty experienced by some candidates for commissioner roles: Phil Hogan

He said that he would review the CAP in 2016 after one year of the new policy mix with particular reference to direct payments and the arrangements on greening and ecological focus. However, he said that his immediate priority was responding to the Russian ban on the import of EU agricultural products.

Greening of CAP has been a failure

Researchers have suggested that the 'greening' of the CAP has been a failure. The latest version of the CAP is no greener than its predecessor and would fail a basic Advertising Standards Authority test in terms of its claims: No greening

The researchers conclude that it fails to encourage greater wildlife abundance or adequate protection for vulnerable habitats such as grasslands.

I would not wish to dispute the specific conclusions made. Policy instruments have often not been well designed and policy effectiveness insufficiently monitored. The sums of money available do not match the scale of the challenge, but have often not been well used.

However, one must beware of reducing environmental policy to the protection of biodiversity or landscape effects. Reducing water pollution from agricultural activities has been a key policy objective and some progress has been made. Climate change mitigation is surely the key objective, but little progress has been made, despite the contribution of modern agriculture to greenhouse gases.

The rise in farmland prices

Over the past decade farmland prices have grown at twice the rate of prime London property with good agricultural land increasing 270 per cent in value compared with a 135 per cent rise in London house prices during that time according to Savills. This makes it three times the price of farmland in North America and 15 times the price of such land in Australia, reports The Economist.

The reasons cited include limited and diminishing supply and constraints on world food supply. However, it should be pointed out that a lot of land in reach in London is bought at least in part as sporting estates which offer the additional incentives of a safe haven for money and tax breaks, such as exemption from inheritance tax after seven years.

However, of course, a lot of the demand is driven by farmers themselves. Economies of scale demand bigger units and although land can be rented, this may not offer security of tenure and often results in a patchwork quilt of land which means that time and money is taken up moving equipment around, not to mention complaints about slow moving agricultural vehicles on the roads.

What this means is that it is now very difficult to get into farming on your account unless you inherit a farm or a large pot of money. This has been exacerbated by the decline of county council entry level smallholdings. This means that farming is deprived of people who might bring in a fresh perspective and innovative ideas.

Farm commissioner job goes to Ireland

With outgoing agriculture commissioner Dacian Ciolos not re-nominated by Romania, the role has gone to Ireland's Phil Hogan. As this report makes clear, it is a decision likely to be welcomed by farmers: Hogan

The Irish Farmers' Association have certainly welcomed the appointment, implying that it will offer new opportunities for them to exert influence and secure better deals for farmers: Irish welcome

This report suggests that he has been none too popular in his role as environment minister in Ireland, although it does describe Brussels rather colourfully as a 'dross magnet': Ministerial record

The farm commissioner role often goes to a small member state with strong agricultural interests and it has, of course, been occupied by Ireland before, most notably by Ray MacSharry who brought about a significant reform of the CAP with long-lasting effects.

This article makes the interesting point that Ciolos failed to make sufficient progress on the integration of agricultural and environmental policy which is a clear direction of travel. It also notes that a central flaw of the CAP is the fragmented nature of the management and control systems: Environmental policy

Agricultural policy outside the EU

There has been relatively little discussion so far of what kind of agricultural policy the UK might have if it left the EU and hence the CAP. Agricultural economist and CAP expert Alan Swinbank has been trying to stimulate debate on this issue, but so far with little success. His latest effort is in the journal EuroChoices.

He notes, 'Successive British governments have repeatedly argued for more radical reform of the CAP than the EU has been willing to accept ... To what extent these aspirations would translate into a reduction of support for British farmers, and a greater emphasis on the provision of environmental public goods, should the UK exit the EU is open to question ... British farmers might bitterly complain that they faced an uneven playing field as their competitors were better able to remain in business as a result of more generous Pillar 1 payments subsidising their farming activities.'

Swinbank also poses the question: 'Could a WTO compatible agri-food trade agreements be negotiated with its former EU partners, or would Irish and Brazilian beef face the same tariff barriers on imports into the British market?'

My initial thinking has been that the single farm (soon to be basic) payment should continue during a transitional period if the UK left the EU, but at a somewhat reduced percentage of the current rate, e.g., 90 per cent, 85 per cent, 80 per cent over three years. However, there is danger that this could become set in stone and we would be left with an historically determined form of subsidy rather than debating and re-thinking the pattern of support.

As Swinbank argues, the alternatives do need to be spelt out so that voters can make an informed choice in any referendum.

How the EU is handling Russia's food import ban

I have written on this subject here: Food Import Ban

Big changes at ComAgri

With the extension of co-decision to agricultural policy by the Lisbon Treaty, the European Parliament's Agriculture and Rural Development Committee has become a much more important player in the decision-making process. It has tended to contain MEPs from agricultural and rural constituencies, or with interests in the sector, and in that sense has sometimes been a brake on reform, with the chair in 2009-14 insisting that the CAP budget be maintained in real terms with more money for farmers and more flexibility on how they spent this publicly funded largesse: Handouts

The committee's composition in the new Parliament has changed substantially, creating more uncertainty about its stance, although it will be chaired by the centre-right EPP. ComAgri’s political breakdown is based on the election results. The European People’s Party (EPP) came first so gets 13 of the 45 seats, with the Socialist and Democrats (S&D) next with nine seats and the other groups getting between three and five each.

A number of old hands who played key ComAgri roles in 2009-2014 are back, including former chair Paolo De Castro (S&D), Albert Dess (EPP) and Jim Nicholson (ECR). Notable absentees include ALDE’s George Lyon and the S&D’s Luis Manuel Capoulas Santos.

Of the 45 new ComAgri members, 23 were re-elected to the Parliament, of whom 20 sat on ComAgri in 2009-2014. New to ComAgri but not to the Parliament are Portugal’s Nuno Melo (EPP), the UK’s Richard Ashworth (ECR) and Dane Jens Rohde (ALDE). The other 22 are newly-elected to the Parliament. This reflects dramatic changes to the Parliament’s political make-up brought by the elections, with eurosceptic, anti-EU parties significantly increasing their MEP numbers – as well as some left-wing anti-EU parties.

The expanded Europe of Freedom and Direct Democracy (EFDD) group has increased its ComAgri representation from two to three MEPs. Back is Stuart Agnew from the UK’s Independence Party (UKIP), which wants the UK out of the EU altogether, but has a poor record of voting and committee attendance in the Parliament. UKIP's position is that UK farmers would then receive a version of what has been the Single Farm (to become Basic) Payment, but that it would be capped to limit the amount going to larger farmers, something the UK has always fought within the EU. Agnew is joined this time by Giulia Moi and Marco Zullo from Italy’s Five Star Movement – a populist party born out of a protest movement led by a comedian.

One of the three non-attached members, Edouard Ferrand, is from France’s far-right Front National, which increased its Parliament MEPs from three to 24. The FN is a critic of the CAP, lamenting the loss of control on farming decisions and arguing that the CAP has not helped agricultural earnings or done enough to protect French farming.

