Geographical indications become a Brexit issue

The basic idea behind geographical indications (GIs) is to prevent a domestic producer giving a name to their own product that gives the impression to consumers that it comes from the protected region covered by the GI, e.g., Parma ham. It is seen as a means of preventing the public from being misled by producers jumping on the bandwagon of a successful GI and also to prevent unfair competition.

The EU has been favourably disposed to GIs because it sees them as a means of encouraging high quality, value added food production in the EU which will increase returns to farmers. This has led to some conflicts with producers elsewhere in the world, e.g., with the United States over Parmesan cheese.

The EU has over 3,300 protected food and drink products which have a specific geographic origin. Sales of protected labels account for some six per cent of the EU's food and drink sector. The products are sold on average at a price more than two times higher than similar non GI products.

In the Brexit report from the Yorkshire Agricultural Society we did consider GIs, but in terms of continuing protection for British products such as Orkney cheddar cheese and Cornish pasties.

However, in one of its latest position papers the EU is demanding that Britain should legislate to recognise products such as Champagne, Parmesan and Beaufort cheese after Brexit. Such protection should be comparable with that provided by Union law: Position paper

Migration plans would hit farming hard

The plans for migration control after Brexit set out in the draft government paper leaked yesterday would hit farming hard, particularly the field vegetable and horticulture sectors which are labour intensive and rely on seasonal labour from elsewhere in the EU.

Under the Government's plans low-skilled workers wanting to stay more than three months would have to register with the Home Office. The National Farmers Union claimed that the plans would cause 'massive disruption to the entire food chain'.

The Government seems to have disregarded the arguments put forward by farmers, claiming that the shortage of labour can be dealt with by recruiting from the local labour pool and new technology. In practical terms we are near full employment, particularly in areas where fruit and vegetables are grown, and those workers that are available often lack the aptitude to tackle the work on offer. As for a shortage of labour becoming a spur for new technology, there are limitations here, particularly in terms of easily damaged fruit. I will look at this issue in more detail in a subsequent post.

There is some evidence that even Brexit voters are relatively relaxed about seasonal workers coming in for a time limited period. If voters found that fruit and vegetables were more limited in supply and more expensive to buy, they might start to question the wisdom of the Government's approach. The issue could readily easily by dealt with by a new version of the Seasonal Agricultural Workers Scheme, although the fall in the value of sterling continues to make the UK a less attractive destination for seasonal workers.

New aide has remain background

Former deputy chief whip and remain supporter Sir John Randall has been appointed as special adviser on the environment to Theresa May. Sir John was formerly the MP for Uxbridge and South Ruislip. In 2015 he stood down in favour of Boris Johnson.

It is expected that he will play a key role in shaping future government policy for agriculture. He is seen as an antidote to the pro-Brexit instincts of Defra secretary of state Michael Gove.

Farmers have been complaining that Gove's energetic interventions are just intended to raise his political profile, but if farming does better as a result, everyone is a winner. However, some farmers consider that he is paying too much attention to conservation and wildlife interests.

Hard Brexit threat to farm exports

Campaigning organisation Open Britain claims that agriculture could suffer if existing trade agreements with the US are lost as the result of a hard Brexit: How trade could be derailed

19 trade agreements could be lost. Exports including beef, lamb and oilseeds could face new trade barriers. It is argued that these agreements will be lost once Britain leaves the EU unless the UK can negotiate new deals with the US, or negotiate to remain within the EU-US agreements, which in my view is not very likely. As far as a trade agreement with the US, the Americans are likely to want concessions on agriculture.

The agreements include food safety and animal welfare standards covering beef and pork as well as concessions on cereals and oilseeds.

Ireland position paper raises more questions than answers

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

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

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

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

The New Zealand question

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

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

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

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

The case for small farms

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

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

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

Migrant labour supply problem worsens

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

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

Farming tomorrow

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

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

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

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

A new and lasting food governance

Tim Lang, Erik Millstone and Terry Marsden call for a new and lasting food governance in a paper on 'Food Brexit: a time to get real': Food Brexit report

They argue, 'Brexit could, all too easily, diminish food security in the UK, where parts of our food system are already far too insecure; this rich country is pocketed with real food poverty, for example, and diet-related disease is part crippling the NHS. We understand food security to be the achievement of a system that provides food that is sufficient, sustainable, safe and equitable.

Brexit could, however, undermine all four of those aspects, in what is an already insufficiently secure food system. Moreover, the UK food system should not only aim for domestic security, it should also not undermine food security in any of the countries from which we buy, or to which we sell, foodstuffs.

This briefing suggests changes that the UK food system should be undertaking if its long-term structural needs are to be addressed. Our case is that the UK food system is highly vulnerable to the rising costs of diet-related ill-health, ecosystems damage, economic dependency, and social reliance on migrant and relatively low-waged labour.'

As far as the CAP is concerned, they state, 'So far, the national UK discussions about the various options for, and effects of, Brexit on food and agriculture policy have been discussed as if they were separate and independent variables, rather than interconnected.'

They note, 'The Brexit process is happening at a particularly vulnerable time for the UK food system - a time when it has become excessively dependent upon imports, while some of its population face worrying levels of ‘food poverty’, i.e. poverty which affects food consumption, 119 and while its productive base is declining, in terms of the number of farms and of small independent businesses, upon which it has historically relied.'

Benefits of high animal welfare standards

The House of Lords European Union committee has produced a report on Brexit and farm animal welfare, emphasising the many benefits brought by the high standards adhered to in the UK: Animal welfare

The report states that 'the UK has some of the highest farm animal welfare standards in the world. UK producers are rightly proud of these standards, and there is cross-sector support for maintaining high levels of farm animal welfare after Brexit.

In order to deliver on its commitment to preserving these standards, the Government must transpose existing EU law on farm animal welfare into domestic law so as to be effective on day one after Brexit. Thereafter, the Government, in consultation with the industry, consumers and other relevant stakeholders, will be able to consider whether to improve these standards.

Scientific evidence and advice should be at the heart of any farm animal welfare policy decisions, and the Government must ensure that withdrawal from the EU does not lead to a shortfall in funding for farm animal welfare research.

The Government must also bear in mind that while high farm animal welfare standards can be a selling point for UK producers, they also increase the cost of production. In the event that post-Brexit trading relations with the wider world, and if standards diverge over time with the EU, lead to increased imports from countries operating lower farm animal welfare standards, UK producers could become uncompetitive. This could undermine the sustainability of the industry or incentivise a race to the bottom for welfare standards—contrary to the wishes of the UK industry.

The Government must negotiate to include provisions regarding farm animal welfare in future free trade agreements. There is some doubt, however, over whether animal welfare can be used as a rationale to restrict imports from other countries under WTO rules. The Government must therefore explore the extent to which developments in World Trade Organization (WTO) case law allow the use of farm animal welfare as grounds for restricting imports under WTO rules.

The demand for high-welfare products is ultimately driven by whether consumers prioritise purchasing those products, at added cost, rather than buying cheaper, lower-welfare products. Labelling systems should be simplified, thereby helping consumers to make informed decisions about supporting farm animal welfare. Farm assurance schemes also help build consumer confidence through their high standards, inspections and associated labels. The Government should encourage the uptake of voluntary farm assurance schemes in the UK.

High farm animal welfare can be seen as a public good. We invite the Government to consider whether the delivery of this public good should be supported through agricultural funding after Brexit, bearing in mind that any such funding must respect World Trade Organization rules.'