As for the Greens/EFA group, outspoken French MEP José Bové and German Martin Häusling are joined by new MEPs Bronis Ropé from Lithuania and Jordi Sebastià Talavera from Spain’s Compromis party. Bové was once involved in physically dismantling a MacDonalds that had set up in a cheese producing region and is a staunch opponent of GM.

The left-wing alliance GUE-NGL has four brand new MEPs on ComAgri. Two from Ireland – Matt Carthy and Luke ‘Ming’ Flanagan – are joined by Antje Anna Helena Hazekamp from the Netherlands’ Party for the Animals (PvdD) and Spain’s María Lidia Senra Rodríguez. We might expect more attempts to pursue animal protection issues.

Ciolos odds on favourite for farm commissioner

Dacian Ciolos looks like he is the front runner for re-appointment for a second term as farm and rural development commissioner. He has not offended any major players among the member states and has been careful not to upset the French, being perceived originally as a French-approved appointment. He is strongly backed by his own government with farming being a more important part of their economy than in most member states.

From a reform perspective, he has been a disappointment, but that is not surprising. It is difficult to get reform through in the face of the vested interests of member states. The farm share of the budget is dropping, but relatively little has been done to make the CAP responsive to climate change.

There is an argument for continuity for the CAP, as Cioloș would be able to oversee mid-term reviews of ‘greening’ and other 2014-2020 reforms that he proposed back in 2011. But 'continuity' can be another way of saying 'business as usual'. The inefficiencies of the CAP are bound to be an agenda item in any referendum debate in the UK.

Ireland is always keen to get the farm commissioner's post and has done well in the role in the past (think of the MacSharry reforms). The Republic's Phil Hogan, who has served as Irish environment, community and local government minister since March 2011, is being advanced as a candidate. Hogan, from the Fine Gael party that is in coalition government with the Irish Labour Party, also has experience in EU issues and is being backed by fellow Fine Gael politician and MEP Mairead McGuinness. McGuinness, from the EPP group and an active member of the European Parliament’s agriculture committee (ComAgri) throughout the CAP reform process, is now a vice-president of the Parliament.

There are a couple of dark horses and one former Spanish agriculture minister Miguel Arias Cañete, since elected to the new European Parliament. Yet the chances for Italian Socialist (S&D) MEP Paolo de Castro, who was ComAgri chair in 2009-2014, appear slimmer.

Although there is much horse trading to come, Ciolos must be the odds on favourite.

Getting a start in farming

If you don't have a farm to inherit, getting a start in farming is difficult. The capital costs of setting up, equipping and stocking a viable farm are huge. For some the practical route is to become a farm manager, but then you are working for someone else.

Perhaps surprisingly, there are people from a non-farming background who want to become farmers. I say 'surprisingly' because it is hard physical work, requires a wide range of skills including dealing with a lot of paper work and the returns are often poor and uncertain. There are some jobs I could never do and farmer, actor and politician are top of the list. But I appreciate that there are those who have a real and genuine commitment.

One route in has been through county council farms. These are not usually large and may have to be combined with rented land to be viable. When I have interviewed such farmers, the off farm work of their partner (or even the farmer) has often been a key contribution to the household budget. They tend to be livestock farms, raising beef or sheep or a dairy enterprise. Smaller arable farms have been squeezed as yields have flat lined for some thirty years and economies of scale have becoming increasingly important in that sector.

However, cash strapped county councils have been selling off their estates. Since 1964 the council farms estate across England and Wales has shrunk by 37 per cent to 111,650 hectares in 2012. Total holdings have fallen by 79 per cent to just 3,442 as they have been combined to try and make them more viable.

Average size has gone up from 10.9 hectares to 32 hectares, but arguably that is little better than a large smallholding. In some cases, part of the holding has been sold off for housing, sometimes the most productive land. When councils sell holdings off, tenants can purchase at market value, but there is no way that a farm of, say, 125 acres with a book value of £1.2m could support a large mortgage.

I don't think county farms are the way forward for the future, but the measures taken under the CAP don't help much either.

Finally, can I give my nephew Deiniol Williams a plug. He has left the family farm where his brother will carry on as, I think, the eighth generation. But he has started a ceramics business and uses a kiln on the farm: Ceramics

Wellcome result for Co-op

The Co-operative Group has sold its farm business to the Wellcome Trust for £249m. This is indeed a welcome result as it ensures a benevolent owner for the business which takes a long-term view and shares many of the ethical standards of the Co-op. As Danny Truell, its chief investment officer, put it, the trust values 'responsible stewardship over quick profits'.

Dedicated to driving improvements in human and animal health, the trust is the world's second highest spending charitable foundation. In effect, they function as another research council for the UK. I have had some loose association with their veterinary work and I have been favourably impressed.

The trust already has significant agricultural holdings in Cambridgeshire, Hertfordshire and Cheshire. It rarely sells businesses once it has acquired them.

The Co-op estate is made up of nearly 40,000 acres of land, 15 farms, three pack houses, and almost 130 residential and commercial properties. Its apple orchards at Tillington in Herefordshire were purchased in 2008, thereby preserving more than 1,000 rare varieties of British apples that were threatened with extinction.

This is one of Britain's largest land sales in decades and one of the largest global deals of its kind. It ends an association between the troubled Co-op and agriculture that dates back more than 100 years.

Call for major changes to food and farming policy

A coalition of NGOs including the RSPB and the National Trust working with the Centre for Food Research have called for UK food and farming policy to be reoriented around ecosystems and the promotion of healthy food in a report entitled Square Meal.. You can read more about the report and download it here: Square Meal

They state in a press release, 'The organisations involved have joined forces to highlight the overwhelming evidence that demonstrates the need for major changes to national food and farming policy. Square Meal aims to start a collaborative discussion in the run up to next year’s general election and to influence future government policies on these issues. [One suspects that the report is really addressed at a possible Labour Government]. It calls for stronger government leadership in planning the future use of land, food policy, farming and conservation in England and for wider public engagement on issues that affect the whole of society.'

One interesting question is how far these issues are within the domain of national politics. The increasing demand for a sugar tax clearly is, but many practical farming decisions are influenced by the CAP. This has a substantial emphasis on protecting the environment, but does not tackle health related issues.

On the CAP, the report says, 'The Common Agricultural Policy spends €1 billion a week of taxpayers’ money across the EU31– a vast amount that could be doing so much more to support and incentivise those farmers doing the right thing for society and the environment and push up standards across the board. But only a tiny proportion of this expenditure represents good value for money by being targeted at sustainable farming. Much of the rest ends up in the coffers of big business or capitalised in agricultural land prices, delivering little more than private profit or too often is supporting unsustainable farming systems, stifling innovation and hampering competitiveness.'