The suggestion that funding for animal welfare could be part of a future domestic agricultural policy is an interesting one, although it is not easy to envisage the policy instruments that might be used. I also doubt whether it is technically a 'public good', more of a 'merit good'.

Thinking out of the box

Somehow I missed this comprehensive report by three leading agricultural economists and an environmental specialist when it first came out. It considers the issue of further modernisation of the CAP: RISE Report

The analysis laid out in this RISE Foundation report shows how the current CAP does not make best use of the considerable resources deployed to support land managers through the necessary transition.  The largest instruments of the CAP, the pillar 1 direct payments, which account for over 70% of CAP funds are ineffective, inefficient and inequitable.  It is suggested that these direct payments should be systematically reduced and resources switched to provide targeted assistance, including transitional adjustment assistance to help farmers adapt and rise to the specific challenges of improving productivity, resource efficiency and risk management and to pay farmers to provide specific environmental and other public goods.

The report argues that the two principal aspects of the CAP requiring the most attention are land management and risk management. Where land management is concerned, the greatest worry is that the current environmental standards are not being met. The report therefore proposes a redesigned, more integrated tiered structure of supports with clearer targets on the environmental outcomes sought.

The core issue concerning risk management is that the present approach in the CAP towards market orientation has not gone far enough. Indeed the sheer scale of direct payment inhibits farmers from better mitigating the risks they face.  The report outlines the full range of instruments that are most appropriate for managing risk at the farm level, market level and nationally at times of catastrophic risk.

Finally, following the lessons that have been learnt from previous successful reforms, the report suggests some procedural changes to kick-start a more effective reform process which brings together more constructively the conflicting interests in agricultural policy. This is particularly important given the difficulty of securing effective reform in the past.

It is suggested that the Commissioners (and their Directorates General) for Agriculture and Rural Development, for Climate and for Environment15, should be tasked to work jointly to produce the next reform proposals for adoption by the College of Commissioners. Following this, the co-decision process should be correspondingly adapted. This might involve the proposals being considered by an appropriate configuration of the Council Ministers who normally serve on the Agriculture, Environment or perhaps Energy Councils.

Gove to outline farm subsidy plans

Michael Gove will outline his plans for the future of farm subsidies today: Green Brexit

Farmers will have to earn support in the future by providing environmental benefits, although it looks as if there will be some scope for assistance with investment and food promotion. Upland farmers will also continue to receive support.

What can the UK learn from New Zealand?

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

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

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

The principal conclusions are:

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

NFU suggests solutions to seasonal worker crisis

The NFU has warned that the supply of agricultural workers on UK farms is now 'in jeopardy' for the next two growing seasons. They have produced a report on the subject: Access to a Competent and Flexible Workforce

The options they suggest are:

• Reintroduction of a seasonal agricultural workers scheme
• An Australian style points based immigration scheme
• A UK points system to attract non-UK nationals
• Retaining an element of free movement

I would prefer a new SAWS scheme as there is already experience in operating such a scheme which has worked smoothly in the past.

Match fit for Brexit

Wyn Grant with Professor Rob Edwards (left), chair of the Farmer-Scientist Network at the Great Yorkshire Show.

'Match fit for Brexit' was the theme of a seminar sponsored by the Farmer-Scientist Network of the Yorkshire Agricultural Society at the Great Yorkshire Show, chaired by the writer and led by James Severn and Richard King of farm business consultants Andersons. They are offering a 'Match fit for Brexit' business review to farmers for £650 plus VAT.

Andersons realistically see area payments ending and they see the following possible forms of support in the future with a budget half of the current one:

• A wildlife and landscape scheme, agri-environmental, building on the platform of current schemes such as environmental stewardship
• Support for hill farmers which could be in the form of an area payment
• Productivity (research and development, knowledge exchange, training, capital investment
• Food promotion at home and abroad (my question here would be, is this cost effective?)
• Revenue insurance to guard against price volatility (I remain sceptical about whether this is the solution)
• Natural resources, focused on water and soil in catchment areas (more than one farmer I spoke to at the show highlighted the problem of soil exhaustion)

One point made in discussion was that the payments available in agri-environmental schemes might not be sufficient to motivate farmers to participate.

Andersons used their three 'model' farms to predict the impact of Brexit. (Note that their profit figures are after making allowance for 'drawings', i.e, a wage for the farming family). The arable 'Loam' farm makes a healthy £248 per hectare a year at the moment. This would go down to £108 in 2025 with good access to the EU and still over £60 with poor access. (My view is that cereal farms with no stream of income from non-farm businesses, which is the case for many of them in East Anglia, would be particularly exposed to price volatility).

The Freisian dairy farm makes a modest £4.4 per hectare at present, this would go down to £3.4 under good access and a bare margin of £0.6 per hectare under poor access.

The 'Meadow' mixed farm, which it was admitted in discussion, is not a well-run business, makes £35 a hectare at present. This would be a loss of £72 per hectare under good access and a big £233 under poor access.

The core message was that farmers should not worry about the figures they can't control like the Brexit negotiations and focus on how well prepared their own business is prepared to respond to the impact of change (albeit that the form of that change is very uncertain). There was a time window for adjustment, given a relative status quo over the next few years and a boost to prices from devaluation. Farmers need to step back from their businesses and review them. For example, farms need to look at their debt structure. Could machinery and labour be pooled with neighbouring farms?

There was some discussion about whether Brexit could lead to land abandonment, but it was felt that most available land would be farmed by someone who could do a better job with it. There was scepticism about whether there will be a big fall in land prices or rents given all the factors that are in play apart from CAP support.

Drones and precision farming

The following session dealt with this topic with speakers from Newcastle University. Precision farming was defined in terms of more correct decisions per area of land or unit of time.

Drones can provide very high resolution images across a wide spectrum, more so than near earth satellites, and they can fly under clouds. However, they cannot be used in anything more than light rain or winds above 23 mph (and winds are often higher above the ground).

The sophisticated cameras cost more than the drones, the cost of which is falling. A question that arose was whether the information gathered for an average sized farm for about £100 would bring a sufficient return in terms of lower inputs and higher outputs.

The biggest receipients of direct payments

Three conservation organisations are among the biggest recipients in the UK of area based payments. The National Trust receives £1.64m, although the bulk of that is for agri-environmental schemes. RSPB receives just under £1m and Natural England just over £850,000.

The biggest private recipient is Beeswax Farming owned by Sir James Dyson who has two big estates in Lincolnshire. He received £1.60m. He is listed 14th on the Sunday Times rich list with an estimated fortune of £7.8bn.

Scottish farmer Frank A Smart receives £1.45m. Farmcare Trading got £1.16m. It is owned by the Wellcome Trust and was formerly Co-op Farms.

These figures will increase the pressure for an end to area-based payments, reinforced by a likely reduction in CAP subsidies in the 27 member states which will undermine the argument that UK farmers need subsidies to create a 'level playing field'.

Trade deal with Japan offers boost to farmers

A trade deal between the EU and Japan, which has required four years of negotiations, will provide duty free access for almost all agri-food exports, although there will be a transitional period. For example, transition periods for phasing out all tariffs on hard cheese will last 15 years. It does cover pasta, confectionery and chocolate.

Current duties on food are high, ranging from 15 per cent on wine to 30 to 40 per cent on cheese.