It is open to question whether large farms do stifle innovation, particularly technological innovation. The tone of the report is very critical of the market economy and praises regulation. It may be, however, that some of its objectives could be achieved within a market economy, or at least by using market based policy instruments. The UK's track record at exercising leadership on the CAP, which is called for in the report, has not been impressive so far, despite valiant efforts to secure reform, in part because of the vested interests of member states.

The EU, Britain and agriculture

Defra has published the 'balance of competences' report on the relationship between the EU and Britain in the area of agriculture. At first glance there is a lot of 'x stakeholder says this' and 'y' stakeholder says that, but it will certainly repay further study. The full report can be downloaded here: Balance of competences

The executive summary states: 'The debate on EU competence for agriculture as set out in the evidence submitted was strongly supportive of EU competence in relation to the Single Market for agricultural goods and to the EU’s role in negotiating global trade deals for agricultural goods. In relation to the Common Agricultural Policy (CAP), there was a recognition that it had changed significantly from its post-war origins, particularly over the past 30 years. The most damaging and trade-distorting elements had been removed and the UK had played a significant role in driving reform.' In short, things have been worse, they have got somewhat better, we deserve a pat at the back for that and anyway there is no alternative.

The summary continues, 'However, respondents put forward evidence that, notwithstanding the reforms, the CAP’s objectives remained unclear and that the criteria for allocation of funding were irrational and disconnected from what the policy should be aiming to achieve. The majority of respondents argued that the CAP remains misdirected, cumbersome, costly and bureaucratic. Environmental organisations advanced detailed evidence about how historically, market intervention and direct payments had led to negative impacts on biodiversity and the farmed environment. The advent of agri-environment schemes had been beneficial across Europe and provided a regime for conservation that might not otherwise exist.' In short, this is a badly designed and implemented policy.

New farm minister owns wellies

Liz Truss is the second woman MP from South-West Norfolk to hold the post of farm minister. Her predecessor Gillian Shephard held the portfolio from 1993 to 1994. There has been a long line of agriculture ministers from East Anglia.

Farm leaders wanted to keep Owen Paterson in post, but a lack of wellies during the floods undermined his reputation. His tough line on the badger cull earned plaudits from farmers, but leaving aside opposition from wildlife campaigners and many scientists, the cull failed on its own terms, targets not being met. Paterson then rather unfortunately complained that the badgers had moved the goalposts.

Some commentators, such as the Spectator think that he was targeted by pressure groups. This view has been pursued by Paterson who argues that he was the victim of a powerful self-serving environmental lobby he termed the 'green blob': Green blob . The Economist suggested that he should never have been appointed in the fisrt place.

As far as Farmers Weekly is concerned, Truss does have one of the main qualifications for the post, her own pair of willies, white to judge from the accompanying photograph, thus appearing stylish while avoiding the green colour favoured by urbanites in the countryside. She also takes a hard line on badgers.

The real difficulty for any Defra minister, apart from the fact that most agriculture policy is decided in Brussels, is Defra itself. It is a real mish mash of a department, uncertain whether its main role is to reform the CAP, boost the rural economy (of which agriculture is an important but only one part) or protect the environment. No wonder it has already finished off two ministers, but Ms Truss may be made of sterner stuff.

Farmers and Scottish independence

Some farmers are passionate about Scottish independence out of personal conviction, but many are cool about the idea. They are uncertain whether it will bring the claimed benefits, particularly given the importance of English markets.

The Scottish National Party argues that Westminster has done a poor job of representing Scotland's farming interests in Brussels. As a result, they argue, Scotland has missed out on billion of pounds in EU subsidies. However, others argue that lower levels of per acre subsidy reflect the low farming value of much of the land in western Scotland.

Farmers account for just 65,000 people out of a total Scottish electorate of four million, but both sides in the referendum debate see them as opinion leaders in rural communities and exerting a influence in the key food and drink industry.

Meanwhile, both sides in the referendum debate are rushing to support EU 'protected geographical status' for Ayrshire early new potatoes. This status has already been secured for Arbroath smokies, Scottish salmon and Stornoway black pudding.

There is a broad income range in Scottish farms with the gap between the richest and the poorest farms amounting to £102,000. The bottom 25 per cent of farms saw a loss of £14,000 in 2013 while the top quartile averaged a farm business income (effectively net profit) of £88,000.

Green peas lead to row

New CAP rules require that large arable farmers ensure that five per cent of their land is set aside as an ecological focus area (EFA). The Government has caused controversy by deciding that one of the five options available to farmers to meet the crops will be planting nitrogen fixing crops such as field beans and peas.

Environmental groups argued that this would bring no wildlife benefits, while the RSPB branded the policy 'a wasted opportunity for the environment'. However, Defra minister Owen Paterson defended it in terms of the imperative of food security. For the NFU Meurig Raymond said that it represented 'a pragmatic solution to a very difficult situation.' In other words, smart lobbying by the NFU.

The oddities of the wine market

Jens Beckert, Jorg Rossel and Patrick Schenk at Cologne's Max Planck Institute have been looking at variations in the price of wine. Or more specifically, as the title of their paper states 'Wine as a Cultural Product: Symbolic Capital and Price Formation in the Wine Field'. For their study they analysed data from 110 wineries and 1,071 wines (it's not clear if they sampled any of them) as well as data on wine consumers in four German cities.

There are some real oddities in the wine market. Even expensive wines don't cost more than €10 a bottle to produce but, although chemically the same, a bottle of wine can cost 1.99 euros or 300 euros. 'These price differentials are justified by alleged quality differences between the wines. However ... it turns out that the price differences are largely unrelated to different production costs and to the sensual experience wine connoisseurs report when tasting the wine in a bland tasting ... even experts are not able to differentiate between wines based on objective characteristics and cannot rank wines according to their price'. Moreover, each time a new vintage comes along, the taste changes.

There are some generalisations one can make about price. Wines made of high status grape varieties (Riesling, Pinot) are usually more expensive. Dry wine is more expensive than sweet and semi-dry wine. Red wine is more expensive than white and rosé. Older wine is usually more expensive than that of a younger age.

Wine producers can develop symbolic capital that can be turned into profit. Wine producers that produce wines that are 'difficult' to drink because the consumer must first learn to appreciate them and 'work' on developing taste can accumulate such capital. This sounds like a formula for the consumer to be conned and a passport for pretentiousness - which does bring to mind an advert currently shown on British television in which a wine buff is mocked for such pretension.

It's an interesting paper, but there is relatively little about supply and demand which is always a key factor in any market, even one as unusual as that for wine.

Cows to get climate change fix

If it was April Fools Day one would think this was a joke, but a White House climate change initiative is searching for a 'cow of the future' whose greenhouse gas emissions would be cut by anti-methane pills, burp scanners and gas backpacks.

Methane is a particularly potent greenhouse gas with a global warming effect that is twenty times greater than carbon dioxide and cows emit a lot of it. A typical cow emits 250-300 litres of methane a day. The 88 million cattle in the US produce more of it than landfill sites, natural gas leaks or fracking. However, contrary to a common misconception, 97 per cent of the methane gas is released by the front end through burps, not through emissions from the back end.