A major stumbling block in the talks was Japan's reluctance to open up its dairy sector to European imports. There will be full tariff elimination for some cheeses and other dairy products, while in other cases a quota system would apply under which duty free access would be granted up a threshold. Soft cheeses will be covered by a duty free quota larger than the current volume of exports.

Agri-environmental policy after Brexit

A group of academics funded by the ESRC has produced an authoritative briefing paper on agri-environmental policy post Brexit: New Dawn?

The report states,'By recognising the wider role of farming in the landscape, agricultural policy can become part of a wider sustainable Land Use Strategy, which seeks to end the decline in environmental quality and to enhance that quality through restoration.'

The policy brief concludes, 'There is a risk that future policy will be constrained by the legacy of past policies and practices. Whilst a transition arrangement between current and future policies is both sensible and inevitable, it is important to grasp this opportunity to remake our rural development and agricultural policies and avoid “lock-in” to unsustainable practices.'

Environmentally sustainable agriculture

The Parliamentary Office for Science and Technology has produced a short but informative briefing note on environmentally sustainable agriculture: Research Briefing

The note places particular emphasis on the notion of 'natural capital'. As part of a new domestic agricultural policy, measures could be taken to achieve natural capital targets referring to the elements of nature that directly or indirectly produce value to people.

It also notes that the Conservative Party manifesto contained a proposal for a 25-year environment plan, but this was not included in the Queen's Speech. If it was proceeded with, it would have implications for a number of aspects of agricultural practice. Among them would be water pollution; greenhouse gas emissions (GHG) from crops and livestock; soil compaction from machinery and livestock; the effects of pesticide use on pollinators; and, the degradation and fragmentation of natural and semi-natural habitats.

The CAP after Brexit

The EU will lose about eight per cent of its current income after Brexit and is thinking about how to adjust to this loss. Given that the CAP accounts for 39 per cent of EU expenditure, it is at the forefront of concerns.

The European Commission has published a 'reflections' document on possible ways forward: EU finances

In terms of what it has to say about agriculture, it is an interesting mix of sticking to old orthodoxies and some signs of new thinking.

On the negative side, it sticks to the discredited argument that direct payments offer a form of 'income support that partially fills the gap between agricultural income and comparable income for other economic sectors.' It is a highly inefficient and poorly targeted means of delivering income support. Later down the same page, we are told that 80 per cent of support goes to 20 per cent of farms. (Actually, this is a stylised fact based on the Pareto rule: the actual figure is lower than 80 per cent).

We are also told that 'thanks to the CAP, European citizens have access to safe, affordable and high quality food.' One could argue that this is the result of technological advances and the innovations made by many farmers in response to changing patterns of consumer demand. Do the citizens of New Zealand lack access to food with these qualities despite the absence of subsidies?

The paper does admit that 'There is no consensus on the level of income support necessary when taking into account competitiveness within the sector.' This is because the policy does not have a competitiveness objective and is not designed to promote competitiveness.

Indeed, high tariff barriers allow uncompetitive practices to continue). A graph makes the claim that 'Agricultural trade balance shows a competitive sector', but makes no reference to the way in which tariffs keep out price competitive imports. Indeed, it is admitted that 'In some cases, these [CAP] payments do not contribute to the structural development of the sector but tend to increase land prices that may hinder the entry of young farmers into the market.'

There is a greater recognition of the need to deliver 'climate public goods and services', a serious omission in the current policy. There is also a recognition of the need to encourage farmers to invest in new technologies which is forming part of the UK debate on a new domestic agricultural policy.

The document envisages 'the introduction of a degree of national co-financing for direct payments in order to sustain the overall levels of current support.' This will not go down well in countries such as France which benefit from the current distribution of CAP funds.

There is also reference to reducing direct payments for large farms. It is suggested that there should be a new 'focus on farmers under special constraints, e.g., small farms, mountainous areas and sparsely populated regions.' Again, care will be needed to ensure that the chosen policy instruments do really tackle problems such as rural depopulation. For example, improving rural broadband might be a more effective way of stimulating new economic activity rather than propping up farms that lack viability.

Challenges for grains post-Brexit

The AHFB has produced a comprehensive report on the challenges facing the grain sector post-Brexit: Grain challenges

The report emphasises that the global grain trade is driven by competitiveness. It is a high volume, low margin business, dominated by relatively few multinationals. The UK is a small player in a big market. In the past four seasons the UK exported 11 per cent of its wheat and 17 per cent of its barley crop. Competition for barley export business is likely to get tougher in future. There is no doubt that the UK faces tough competition from lower cost producers with higher outputs.

Any change in trade and support arrangements is likely to lead to structural changes on farm. Further farm consolidation could follow to achieve economies of scale.

The loss of preferential treatment in relation to the EU market is likely to mean loss of access agreements with non-EU countries such as Morocco and Algeria in the absence of new access arrangements and probably tariffs.

Strawberry prices could soar

Growers have warned that strawberry prices could soar if they no longer have access to seasonal EU workers after Brexit. Already this year the number of seasonal workers has fallen by 17 per cent because of the fall in the value of sterling and uncertainties about the future: EU workers

Former Defra secretary Andrea Leadsom suggested that farmers should invest in machinery as an alternative, but this is not an option for some crops. Machinery would damage soft fruit.

No need for experts at Defra

There will be no need for experts at Defra after Michael Gove was appointed Secretary of State at the department in the reshuffle of the Cabinet.

It had been widely anticipated that Andrea Leadsom would be replaced and she becomes Leader of the House of Commons.

Confidence levels among farmers falling

Confidence levels among farmers are falling, despite a good short-term outlook, according to this report from The Guardian.

However, it repeats the myth that farmers were among the 'staunchest supporters' of Brexit. Where is the evidence for this statement? To generalise from rural voting to that of farmers is to commit an ecological fallacy, a basic methodological error.

Read the report here: Gloomy farmers

More time for farmers before subsidy phase out

The Conservative manifesto promises to keep farm support at current levels for the lifetime of the next Parliament. This means that farmers will have until 2022 to adjust to a reduction in subsidies, although the downside risk is that the longer time span may lead them to postpone necessary changes, especially when future policy remains uncertain.

According to farm manager George Eustice the intention is to focus on supporting small enterprises and those new to the industry. The introduction of government backed loans could see a revival of a version of the Agricultural Mortgage Corporation set up by Stanley Baldwin's government (it was sold to Lloyds in 1993).

The Government is also considering schemes to help older farmers retire and changes to tenancy legislation to create slightly longer tenancies.

A farmer writes

In an interesting article a Northamptonshire farmer who has a mixed farm writes about how Brexit will affect him and other farmers: The impact of Brexit

Labour crisis in agriculture

The House of Commons Environment, Food and Rural Affairs Committee was not able to complete its inquiry into labour constraints in agriculture because of the dissolution of Parliament, but has produced a report that highlights some of the key issues: Feeding the nation

The committee does not share the Government's view that the sector does not have a supply problem. It took the view that government statistics are inadequate for measuring agriculture's labour needs, particularly where migrant labour is concerned.

The report says there about 75,000 temporary migrant workers employed in UK agriculture. The NFU says that the sector will need 95,000 seasonal workers by 2021.

Improved living standards in Eastern Europe, the fall of the pound and uncertainty following Brexit have contributed to a labour shortfall in the sector.