Supplements such as basil can cut methane production in cows. In Argentina, scientists have created backpacks that collect gas via tubes plugged into cows' stomachs. That sounds as if it would raise animal welfare issues to me.

Climate change report emphasises food supply effects

The latest UN report on climate change emphasises food supply effects: Climate change.

The report argues that climate change has negatively affected wheat and maize yields both regionally and on a global basis. The effects of climate change on two other important food crops, rice and soya beans, have been smaller in the most important producing countries. There may be some positive effects on crops in cooler climates in future. However, the overall outlook for wheat, rice and maize production in tropical and temperate regions is expected to be more negative than positive.

The last assessment by the UN's Intergovernmental Panel on Climate Change in 2007 was more sanguine about how climate change was impacting on food production. Unfortunately, the suggestion that the CAP might incorporate a climate change pillar was rapidly dropped in the last set of reform negotiations.

The politics of grains

Few commodities are more politicised than grains. They were the first products to be covered by the Common Agricultural Policy. The US has run export subsidy schemes for them in the past. International trading houses like Cargill are involved.

Fear has gripped the wheat market with prices soaring as investors buy against the backdrop of the crisis in Ukraine. Concern about freezing weather in major growing areas in the US has also helped to push up prices by about 20 per cent since the end of February. Ultimately this could boost inflation by affecting prices of goods in the shops.

The so-called Black Sea grain region of Russia, the Ukraine and Kazakhstan accounts for a fifth of world exports. Exports from this area are particularly important in North Africa and the Middle East.

In the longer run, production in Ukraine could be affected by higher prices for inputs because of the weakness of the hryvania and difficulties for farmers in accessing finance. If Russian tanks actually came charging across the steppes of eastern Ukraine, even more disruption would occur. On the more positive side, exports of Ukranian wheat to Europe could increase.

In Britain, 'Nimbys' are using food security arguments to reinforce their case against building on 'green belt' farmland. However, it is important not to panic. Global production forecasts are of 700m tonnes, only slightly down from 709m in 2013/14.

Commodity prices under pressure

Commodity prices in agriculture are facing upwards pressure. It's nothing like the price spike of 2008, but the bearish mood that prevailed at the end of last year has disappeared. The structural pressures of increased demand and little effective increase in supply rate remain in place, even if the rate of growth in Chinese demand has weakened as the economy slows. Stocks are relatively plentiful, but demand from emerging markets is increasing.

In some cases, weather has been a factor. Dry weather has affected sugar production in Brazil, and there are concerns about dryness in India and Thailand, two leading producers. At the same time the sugar reform in the EU has had an effect. Sugar beet producers do not withdraw too hastily as it is a good break crop and they have sunk cost investments in the crop, but a 9 per cent fall in production is expected this year. Farmers in East Anglia have been complaining for some time about reduced margins. Cocoa prices have risen in anticipation of an El Nino effect in West Africa later this year.

Rising global demand is sustaining dairy prices, although the impending end of quotas in the EU may boost production and push them down again. Coffee has seen particularly big rises because of drought concerns in Brazil with prices of higher quality beans up by as much as 70 per cent. These may filter through to consumers by the end of the year.

Any price increase is particularly a concern in developing countries where food forms a much larger part of household budgets, but under conditions of austerity and reductions in real wages, consumers in developed countries are also very sensitive to food price inflation. In Britain, hard discounters such as Aldi and Lidl are undercutting mid-market retailers like Sainsbury's and Tesco. More up market retailers like Waitrose are less vulnerable, while good performance by the food arm of Marks & Spencer has offset disappointing returns in clothing.

Yes, we have no bananas

The famous song of this title dates from 1923: Bananas. Bananas have been a hot topic in agricultural trade negotiations: I have a book on the subject on my shelves. They are an enjoyable fruit which provides an energy boost and are the biggest fruit of the planet in terms of production volume. During the Second World War they were not imported and youngsters didn't know how to eat them when they first encountered them. I can remember them being on ration.

Bananas have been controversial because they are largely produced in the Global South and exported in large quantities to advanced countries (although most of them are consumed in the producer countries or nearby). The trade has been dominated by a few large companies and margins for producers have been squeezed. There are also big fungus disease problems on the horizon, although mainly confined to Asia at present (also fortunately it is not wind borne and scientists are attempting to find means of control). The EU only produces bananas in relatively small quantities in Greece and the Canary Islands.

Now there has been a back to the future deal in terms of a merger between Chiquita of the US and Dublin-based Fyffes. The latter company dates from the late 19th century when it was set up to grow bananas in Jamaica for the British market. After hurricane damage, it was bought by the US-based United Fruit Company, but they got into trouble after their involvement in the Guatemalan coup in 1954. That didn't stop them sending their banana boats to help in the disastrous Bay of Pigs invasion of Cuba in 1961.

United Fruit was taken over by United Brands in the 1970s and changed its name to Chiquita. Fyffes was sold to Fruit Importers of Ireland in 1986. Chiquita has tend to focus on margins and quality, while Fyffes has been more of a mass market brand. Now they have come together in a $1 billion dollar merger designed to address declining profit margins. The new company will be called ChiquitaFyffes.

European retailers are increasingly using bananas as loss leaders and forcing producers and distributors to absorb wholesale cost increases. The Fairtrade Foundation has warned that the merger is like to squeeze producers further, although it will account for only 14 per cent of the world market, but 30 per cent of the European market. No challenge on competition law grounds is thought likely.

Is milk white gold?

There is currently a supermarket war going on using milk as a loss leader. Farmers have been reassured that it will not affect the price that they are paid, but some are concerned about the treatment of liquid milk as a commodity. With the impending lifting of quotas, many EU farmers, not least in the Netherlands, are planning expansion. But in a world that could be awash with milk, despite increasing demand in China, milk could turn out to be 'white gold' but fool's good.

Moreover, any country expanding its production will be up against New Zealand which has an ideal climate for dairy production and years of accumulated expertise in production and marketing. But is New Zealand really the Saudi Arabia of milk?

A recent report in the Financial Times struck a note of caution: White Gold.

The Pink 'Un noted that since 1980, the dairy herd has more than doubled to 6.5m cows while the number of sheep has halved. At least 300,000 hectares of land has been transferred to dairy use from other types of farming and forestry over the past decade, causing a jump in agricultural land prices. The dairy industry is driving the boom in capital investment with NZ$1bn dairy plants under construction along with other spin-off infrastructure projects.

But there are risks in being so dependent on a single sector which now accounts for almost a third of total exports, particularly when it is a commodity. It makes New Zealand look like a modern version of a company town. Some see parallels with Ireland before the financial crash with an economy based on debt and credit, low savings rates and current account deficits. Irish dairy farmers prospered under the CAP, some of them building new mansions with porticos. They survived the crash with the CAP providing a safety net which Kiwi farmers do not have.

Different versions of food futures

Earlier this week I went to a very interesting workshop on future global food systems. As is inevitably the case, two different versions of the future emerged.