Government giving mixed messages to agriculture

With Parliament now dissolved, the House of Lords Energy and Environment Sub-Committee has produced its report on Brexit and agriculture: Brexit report

The report implies that Government has not sorted out its priorities in relation to the sector: 'The Government is currently giving mixed messages to the agricultural sector. Its vision for the UK as a leading free-trade nation with low tariff barriers to the outside world does not sit easily with its declared commitment to high quality and welfare standards in the UK farming sector. Combining and delivering these two objectives will be a considerable challenge.'

The report notes the reliance of the UK agri-food sector on both permanent and seasonal labour from other EU countries. 'This is an immediate challenge which the Government must address urgently.'

The report warns, 'Farmers risk high tariffs and non-tariff barriers on exports, which could render their business uncompetitive, while simultaneously having to adjust to a new UK policy for funding.'

Growing soya becomes more popular

Soya is a subtropical crop largely grown in Brazil, Argentina and the US. The UK imports £1bn worth of soya each year, 95 per cent of which goes to animal feed for chickens, sheep, pigs, cattle and farmed fish. It's also an essential ingredient in a wide range of things from bread to ice cream.

New varieties of soya can cope with the cooler, less sunny climate in England. In the past year there has been a fivefold increase in the area planted in the southern half of England, with about 4,500 acres this year.

The world price for soya has soared as growing demand for meat in China has pushed up the cost of livestock feed. Soya now sells for about £400 a tonne, compared with about £140 for wheat and £330 for oil seed rape.

It also cheaper to grow than traditional crops because it does not suffer much from pests and diseases, a key consideration when plant protection products are becoming less readily available. It fixes nitrogen from the atmosphere in its roots and can help to break up blackgrass, a growing weed problem in cereal fields. This makes soya a valuable break crop in spring rotations to help to kill off diseases, pests and weeds in the ground.

How farmer attitudes affect farm profitability

A fascinating study explores the association between farmers' attributes and profitability.

PhD candidate Niall O'Leary at the University of Reading has found that a large proportion of the variation in farm profitability can be predicted by the attributes of a farm's manager. Two studies of dairy farmers in Great Britain were carried out and almost 40% of the variation in farm profitability could be explained by five variables in one study and by three variables in the other.

The major predictors of farm profitability identified fall under the following five categories.

• Detail Conscious behaviour - farmers are generally not Detail Conscious but high scorers are much more profitable. A high scorer 'focuses on detail, likes being methodical, organised and systematic'. A low scorer is 'unlikely to become preoccupied with detail, less organised and systematic, dislikes tasks involving detail'.
• Leadership behaviour described as 'Inspiring and guiding individuals and group. Leading by example and arousing enthusiasm for a shared vision' is strongly associated with profitability.
• Those who 'lose their cool' when things go wrong and also those who are generally relaxed or laid back are less profitable. A motivated and proactive person who can handle problems is likely to be much more profitable than either a laid back, relaxed person or an overly anxious person prone to frustration.
• Attitudes and beliefs, in particular how entrepreneurial / profit orientated farmers view themselves are associated positively with profitability.
• 'Growth Mindset', those who have a fixed view of their own and staffs abilities are much less profitable. Education and training provision are tangible indicators of a Growth Mindset.

The effect of Detail Conscious is significant with 24% of variation in profitability covarying with it. A high scorer 'focuses on detail, likes being methodical, organised and systematic'. A low scorer is 'unlikely to become preoccupied with detail, less organised and systematic, dislikes tasks involving detail'. A one point difference in Detail Conscious on the 1 - 10 scale is associated with 1p per litre or £72 per cow greater profit per year.

Leadership is described as 'Inspiring and guiding individuals and group. Leading by example and arousing enthusiasm for a shared vision.'Relaxed is negatively associated with profitability. A high scorer on the Relaxed measures 'finds it easy to relax, rarely feels tense, generally calm and untroubled' and a low scorer 'tends to feel tense, finds it difficult to relax, can find it hard to unwind after work'.

The need for resilience

Participants in the panel on Brexit and agriculture

The Agricultural Economics Society conference in Dublin in the earlier part of this week attracted a number of interesting presentations and a speech by EU agriculture commissioner Phil Hogan.

One point that he made was that any free trade agreement with the UK would have to cover food standards, food quality, food safety, animal welfare and environmental issue. The aquis wold have to be imported into a FTA. The UK could not be used as a backdoor mechanism for inferior goods.

One theme that emerged from the conference was the need for farmers to show 'resilience' in the face of changing conditions and uncertain circumstances. However, that may not be a quality they all have.

One poster presentation by Niall O'Leary investigated the personality traits of farmers. It showed that 'independence' was the most common trait, in the sense of 'I'll do it my way.'

Agricultural economist Alan Swinbank said that high tariffs were a relic of a 1980s CAP when there was a fear that imports would undermine the intervention price. If one lowered tariffs to ten per cent that would still give more protection than enjoyed by other sectors.

There was considerable discussion of ecosystem services, although I was still left uncertain about how this concept could be operationalised. In policy terms it was seen as a means of challenging the 'agriculture first' element in policy. The objective would be to promote the total social value of rural land resources.

It was uncertain whether we had identified all ecosystem services. How could a balance be achieved between marketed and non-marketed services? There was the question of trade offs between different ecosystem services. Local environmental governance organisations (LEGOs) could be a mechanism for coordination at a local level.

How will Brexit affect British farming?

Share Radio talks to myself and NFU Vice-President Guy Smith: Brexit and farming

From crop protection to crop health

As a member of the Farmer-Scientist Network at the Yorkshire Agricultural Society, I was involved in getting this project off the ground which is using field trials to see if we can make more use of biologicals in plant protection. View the introductory video here: From crop protection to crop health

Roma Gwynn and other experts look at the future for pesticide regulations here: Horticulture Week

The benefits of stability

The round of talks on Brexit and agriculture, at which one often meets the usual suspects, continues. Next stop Dublin, yesterday it was the Public Interest and Environmental Law (PIEL) conference at Cass Business School, ably organised by students.

My central focus was on the need for well-designed policy instruments in a domestic agricultural policy that would meet their objectives without imposing undue transaction costs.

Our chairman from the RSPB made an interesting observation. He said that the CAP was slow to reform, but the other side of the coin was that it offered stability through the legislative framework. Moreover, it offered a multi-year budget but in future we would be facing an annual budget with competing demands on resources.

Incidentally, I never knew that red diesel was used at Heathrow and for the refrigeration compartments of food lorries.

New agri-business Brexit coalition formed

Eight trade associations or organisations concerned with agri-business have formed a new coalition to advise the Government on the implications of Brexit for farming: Voice of agribusiness

It will be interesting to see how this new grouping relates to the NFU.

Successful diversification

Farmers have diversified in all sorts of ways to provide new streams of income for their farms. For dairy farmers, one option has been to process their milk on the farm to provide high value added products such as yoghurt, speciality cheeses or ice cream.

Troy Town Farm on St. Agnes in the Isles of Scilly is the most westerly farm in Britain. I think they have just nine cows, but they produce high quality ice cream. I can vouch for that as I have walked across St. Agnes to taste it.

This short video gives a brief account of their story: Troy Town Farm

Four new papers on Brexit and agriculture

The Brexit working party of the Farmer-Scientist Network of the Yorkshire Agriculture Society, which I chair, has produced four new papers on Brexit and agriculture. They can be found here: Brexit papers

I have written papers on the future of Pillar 1 subsidies and migrant labour; Michael Cardwell and Fiona Smith have written on agri-food trade; and Alan Greer has covered devolution aspects.

More threats than opportunities

The agricultural trade dimension of Brexit posed more threats than opportunities according to NFU Director of Strategy Martin Haworth. He was speaking at a EurActiv seminar on 'After the CAP: what future for British agri-trade?' in London yesterday.

He thought that there was a lot of optimism about how easy it would be to negotiate a free trade area with the EU. How far could one replace EU markets with third country markets? With no frictionless access to the single market, we were looking at second best outcomes, the question was how second best?

Even with tariff free trade, there would be barriers with customs procedures. There was a great potential for disruption with perishable goods. He had a number of campaign medals from the past, but none of these problems had arisen since we had been part of the single market.

He noted that the horticulture sector was very integrated through importing and exporting. (Later, this led to discussion of how it was not in Spain's interests to have salad exports to the UK disrupted).

Our food exports to Belgium were three times those of China, India, Russia and Brazil combined.

Peter Hardwick of the ADHB noted that the advantages of proximity and speed of delivery in EU markets. Logistical issues around rules of origin were far more difficult than tariffs.

Molly Scott Cato MEP noted that it was difficult to justify paying people for owning land. There needed to be a discussion in government about what the future farming model should look like. A Defra staff member confirmed that no green paper was in prospect.

Phil Stocker, chief executive of the National Sheep Association, said we were not having a discussion about how we wanted agriculture to look like in the future. Upland farmers could respond by intensifying.

Lord Teverson said that the future relationship with the CAP was critical. The sequencing of agri-trade deals was important. Supply chains were now important even for SMEs.

Martin Haworth emphasised that a defined transition period was needed for everything.

Fall in farm land prices

After many years of above inflation increases, the price of agricultural land fell by 7 per cent last year with the average price per acre dropping to £10,223. The Royal Institute of Chartered Surveyors blamed a sense of uncertainty linked to the prospective loss of EU subsidies.

A survey by Knight Frank found that farmland prices had fallen last year at the fastest rate since 1999. Its survey of bare agricultural land (not including homes or farm buildings) found that prices fell by 9 per cent to £7,470 an acre. Nevertheless, a pound invested in agricultural land in 2009 would still be worth twice as much as a pound invested in a house or the FTSE 100 share index.

It is thought that the price of farmland could continue to fall this year because of higher input prices resulting from the fall in the value of the pound. Prices are, however, being propped up by lifestyle farmers who are estimated to account for a quarter of purchases.

A fall in land prices might be seen as a benefit of Brexit, making it easier for new entrants to come into the industry, reducing the average age of farmers and boosting innovation. However, the real consideration here is whether rents for tenants fall significantly as this is the usual entry route other than in cases of succession.

Even then, new entrants face the cost of machinery and, other than or arable farms, livestock. What may be needed is new means of building up a herd such as share farming which is being experimented with, following the Nee Zealand example.

NFU goes for three pronged approach

The National Farmers Union has gone for a 'three pronged' approach to British agricultural policy after Brexit. If it seems a little short on detail, this is no surprise as different sectors of the industry want different things and even farmers within the same sector.

The first area would be designed to enhance productivity and competitiveness. This could include capital grants to farmers, knowledge transfer, training and advice an tax breaks to encourage investment.

The second area would be directed at environmental measures. As well as traditional agri-environmental schemes this could encompass payments for ecosystem services such as water companies paying farmers to look after watercourses.

The third area would be concerned with volatility. This would be the top priority if the settlement was an unfavourable one for the sector, e.g., on trade. This could include crop insurance (I remain to be convinced), future contracts (surely only for bigger farmers), and income guarantees, as well as direct payments to farmers. Income guarantees might look like deficiency payments as happened pre-1973, but they may not be WTO compatible.

Migrant labour and agriculture

The UK in a Changing Europe programme has published a blog post from me on migrant labour and agriculture in which I call for a new version of the SAWS programme after Brexit: Migrant labour

No priority at all?

According to a leaked report in The Times today, the Government has divided sectors of the economy into high, medium and low priority for the Brexit negotiations.

As one might expect, pharmaceuticals, motor vehicles, aerospace and air transport get high priority, along with (rather more surprising) textiles and clothing. Fisheries gets into the medium priority list. But in this leaked list, agriculture and food processing don't get mentioned at all.

That is a concern when agriculture could be the sector economically damaged by Brexit through a combination of the loss of subsidies and the removal of tariff protection.

What form of pesticide regulation after Brexit?

This is one of the many complexities to be faced after Brexit and fortunately the ADHB has produced an excellent guide to the subject authored by Sarah Barker and John Knight: Horizon study

After the referendum, I heard that some arable farmers had voted for Brexít because of restrictive pesticide regulations. However, this study concludes: 'The regulatory burden might not be reduced as much as farmers hope and in any event would probably take a number of years to achieve. It is also likely that environmental, consumer and public health lobbies will continue to be influential and to exert pressure for more stringent regulation'.

The report sets out four options. Aligning with the EU would be relatively straightforward, provided it was accepted by the EU. The precautionary principle would continue, but the UK would have no influence over the approval process which might become more restrictive with the remaining EU members.

Aligning with the US has found favour in some quarters because of the use of a risk-based approach there. More actives and products would become available to the UK industry and more biologicals would be available [the US has been particularly innovative in this area]. However, there might be a pressure group reaction to a more permissive regime and climatic differences may mean that US actives are less suitable for use in the UK, particularly for niche crops.

Adopting OECD standards, which use a risk-based approach, might work in the future but there are major challenges in obtaining efficient collaboration between multiple governments.

The UK could have its own policy which would give it full control of the approvals process. It could adopt a low-risk approach and it might be possible to speed up the approval of biopesticides. However, the registration and use of pesticides would have to be acceptable to trading partners. The UK may be seen as too small a market for companies to go to the expense of registering products for approval, leading to fewer actives being available.

In other words, there is no ideal solution, although a UK policy might be seen as politically compatible with hard Brexit.

The future of agri-food trade

In an informative and comprehensive treatment, two leading agricultural lawyers take a look at the future of agri-food trade post Brexit. Needless to say, it is complex! Agri-food trade

Can Defra cope?

At yesterday's Lords committee meeting, I was asked if government needed to be more proactive in identifying regulations that could be abolished or modified after Brexit. My response was, in effect, that Defra had been hollowed out so much, I doubt whether it had the capacity.

This view is confirmed by the latest Whitehall Monitor published by the Institute for Government: Whitehall Monitor

It points out that Defra has estimated that around a quarter of EU laws (around 1,200) relate to its work, and that 80 per cent of the department's work is 'framed' by EU legislation. But staff levels have fallen by a third since 2010.

It also notes that Defra has had relatively little recent legislative experience, its responsibilities since 2010/11 being limited to two Government bills that became law.

Be very, very afraid

At one point in yesterday's House of Lords committee evidence session, Professor Alan Swinbank envisaged a future in which there were fewer farming enterprises in Britain. I know that the committee were very interested in a paper he had written for the University of Sussex trade observatory entitled 'World Trade Rules and the Policy Options for British Agriculture Post-Brexit.' The contents, although rigorously argued, are somewhat more explosive than the anodyne title might suggest. You can download the full paper here: Key reflections

It is worth quoting a little of what he says in his conclusion. Professor Swinbank is one of the leading experts on the CAP, but also on agricultural trade policy.

He warns, 'It is highly unlikely that agricultural issues will determine the UK's future trade policy, as easy access for sugar, beef or butter to the UK's market for example could well be some of the key demands of potential FTA partners.' He continues, 'A unilateral reduction in tariff barriers to lower food prices and increase competitive pressures, would probably be unwise (although appealing to a number of economists) as it is those high tariffs that strengthen the UK's negotiating capital.'