One view is that in order to feed a growing world population (of which anything between 1 billion and 3.5 billion are under nourished and 0.83 billion underweight) we shall have to continue to rely on intensive systems of food production and make greater use of new technology.

An alternative view, which was developed rather more in the discussion, was that we were going to hell in a handcart and the present system of production is unsustainable in terms, for example, of the demands it is making on soil and water and its contribution to climate change. We rely on too narrow a range of plant and livestock species and overlook crops which could be safely grown several times in one year (although whether people find some of these crops palatable is another question).

Of course, how one moves to a different system is a more challenging question and it struck me that there was an element of naivety in some of the suggestions put forward. Urban agriculture such as growing mint in a suburb of Rotterdam may have educational benefits, but it is not going to start to feed large cities. If diversity is the enemy of capitalism, as was argued, how is one going to get round that given the structural and lobbying power of big business? How can one cope with the power of supermarkets which tend to make cosmetic changes in their offer to reflect concerns? One answer that was suggested was to convert consumers into citizens in relation to food, but that has its challenges.

I would suggest that sustainable intensification offers a possible way forward. I know that it is greeted with scepticism both by environmental lobbyists, who see it as a stalking horse for GMO, and by farmers who tell me that they don't understand what it is. What it involves is an acknowledgment is that we are going to have continue with intensive farming (although not everywhere) but it has to be done in a more sustainable way by using inputs in a much more careful way. Drone technology, for example, opens up new possibilities in precision farming, making it possible to avoid the over use of fertilisers.

One also has to recognise that business is not a homogeneous entity signed up to a common agenda and that some businesses are concerned about the possible impacts of unmitigated climate change, notably the insurance industry which plays a key role in the Aldersgate Group which is a coalition of businesses, NGOs and others: Aldersgate .

Where I would agree with many of the speakers is that the analysis of power relations is of crucial importance in understanding how systems of food production operate.

So, farewell then, CWS Farms

Faced with a £2 billion deficit, the Co-op is to sell off its farms. The group now regards them as 'non-core' and thinks that they distracted from its other activities. Most of the farms are arable, although there is also some soft fruit production.

Now is a good time to sell as farmland prices are rising and these are good farms in attractive locations which have been well looked after, although there have been some expressions of concern that their arrival on the market may depress prices (but I think that is unlikely). There are still individuals with £30m or more in cash willing to buy farms in the UK. They could be worth £350m, although presumably would be sold separately. Some of the farms are thought to have development value. They are located in Cambridgeshire, Gloucestershire, Herefordshire, Leicestershire and Yorkshire. There are also farms north of the border in Aberdeenshire and Perthshire.

CWS was, I think, Britain's biggest farmer, certainly after Sentry Farming disappeared from view, although there are other contract farming companies, notably Velcourt: Velcourt . Farmers Weekly commented in an editorial that 'The C0pop's exit from farming is in part an acknowledgment of the high capital requirement of modern commercial agriculture relative to the returns.'

The CWS owns 15 farms that cover 19,830 hectares (49,000 acres). Only 2 per cent of production ends up in the Co-op's own supermarkets, with cereals sales to bread manufacturers accounting for 70 per cent of production. The Co-op has owned farms since the 19th century and had argued that they provided an edge over its competitors as consumers were becoming more concerned about the provenance of food (in practice only some consumers).

When I was growing up in London in the 1950s we got virtually everything from the Co-op from milk and bread to clothes. The return for customers was a declining 'divi' whilst the stories failed to modernise as competitors strengthened their offer. The Royal Arsenal Co-operative Society, then the biggest in the country, was known locally as 'Rob All Customers Slowly.'

Transatlantic trade talks hit trouble over agriculture

The US-EU trade talks are running into trouble on a number of fronts, but predictably agriculture is proving to be a particularly difficult issue. The farm lobbies on both sides of the Atlantic are active and influential and the EU feels a need to respond to the concerns of its citizens on such subjects as GM crops and hormone-raised beef. For its part, the US sees this as protectionism under another guise.

Food safety is an area where there is a particular gap with the EU sticking to the 'precautionary principle' which can justify intervention in the absence of much in the way of hard scientific evidence while the US has a more lenient 'risk assessment model' which only bans products if there is a known risk. The EU is about to approve a GM strain of corn/maize, but that is after a decade of debate and six scientific studies. It remains to be seen how much is actually planted.

The fundamental problem is that the public in the two entities have different attitudes on issues of this kind and these are difficult to overcome, particularly when the EU is engaged in a constant search for democratic legitimacy and popular support. Standing up to big US corporations marketing allegedly dangerous products and processes is one way of doing that.

Large farms may abandon basic payment

It is being reported that some large arable farms are considering abandoning the basic payment (the successor to the single farm payment) because of the 'three crop' rule: Three crops

I do think that this rule is a typical example in the CAP of a possibly laudable objective leading to a policy instrument that is deficient. It arose out of a desire to curb the landscape and biodiversity effects of monoculture. However, at one time there was an implicit view in the EU that some parts of member states would be farmed in a way that maximized productivity. Requiring farmers to grow three different crops undermines this and, in my view, is an unwarrantable intereference in their freedom to make their own commercial decisions. I would also question whether it really achieves that much in the way of 'greening'.

Whether farmers would give up the basic payment is an interesting quetion. It can be a very substantial amount for some large-scale arable farmers, but others receive relatively small sums. However, in many cases it is the difference between making a profit and making a loss. The real hope must be that some progress will be made in reducing the impact of this policy instrument.

Adapting farming to climate change

One of the predictions of climate change is that extreme weather events will increase in frequency and although one has to be careful about generalising from a particular weather pattern, there is some evidence to support that hypothesis given the wettest winter in the UK for 250 years. It would seem that additional warmth is being absorbed in the oceans. It is not so unusual for the Atlantic to be a storm factory at this time of the year, but the destination of the storms is changing with the jetstream diverted south.

There is a growing recognition, even on the political right, that denial is no longer plausible and that one needs an intelligent discussion about policy options: Talking about the Climate

In particular there are questions about how one can sustain productive farming under these conditions in such areas as the Somerset Levels. Adapting to the particular features of the local climate is important and here is a good example from the Isles of Scilly: Churchtown Farm

Agri-environmental schemes after 2014

Not everyone's topic, but if you are affected in any way or just interested there is some useful information here, courtesy of the excellent RELU Landbridge project: Agri-environmental schemes

Agricultural policy outside the EU

Whether or not the UK will leave the European Union remains to be seen, but it is a sufficiently serious prospect for it to be worth thinking about its implications for agricultural policy.

What one would probably have is a continuation of a version of the CAP at the national level. One of the constraints here is that the UK would still be a member of the World Trade Organisation and any agricultural subsidies it provided would have to be compatible with WTO rules. Indeed, it could be argued that recent changes to the CAP have been driven too much by the need to provide subsidies in a form that can demonstrate that they are compatible with the 'green box'/non-trade-distorting requirements of the WTO. Hence, the policy instruments may have been influenced too much by that requirement.