He notes that alternative trade scenarios could result in a large number of farms being 'put under considerable financial pressures, with an uncertain impact on farming practices and the environment ... [Farmers] would probably protest vigorously if both taxpayer funded support and tariff protection were removed in a double whammy.'

In yesterday's session, Alan Swinbank was asked if any free trade pacts would be beneficial for agriculture. He noted that the real danger did not come from an agreement with the United States, but from agreements with Brazil or other South American countries, Australia and New Zealand. Australia would like to increase its tariff free exports of sheepmeat to the UK. Benefits could come from agreements with highly protected markets to which high value added goods could be sold: Japan, (South) Korea and Norway.

Further information about Alan Swinbank's remarks to the Lords committee can be found here: Irish Farmers Journal

House of Lords launches Brexit and agriculture enquiry

The House of Lords Energy and Environment Sub-Committee of its EU Committee has launched a short inquiry into the implications of Brexit for UK agriculture: Brexit

Excerpts from the evidence given by Alan Swinbank and myself were used on Farming Today on 26th January.

The full visual and audio record of the meeting can be found here: Evidence

'Cliff edge' for farmers

As I write this post, the Council of the National Farmers' Union is debating options for farming post Brexit a few miles away at Stoneleigh Park and none of the scenarios looks particularly promising.

If area subsidies are withdrawn overnight, farmers will face a 'cliff edge'. Many enterprises will go out of business and be consolidated into larger businesses or bought by foreign investors at a knockdown price.

We need a phasing out of existing forms of subsidy. Exactly how this might be done is something I am working on at the moment.

Earlier this morning I did a television interview for Reuters on the challenges for UK farming post Brexit. The interviewer made the point that they heard a lot in London about the needs of the financial services industry, but very little about farming. Exactly so.

Indeed, the UK Government is now contemplating a trade deal with New Zealand that would benefit the financial services industry, but allow in additional imports of lamb, to the detriment of the sheepmeat industry.

The Scottish Government is considering continuing general subsidies after Brexit, although they may face budgetary constraints in doing so. What is clear is that French and German farmers will continue to receive CAP subsidies which could amount to 20 per cent of the market value of product.

I want to move away from subsidies, and in particular blanket subsidies that are not related to a policy objective. But it must be done in a way that allows the industry to adjust.

Does it matter that Andrea Leadsom doesn't understand history?

Does it really matter that Defra secretary Andrea Leadsom does not understand that farming is a relatively recent development in human history? This blog post argues that it does: Getting it wrong

More to the point, what we got in her speech at the Oxford Farming Conference was a series of platitudes, but very little detail on what the future holds for British farming in policy terms. OK, there are going to be two consultations, but that is a tried and trusted way of delaying taking difficult decisions.

Some thought that her predecessor at Defra, Liz Truss, was a lightweight. Mrs Leadsom doesn't lack confidence or optimism as a dedicated supporter of Brexit, but what she can deliver for the industry remains to be seen.

Monbiot gives it large

I disagree with almost everything that George Monbiot says, but one has to admit that he is an effective polemicist who has some influence. Here is what he had to say at the Oxford Farming Conference: Efficient farmers beware

Leadsom promises 'bonfire of controls'

Defra secretary Andrea Leadsom has promised a 'bonfire of controls' at the Oxford Farming Conference with a 'slash and burn' approach to EU regulation: Red tape to go.

This may be easier to promise than deliver given the complexity of the regulatory environment. Promising to scrap red tape always generates a good headline, but what is really needed is to review each regulation and the purpose it serves. This require some expertise.

However, she is targeting the 'three crops' regulation designed to promote biodiversity on larger farms and this has gone down well with the CLA.

Green campaigners have been more critical, but my view is that the three crops regulation is a rather blunt policy instrument which constrains farm level decision-making without contributing much to sustainability.

Minette Batters, deputy president of the National Farmers Union, said she was disappointed Mrs Leadsom was focusing on less important farming issues relating to Brexit rather than farmers' main concerns such as continued access to the single market and a steady supply of foreign labour to pick crops.

Protecting niche products after Brexit

Will Orkney cheddar cheese still enjoy protection after Brexit? Geographical indications as they are called are on the agenda again, so I thought it might be helpful to reproduce below what I wrote for our Yorkshire Agricultural Society report with the concluding paragraphs drafted by an agricultural trade lawyer.

Seventy-six names in the UK, including food products, wine, beers and ciders, are registered under the EU’s geographical protection schemes. There are three main programmes: protected designation of origin (PDO), protected geographical indication (PGI) and traditional speciality guaranteed (TSG).

Government sources told The Times that securing a “rollover of current arrangements” was the best option. Officials are also looking to see if speciality recipes or regional provenance can be protected using trademark regulations under domestic intellectual property rights laws. Matthew O’Callaghan, of the Melton Mowbray Pork Pie Association, called for a swift resolution. “It would be very damaging to leave these schemes,” he said. “There are some products that are exported, it would be damaging for them within the EU. More important for us is the issue of copying within the UK. It is the EU that has saved a lot of British food heritage."

[From our repoort] The basic idea behind geographical indications (GIs) is to prevent a domestic producer giving a name to their own product that gives the impression to consumers that it comes from the protected region covered by the GI, e.g., Parma ham. It is seen as a means of preventing the public from being misled by producers jumping on the bandwagon of a successful GI and also to prevent unfair competition.

The EU has been favourably disposed to GIs because it sees it as a means of encouraging high quality, value added food production in the EU which will increase returns to farmers. This has led to some conflicts with producers elsewhere in the world, e.g., with the United States over parmesan cheese. Given the EU’s support for GIs, it is likely that they would insist on the UK recognising EU GIs in any future trade agreement. This could well become a contentious issue in any trade negotiations between the EU and UK after Brexit.

What value GIs offer to British farmers is an interesting question. Niche products, e.g., Orkney Island cheddar, are often involved, although these may be important to local economies. In Yorkshire in particular, the following products are covered by GIs: Swaledale cheese; Swaledale ewes cheese; Yorkshire Wensleydale.

GIs are established by EU regulations and there is no UK legislation needed. GI protection in the UK would lapse on Brexit and EU protection of UK GIs could be expected to lapse as well. The UK would probably have to offer some minimum standard of protection to European GIs. Indeed, under WTO rules, the UK would be under an obligation to implement some form of legal protection. In an earlier TRIPS case India-Patent Protection for Pharmaceutical and Chemical Products WT/SDS79/R (albeit one on patents and not on GIs as such), the Appellate Body went out of its way to say that the need to offer protection was a positive obligation on the part of the WTO member.

If Brexit does occur, our view is that it is likely that the WTO rules in TRIPS require the UK to offer a minimum standard of protection for products protected by EU GIs, although the form and level of that protection remains unclear. These are complex matters as is evident from the example below.

It is possible that the WTO rules may have made the position clearer – and also better for UK farmers On our understanding, the Dispute Settlement Panel in EC — Trademarks and Geographical Indications (WT/DS174/R) upheld the principle that foreign nationals should have proper access to the EC’s GI system (https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds174_e.htm), with the EC subsequently amending the system so as to comply with the WTO decision: see Council Regulation (EC) No 509/2006 of 20 March 2006 on agricultural products and foodstuffs as traditional specialities guaranteed and Council Regulation (EC) No 510/2006 of 20 March 2006 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs.