Within the discussion of the 'balance of competences' review of the CAP, one issue is how much 'renationalisation' there has been of the CAP. Certainly, there has been quite a considerable amount of recoupling which gives quite a lot of discretion to member states or their regional governments, but the basic principles of the CAP remain intact.

In any case, some would argue that the term 'renationalisation' is an inappropriate or old fashioned one. What has happened rather is the maintenance of a common policy design with national flexibility in policy implementation. Some argue that as the goals of the CAP have become more complicated, and in particular taken on a greater public goods/environmental emphasis, there has been a recasting of the form of the CAP (although it is possible to exaggerate the extent of this). What this requires is policy instruments that allow diversity of implementation in member states (but not to an extent that would satisfy Eurosceptics). It is, however, worth bearing in mind that a lot of policies affecting agriculture are nationally determined, particularly taxation and inheritance law and planning regulations.

It may be that the CAP can be characterised as a means of tackling the market failures associated with land management (but arguably a rather inefficient means of doing so). However, for some member states the occupation of land could be a key objective to prevent rural depopulation and secure the ecosystem benefits of farmed land.

One also comes up against the problem of a low level of competence in effective policy design and delivery. That is not a problem confined to the CAP, but is a general challenge for the EU and for member state governments, but it is particularly evident in relation to the CAP.

Cost of farmland likely to continue to rise

Knight Frank's farmland index reported a 7 per cent increase in prices in 2013 to reach an average of just under £6,700 per acre, and further growth is expected in 2014. Large blocks of investment grade arable land now regularly sell for over £10,000 an acre in the UK. In the past ten years, average values have increased by 22 per cent. This compares with a rise of 58 per cent for the FTSE 100 and 132 per cent for prime central London residential property.

Investors favour farmland because of its stability and tax incentives. A shortage of supply is also driving up prices, while growing global demand for food makes it an attractive long-term investment.

Mind the gap

HSBC head of agriculture Allan Wilkinson has drawn attention to the gap between returns from the market and costs of production, particularly in livestock enterprises. For beef the cost of production is £3.20/kg liveweight compared with a market price of just £2.10 so that only 60-70 per cent of production costs are recovered from the market. It costs £2.30 to produce a live kilo of lamb while market prices are at £1.75-1/85 kg lw. Thus, only 75 per cent to 80 per cent of production costs are met by the market.

These are, of course, average production costs and Mr Wilkinson emphasised the gap between the best- and poorest-performing farm businesses. He warned that unless the gap between the cost of production and returns can be closed, the size of the red meat sector will fall further and the industry will continue to decline.

Once again these figures show how dependent important sectors of British agriculture are on CAP subsidies which are bound to decline in the long run.

What do we mean by food security?

Food security has been a dominant element in recent debates on agricultural policy, not least the recent discussions on CAP reform. But what do we actually understand by food security? There are a number of standard definitions out there, but in fact various actors interpret the term for their own purposes. An important article in Food Policy by Jeroen Candel, Gerard Breeman, Sabina Stiller and Catrien Termeer, identifies six different interpretations or 'framings'.

Not surprisingly, the productionist and environmental frames were dominant, accounting for nearly 70 per cent of uses. Anyone who has followed the CAP debate is familiar with the productionist frame. It is the stock in trade of those who advocate a 'business as usual', 'more of the same' CAP. As the authors note, it 'revolves around a story line that considers food security as one of the key goals of a future Common Agricultural Policy.' World food crises increase the salience of this frame.

The policy conclusion that is drawn is that the CAP should maintain 'a strong first pillar.' Agricultural production and productivity should be stimulated, 'and should be considered as a form of public goods provision, for which a financial compensation is justified.' [Needless to say, I think that this is a spurious argument, but it is certainly widely deployed].

Whilst the productionist frame is the dominant one, the environmental frame accounts for almost a third of all uses. This is of itself interesting as such a prominence would not have been achieved fifteen or twenty years ago and shows how the debate about the CAP has been 'greened'. The provision of environmental services is seen as an integral part of European food production and the emphasis is on long-term sustainability which cannot be achieved by the continuation of current policy.

Interestingly, the third most used frame is the regional one which shows how the notion of food security can be appropriated for a range of purposes. I see this as a very political frame in the sense of securing benefits for a particular set of actors. The argument here is to look after less developed regions which it is argued cannot produce at world market prices. Farmers in these regions perform an important function as caretakers of the countryside. The Scottish Highlands and Islands are a good example. Although a continuation of the CAP is supported, the present distribution of funds is seen as unfair.

The free trade frame argues that food security is best achieved by free trade. The development frame critiques the impact of the CAP on developing countries. The food sovereignty frame offers a radical critique of traditional conceptions of food security and focuses attention on people's right to food. Historically, notions of equity did feature in the debate in terms of closing the gap in the standard of living between rural and urban areas, but this framing covers both consumers and farmers and is underpinned by notions of global solidarity.

Interestingly, the European Commission uses multiple framings, invoking various frames simultaneously. My take would be that various interpretations of food security can be utilised to justify whatever line the Commission has chosen to take. The consequence, the authors argue, is that a clear vision of the relationship between the CAP and food security is lacking and policy makers may need to develop a more coherent vision [although I would add that CAP decision-making processes rarely facilitate clear strategic thinking].

Not only is this article a very useful, empirically based overview of how the term 'food security' has been used in policy debates, it also provokes thought about where we might go in the future.

Farmland attracts institutional investors

There is nothing new about farmland attracting institutional investors. There was a surge of interest in the 1970s when it was seen as an asset that would hold value in inflationary times. However, there is a new wave of interest. The UK's £14.9bn Pension Protection Fund has recently appointed a farmland manager. In the US, TIAA-CREF had built up a $4.4bn portfolio by July 2012, encompassing more than 800,000 acres across four continents.

What's the attraction? It gives exposure to commodity prices as well as the return from production. Demand for agricultural commodities is growing as developing countries become more prosperous while supply is constrained by such factors as the availability of land and an assured water supply. Investing capital in, for example, machinery or irrigation could drive up the value of the asset as well as returns.

The downside is that this is not a liquid asset. Investment has to be for the long term. Yields can be impacted by weather events, the uncertainty and magnitude of which could increase with climate change. There are also political risk issues associated with subsidies, trade regimes and tax structures.

What is required is specialist knowledge of the sector. It is important to focus investments in locations that have good soil quality, reasonable infrastructure and access to the markets where growth is occurring. Many investors have been attracted to Australia for those reasons.

There are also potential ethical problems. Swedwatch has criticised Sweden's national pension fund AP2 for a lack of transparency on its Brazilian farmland investments: Swedwatch . It suggests that there may be serious negative impacts on the environment and human rights. Common problems include high use of pesticides, poor working conditions and a loss of biodiversity.

Can Doha lite succeed?

As trade ministers gather in Bali the question is can a 'Doha lite' agreement be concluded to rescue something from the Doha Round of trade negotiations? Or will agreement once again be foiled by arguments over agriculture?

The developing world will still want the US and the EU to stop export subsidies for their farmers, although those paid out by the EU have shrunk away to a fraction of what they were: Export subsidies . Cotton farmers in Africa will still demand better access to the American market and a reduction in domestic subsidies. Sugar cane growers in Australia and Brazil also want better access for their products.

However, the real sticking point could be Indian insistence on rewriting the rules of the WTO on food security programmes. A 'peace clause' was agreed, intended to give another four years to negotiators to come up with new WTO rules for farm subsidies and the prices paid for staples bought as part of government programmes to supply food to the poor. 70 per cent of the Indian population is covered by such programmes which have recently been extended by legislation and there is a general election due next year. It now appears that India wants the clause to be permanent or at least apply until a final deal is concluded.

Decline in meat eating claimed

A quarter of the British public say they have cut back on the amount of meat they eat over the past year, new research for the Eating Better alliance revealed today. Only 2% say they are eating more.

The YouGov survey of the British public (1) commissioned by Eating Better found around one in three (34%) say they are willing to consider eating less meat, with a quarter (25%) saying they have already cut back on the amount of meat they eat over the last year. Ready meals, and processed meats are most likely to be off the menu. Eating Better says this suggests the public remain wary, following the horsemeat scandal, of cheaper meats that are likely to be less healthy, of unknown origin and poorer quality.

Concern for animal welfare topped the reasons for considering eating less meat, ahead of saving money, food quality/safety and health. The survey found a large increase in awareness of the significant environmental impacts of producing and eating meat from just one in seven people (14%) in a YouGov survey for Friends of the Earth in 2007 to nearly one in three (31%) in 2013.

The most dramatic change has been in young people (aged 18-24) where there has been a five fold increase in awareness from just 8% in 2007 to 40% today. Young people were nearly 3 times more likely to say they don’t eat any meat at all – compared to the survey’s average – with one in six (17%) of young people saying they don’t eat any meat. Despite rising food prices, around half those surveyed said they would be willing to pay more for ‘better’ meat if it tastes better, is healthier, produced to higher animal welfare standards or provides better financial returns to farmers. Willingness to pay more was not restricted to higher (ABC1) social grade groups.

What the survey does not make clear is by how much people have cut back on the meat they eat. However, it is not good news for the hard pressed livestock industry.

The promise of precision farming

It has been estimated that the use of precision agriculture technology could increase yield on any given farm by about 10 per cent, compared with average global annual crop yield increases of about one per cent. Tractors that map fields, drive themselves and precisely calibrate their movements to within inches to minimise wasted fuel, fertiliser or seed are increasingly becoming a standard piece of kit.

Auto steer has been around for about 15 years, but the focus is increasingly on remote sensing and data collection on the dozens of variables, from soil moisture to nutrient levels, that influence success in modern farming. Agricultural companies are trying to make better use of the vast caches of data that farmers generate in areas such as yield and soil mapping, although some farmers have privacy concerns and want to limit the amount they share with big companies.

Monsanto recently spent nearly $1bn acquiring data science company Climate Corporation. Companies clearly see commercial opportunities in relation to climate change, but there is controversy about whether weather derivatives have the market smoothing effect that is claimed for them: Climate data

The final shape of CAP reform

A rural surveyor takes a look at the final shape of CAP reform, noting that, as always, the devil is in the detail with many points of implementation still to be resolved: CAP reform

He also notes the different perceptions between the UK and other member states with the reform being seen as a missed opportunity here and a substantial achievement elsewhere.

Subisdising oil seed rape

The threatened reduction of oil seed rape subsidies for biofuel from 10 per cent to 5 per cent is concerning some farmers who say that it will no longer make economic sense to grow the crop. Of course, one might ask whether such a market distorting subsidy was sensible in the first place which is why the UK and other member states such as the Netherlands would like to see it reduced.

However, for farmers on heavy land in particular oil seed rape has great advantages as a break crop. There aren't that many alternatives. Peas are very sensitive to weather conditions, particularly rain, and the returns on sugar beet are not that good.

Oil seed rape is also favoured by beekeepers as it flowers early in the season and produces plenty of pollen.

Why farmers have to hedge currency risk

One hundred years ago in 1913 the weather was also warm for the time of year with people claiming that it was too hot to play football. It all ended in a big thunderstorm here in the Midlands. According to a Farmers Weekly poll, the overwhelming majority of farmers still think they have been hit by the weather last winter and the wet and cold spring, the second in a row. I have been growing tomatoes in my greenhouse for over thirty years and this is the worst year I can remember (and, of course, I don't get a SFP!). In these circumstances subsidy payments become more important to farmers to maintain their cash flow.

Along with the uncertainties of the weather, farmers also have to face currency risk. Indeed, some of them follow the forex market as keenly as they keep an eye on the weather. The recent rally by sterling is not good news for farmers as September 30th is the day when their farm subsidies are translated from euros into pounds. (From next year it will be calculated as an average for the month). The pound has gone up by about two per cent since May when they submitted their claims.

A growing number of farmers are resorting to hedging their currency risk. According to Alick Jones, agriculture policy director at Lloyds TSB, about a third of their clients in receipt of the single farm payment hedge their currency risk. However, the Royal Society for the Protection of Birds, which receives £1m in subsidies as a big landowner, doesn't follow this practice.

It was interesting to read in yesterday's Financial Times report on this topic that on one 450-acre livestock farm in Anglesey, the single farm payment of about £30,000 represents about 40 per cent of profits. In the long run, such a dependence on subsidies cannot be healthy, as many farmers themselves recognise, but for now they are an integral part of the business model.

Farm subsidies up again across the world

A long-term trend towards a decline in farm support was reversed in 2012 according to the Organisation for Economic Cooperation and Development (OECD): OECD Report

This is perhaps a surprising development, given that government budgets are under pressure and farm subsidies offer a possible, although well-defended target. However, the OECD noted a particular trend towards increasing support in countries that emphasise self-sufficiency and they think that this has a poor relationship with food security.

This is a concern as self-sufficiency has been raised again recently in the UK debate by the NFU. Admittedly, there has been a decline in self-sufficiency in indigenous food between 1984 (95 per cent) and 2012 (76 per cent). (When foods from non-temperate climates are added in, the figure drops to 62 per cent). One might ask what the relevance of this is given that the UK operates within the CAP, but if the UK was to leave the EU this kind of discourse might become more relevant.

Admittedly, the overall increase in subsidies was 1 per cent, but that masked some sharp increases in emerging countries: 4 percentage points in China to 17 per cent of total income; 6 percentage points in Indonesia to 21 per cent; and 4 percentage points in Kazakhstan to 15 per cent. Norway provided the largest level of farm support with a 63 per cent share, up four percentage points. Switzerland, Japan and Korea were all over the 50 per cent of farmers' income level.