Significantly, the latter expressly recited that ‘[t]he protection afforded by this Regulation, subject to registration, should be open to the geographical indications of third countries where these are protected in their country of origin’. (For the current legislation, see Regulation (EU) No 1151/2012 of the European Parliament and of the Council of 21 November 2012 on quality schemes for agricultural products and foodstuffs.) Accordingly, it would seem that UK farmers post-Brexit might legitimately expect to be able to continue to take advantage of this form of ‘quality marketing’ within the EU.

Treasury ups war on farm subsdies

The following report appeared in the Sunday Times yesterday (extracts only).

'A “25-year plan for nature” calling for UK uplands to be allowed to revert to forests and wetlands and tough new restrictions on commercial fishing is predicted to spark a Whitehall battle when ministers publish it in the next few weeks. The plan is being driven by the Treasury’s natural capital committee (NCC), a group of economists and environmentalists tasked by the former chancellor George Osborne with helping to fulfil the Conservative Party’s election pledges to reverse 60 years of environmental decline.

At the heart of the plan is a key radical idea: that Britain’s natural assets, including mountains, rivers, fields and forests, can be given a monetary value and incorporated into the country’s national accounts. Each element of those natural assets, from fish stocks to the recreational value of mountains, can then be periodically revalued.

The NCC’s latest report says: “Despite only accounting for 0.7% of GDP, farming utilises 75% of total land area . . . and can produce large external costs to society in the form of greenhouse gases, water pollution, air pollution, habitat destruction, soil erosion and flooding. These costs are not reflected in the price of food. As a result, farming is responsible for net external costs to society that have been valued at £700m per annum.”'

Leaving aside the journalistic hyperbole, all this in consistent with the Treasury's targeting of farm subsidies which is nothing new.

What this is also about is the notion of paying farmers for providing so-called ecosystem services, an idea that is gaining traction. It is not my main area of expertise, but my hunch is that any scheme of this kind could well benefit upland farmers at the expense of lowland farmers who have obtained the biggest subsidies up to now. It might not also be good news for sheep farmers who are attracting increasing environmental criticism.

Without seeing the report, it is difficult to comment on it. What I do predict is that there are stormy waters ahead in 2017.

How and why farmers voted on Brexit

A view has developed that farmers voted overwhelmingly for Brexit. However, this view is largely based on a series of Farmers Weekly polls which were not based on a sample but on self-selected responses. Thus, if Brexiteers were stronger in their beliefs, they might be more likely to respond.

This does not mean that nothing can be learnt from these polls. The latest online poll shows that of 1,400 active farmer respondents, 54 per cent voted to leave and 44 per cent voted to remain. 28 per cent thought they would be better off as a result of Brexit and 41 per cent thought they would be worse off (21 per cent about the same). Even among those who voted to leave, there has been a decline in optimism.

Horticulture was the only sector in which more farmers voted to remain than leave. The sector is highly dependent on migrant labour from the EU.

Unsurprisingly, those sectors that have received little or no support from the CAP were most likely to vote leave (poultry, pigs, potatoes). The pigmeat sector incurs heavy transaction costs in meeting EU environmental regulations.

More than half of farmers in Scotland, Wales and Northern Ireland voted to leave, although they are particularly reliant on subsidies.

It is important to note that farmers often voted on the basis of the same concerns as the public in general, rather than agricultural policy. Those who wanted to leave were concerned about issues such as loss of sovereignty and migration. Those who voted to remain were more concerned about market access and loss of support.

During the referendum campaign I addressed a number of meetings of farmers on Brexit. Since then I have sought the views of well-connected farmers for their views on patterns of voting.

The general view was that livestock farmers were more likely to vote for Brexit as they felt constrained by what they saw as EU regulations. The FW poll shows that support for Brexit was particularly strong in the south-west, a livestock region.

However, there is anecdotal evidence that some arable farmers voted for Brexit because they felt constrained by the EU pesticides regime, e.g., restrictions on neonics and a possible ban on glyphosate, a popular weed killer. However, they now realise that if the UK wants to export grains to the EU, it would have to abide by EU regulations.

Special post-Brexit deal needed for Ireland

A special post-Brexit deal is needed for Ireland, according to an influential House of Lords committee: Brexit and Ireland

The report gives recognition to the importance of the agro-food sector in Ireland and Anglo-Irish trade in this area. Farmers will suffer if trade barriers are imposed between the two countries. The agro-food sector would probably be worst affected, given its reliance on cross-border trade.

Is Defra ready for Brexit?

It has been estimated that around a quarter of EU derived regulations fall within the ambit of Defra. Is Defra ready for Brexit? No, although the more important question is whether it will be ready by 2019.

The Institute for Government has undertaken a very interesting study of Whitehall's preparedness for Brexit which is quite positive about the Department for Exiting the European Union. Defra is one of five departmental case studies: Institute for Government

What is particularly worrying in Defra's case, given the range and complexity of the issues involved, are the cuts in staff and budget that have taken place. Defra's budget is 17 per cent smaller than it was in 2010 and will be about 35 per cent smaller by March 2019. Moreover, staff have already been cut by 35 per cent.

If all the depleted staff had to do was to deal with Brexit, it might be feasible. Decisions about which regulations to keep and which to change can be taken after Brexit. However, staff also have to do their 'business as usual' work and there is no shortage of challenges, e.g., bovine TB, not to mention the question of relations with the devolved administrations.

Seasonal worker shortage hits home

Even before Brexit, a shortage of seasonal workers is hitting fruit and vegetable growers. A survey by the NFU found that almost half the companies supplying agricultural labour were unable to meet the horticultural sector's demands between July and September. The supply pf pickers for late season crops was only able to meet 67 per cent of the industry's needs. This marked a sharp deterioration from the start of the year when none of the labour providers reported problems finding workers.

Leading provider HOPs Labour Solutions said that two years ago 40 per cent of seasonal workers planned to return to the UK. That number had fallen to 24 per cent.

There is a perception that Britain is a xenophobic place, while the devaluation of the pound has reduced net income by 15 to 20 per cent.

British horticulture relies on EU workers for more than 98 per cent of its seasonal workers. Defra secretary Andrea Leadsom has said that more British workers should be attracted into the sector, but they have proved unreliable in the past.

The possibilities of a bond scheme

If the basic payment is withdrawn overnight in 2020 after Brexit or becomes a limited payment confined to marginal upland farms, the effect on farming could be catastrophic. For many farms, probably the majority, it is the difference between running at a profit and making a loss.

Some sort of transitional arrangement is needed. It could be a phased reduction in payments, or it could be a government backed bond which could either be sold to invest in the farm business or would generate an income from interest for a period of time.

I have been sceptical about such schemes in earlier postings because of the current low interest rate environment and that does remain a challenge. However, writing in Agra Europe distinguished agricultural economist Stefan Tangermann has revived the idea with his usual eloquent advocacy.

A time limited annuity scheme would offer a soft landing, and would be far preferable to a phased removal of the existing system of support that is still linked to land and farmers. As Stefan says in his article, if these entitlements are 'in the form of a bond-type entitlement document that is saleable on the capital market' this would give farmers confidence that the 'future stream of payments is irrevocably determined'.

With the current state of financial markets, however, it is open to question whether there would be a robust market for this "bond". Most recipients would, I suspect, simply collect their annual compensation payments, rather than exchanging the entitlement for a cash sum for investment purposes.