Farm support in the EU was consistent with the general trend, rising from 18 per cent to 19 per cent of farm incomes.

The search for a British baked bean

I spent an enjoyable afternoon at the Warwick Crops Centre (formerly Warwick HRI) Open Day at Wellesbourne yesterday. In part this was because of the opportunity to catch up with former research collaborators (and hopefully future ones), but there were also many interesting exhibits and a good crowd in attendance. My overall impression was that the Crops Centre is now in a more stable position than it was and able to make a real contribution to the need for applied research in agriculture that is of value to farmers and growers.

I was particularly interested in the exhibit of growing haricot beans. Baked beans are a staple of the British diet and they are very nutritious, although possibly they could be prepared and cooked in more interesting ways than being doused in tomato sauce (having said that, I do eat them in that format). At one time production was centred in Michigan, but we now mainly import them from Canada.

They are difficult to grow in the UK because they are sensitive to cold. Some twenty years ago work was done on a British variety of 'navy' bean (I'm not sure where the terminology comes from) but then the funding ran out. However, with a new emphasis on food security, BBSRC has come up with some funding for the work to continue.

Two types of bean were being grown, one that is disease resistant and one that is cold resistant. One of the varieties was white rather than the usual colour which would require some re-education of consumers. The hope is to combine these to produce a bean that is both cold and disease resistant which could then be grown in the UK. How economic this would be, even with an improved variety, is an open question. The plants seemed to be smaller than their counterparts in Canada.

Nevertheless, it is an excellent example of applied research and you can read more here: Baked beans

Can Scottish farmers be weaned off subsidies?

One of the claims being made in the Scottish independence referendum debate is that if Scotland had a seat at the negotiating table, its farmers would get much more way in the way of CAP subsidies. But is such a dependence on subsidies desirable when English farmers are being urged to orient themselves towards the market? This provocative piece from a New Zealander suggests that it can become tantamount to an addiction: Subsidies

Of course, as the writer recognises, farming in the remoter parts of Scotland faces special challenges, but these are better tackled under the umbrella of a rural development/remote areas policy rather than through blanket subsidies. Moreover, the treatment of the Highlands and Islands has not been ungenerous, particularly when compared with England's isolated Scilly Isles, a subject I have been tackling in a series of articles for Scilly Now and Then. The magazine's website is here: Isles of Scilly

China's new line on corn imports could affect world market

Changes in supply and demand patterns for food in China can have important implications for world markets. Even a small increase in Chinese imports can influence world markets in which there is a tight balance between supply and demand, as well as offering new export opportunities for farmers. Many of these decisions are politically determined and there appears to be a significant change in the line of the central authorities on corn (maize) imports recently.

Since 2001 when China lowered its import barriers, a policy of self-sufficiency has been followed in relation to corn, rice and wheat with imports kept to a minimum. In contrast the soyabean market was opened up to imports to release land for the key staples. China has become the world's largest importer of the oilseed, representing 75 per cent of global seaborne trade.

Last year China's agriculture minister Han Changfu said that corn 'should not become the second soyabean.' Recently, he has modified his line, saying that corn imports would have to increase gradually to meet demand for animal feed which in turn reflects growing prosperity and higher levels of meat consumption. It appears that China envisages importing 20-30m tonnes of corn a year, the lower figure representing 10 per cent of consumption. While China's grain output is at record levels, there are evident strains with urbanisation using up farmland and problems with water supplies.

China does not want to be solely dependent on the US and is encouraging exports from Argentina and the Ukraine.

Finance for farmers

Back in the 1990s I was involved in a research project led by Will Coleman from Canada which looked at how farmers got their finance. I interviewed all the clearing banks in Britain and Ireland, plus a specialist institution called the Agricultural Mortgage Corporation which was set up by government in the 1920s but by then was being absorbed into the private sector.

The general pattern was for banks to have a specialist agricultural manager at head office who, with local managers, kept in touch with the farming community. Farmers were seen as a very safe bet. They rarely defaulted and, even if they did, you ultimately had the land as an asset, although banks were very reluctant to foreclose. In many ways it was a very traditional form of banking. A relative who is a farmer was tipped off by his bank manager about a suitable farm to buy to diversify his business.

There's still plenty of need for finance for land and capital equipment. Those who inherit a farm sometimes have to buy out siblings. They may also want to buy additional areas of land to secure economies of scale. Finance is important if agriculture is to meet the challenge of increasing and more sophisticated demand and relatively finite supply, particularly of land suitable for farming. Food production will need to rise by at least 60 per cent by 2050 to feed a rapidly growing world population that is increasingly able to demand more resource intensive foods such as meat which create additional demand for animal feed.

However, since the financial crisis banks have been cutting their loan books, while the price of land continues to rise, stimulated by the availability of subsidies, good long-term demand for food, tax breaks and, in parts of the UK, the dual use of farms for sporting purposes. However, new types of finance provider are emerging like Aquila Capital of Hamburg.

Aquila actually buys equity stakes in a farm which could be as much as 70 per cent. However, they claim that it works more like a debt. They receive a guaranteed 3 per cent a year, although there might be circumstances in which the farmer had to borrow to meet this requirement, increasing the debt burden. The farmer receives the next tranche of income and the remainder is split 70-30 in Aquila's favour. It is envisaged that such investments will yield pre-tax, post-free returns of 5-7 per cent a year which are attractive in current circumstances. Savings accounts are typically paying less than 2 per cent and relatively few companies pay dividends above 5 per cent (and may not be able to sustain them). 4 per cent would be a good return on an income fund, although you should be able to get over 5 per cent from a peer lender, depending on how much risk you might be able to take.

Whether it is a good deal for farmers is an interesting question, but needs must. Aquila also claim that after 15 years or so farmers will have accumulated enough capital to buy them out.

The capping controversy

A full and very informative blog post here, although the English is a little stilted in places: Capping

I would just make a couple of points. First, it is always possible that businesses could be split into distinct legal entities to avoid the rules. Second, the last paragraph of the post points out that many wealthy estates benefit from large CAP subsidies.

However, this brings us back to the question of what the CAP is for. If its main objective is to help poor or marginal farmers, it is an inefficient means of doing so. (Actually, there are probably at least two objectives here, one an income distribution objective and one a rural landscapes/depopulation objective).

If one, however, one thinks that the CAP should be helping European farms and food processors to be globally competitive, larger farms are, in general, more efficient (and often more environmentally conscious and aware of animal welfare needs).

Devolution and agriculture

Devolution raises some tricky issues about who can do what and this interesting and informative blog post looks at a dispute involving the Welsh Assembly Government and the Westminster government that has gone to the UK Supreme Court: Devolution

Getting agreement on CAP is near impossible

Reflecting on the outcome of the CAP negotiations, NFU president Peter Kendall is critical of the decision-making process, saying that it is near impossible to reach agreement: Kendall. He makes a good point, but how could one start to change it, given the range of interests and institutions that have a stake in the way decisions are made?