What farmers really want

It is always good to talk to farmers about their post Brexit hopes and fears and I had another good discussion in Yorkshire last week.

In terms of their hopes, they thought that there was an opportunity to create a more bespoke domestic agricultural policy rather than the monolithic CAP. A smaller sum of money could be spent more efficiently and effectively to achieve better results. This required a reduction in transaction costs.

Overarching principles were needed and the objective should be to make good farming easier and to penalise poor practice. Policy should be simple to operate and transparent.

What had to be sought for farming to succeed in the future was increased and sustainable productivity. This would in turn depend on the making the best use of new technological innovations, some of which were highly complex. There was a skills gap, so investment needed to be made in human capital.

There was concern about the continuing effect of the retail sector's race to the bottom which led to delayed payments and cash flow problems.

Temperate agriculture

A blog report on a meeting on temperate agriculture which is interesting on a number of levels, but in particular arguing that we need to take a broader view of sustainability, thinking of it not just in environmental terms, but also giving appropriate weight to socioeconomic factors: Temperate agriculture

Brexit and food processing

By some measures food processing is the country's most important industry, but is rarely treated as such. Relatively few estimates are available of the impact that Brexit might have on it.

Boston Consulting Group, law firm Herbert Smith and advisory group Global Counsel have considered the impact on a chocolate manufacturer if the UK left the single market and the customs union without any trade arrangements in place.

It is assumed that the UK-based chocolate manufacturer imports most of its materials from around the globe, over half from the EU and a quarter from the rest of the world. It sells mostly in the UK, but exports a quarter of its chocolates to the EU.

Hard Brexit scenario 1 assumes that UK imports and exports are subject to WTO most-favoured nation tariffs. (This does not allow for non-tariff barriers which might arise, for example, over the definition of 'chocolate' which has been the source of tensions between the UK and the rest of the EU in the past). In Brexit scenario 2 imports are subject to zero tariffs.

Under the first scenario the company would be £4.2m worse off on revenues of £100m and under the second scenario it would be £8.2m better off.

A more fine grained analysis would take account of which were the key materials (e.g., cocoa, milk), where they were sourced from and how vulnerable they were to different scenarios.

In the quarter to the end of September British food exports to countries outside the EU grew at twice the rate of those to the bloc, 19.2 per cent against 9.6 per cent. However, the EU still accounted for 71.5 per cent of food exports, led by Ireland, France, Germany, the Netherlands and Spain. Exports to China rose by 62 per cent in the first nine months of the year, making the country the ninth largest destination for UK food (the US is sixth).

However, the trade deficit in food and non-alcoholic drinks increased by 6.7 per cent to £23.3bn.

Too cute to kill?

In the summer I was a keynote speaker at an interesting conference at the University of Surrey veterinary school which looked at the framing of policy on animal health and welfare and also the depiction of animals in children's literature. A report of the conference is now available here: Too Cute to Kill?

Views from Lincolnshire on Brexit

Yesterday I attend a Brexit seminar with large-scale farmers in Lincolnshire and there was a very interesting discussion.

Among their priorities for a post-Brexit domestic agricultural policy was research on what would reduce the cost of production. There could be more emphasis in policy on supporting success, on what was likely to succeed. There should be schemes to promote successful sectors and make them more efficient.The social, environmental and commercial aspects of agricultural policy could be more clearly separated.

Policy should be more evidence based and there should be less reliance on the precautionary principle. Among some of those present there was perhaps a little too much optimism about how it would be possible to roll back regulations. However, it was recognised that any attempt to use currently banned growth stimulants would be blocked by retailers.

It was accepted that intensive livestock systems would lose out under future subsidy policies because they could not demonstrate a public good. Even so, the beef and sheep sectors could be in trouble, especially if tariffs were imposed on exports of sheep meat.

I was struck by how much tension there was between different sectors and even within sectors.

Brexit impacts on trade

The AHDBB has produced a very useful report on the impact of Brexit on UK trade in agricultural products which includes detailed sector by sector analysis, focusing on threats and opportunities: AHDB report

What is the future for agri-environmental schemes?

What is the future for agri-environmental schemes post Brexit? This blog post considers some of the issues: The fate of agri-environmental schemes

The record of the schemes has been mixed and they are context dependent. The recent emphasis has tended to be on the reduction of species loss. Will there be a greater emphasis in future on agricultural landscapes?

As with other aspects of post-Brexit agricultural policy, there needs to be a debate about what the policy objectives should be and what priority should be attached to different objectives.

Brexit and the food and drink industry

Nick Clegg takes an in depth look at the implications of Brexit for the UK food and drink industry, including agriculture, and concludes that there will be a series of negative impacts. He sets out a number of questions to be answered: Food and drink paper

Goblygiadau Brexit i amaethyddiaeth Cymru

Yesterday I gave evidence to a Welsh Assembly committee on the implications of Brexit for Welsh agriculture. The paper I prepared for them is reproduced below. The standard of the questioning was high and a central theme was whether Wales would be able to develop a sufficiently differentiated agricultural policy that took account of its special needs and concerns.

Scenarios for the future relationship

Considerable uncertainty attaches to the nature of the relationship between the UK and the European Union after Brexit, and the form of that relationship will have considerable implications for agriculture. A worst case scenario would see tariffs imposed on exports of Welsh sheep meat to France, depressing the domestic price. It is quite possible that there will be a transitional period in which our relationship with the EU would be governed by WTO rules. However, the most likely outcome is a deal in which the UK has access to the single market but has make to concessions in terms of a contribution to the budget and relatively few limits on the access of EU labour, e.g., confining access to those with employment offers or providing for some kind of ‘emergency brake’.

Structural characteristics of Welsh agriculture

Clearly the sheep sector is of crucial importance to Wales which accounts for over a quarter of the total UK population. Cattle are also important with a greater share of the UK total than the share of the land mass. Milk is particularly important in Carmarthenshire. However, the horticulture sector is small so that migrant labour issues are of less significance in Wales.

It is important to bear in mind the importance of farming to the rural economy, particularly in the remoter parts of Wales where a traditional Welsh culture remains strong. The physical geography and climate in these areas is often challenging. Many people who are not farmers depend on the continued success of the farm sector for employment, e.g., agricultural contractors, tree surgeons, mechanics, veterinary practitioners etc.

Farm support

The Basic Payment in its present form and at its current level is to continue until 2020. For many far, businesses, this represents the difference between making a profit and running at a loss. What will happen after 2020 is uncertain, but there is a growing consensus among policy analysts that any future general support should be focused on marginal farms in upland areas where the need is greatest. Large-scale arable farms in East Anglia should be able to be competitive without the large subsidies that they receive at the present.

There is a case for some continuation of general support given that farmers remaining in the EU will continue to receive CAP payments and there will not be a competitive level playing field. Some attention also needs to paid to price volatility in terms of its impact on levels of production and hence on food security. Vulnerabilities to climate change could increase global price volatility.

Conservation and agri-environmental schemes will continue to be significant. There is a broader basis of political support for them. However, they are relatively short term, for example over periods of five years. All farms only have a limited area that can be taken out of production, or subject to special treatment; and still allow the farm to be a viable producer of food. Conservation and environmental protection will only be successful if the industry feels secure financially.

One sheep farmer I talked with noted, ‘if the family farms are not maintained then they will not be there in the future and then who is going to look after the environment?’ This farming family has been active in creating habitat areas with some grant help and noted ‘This was all possible because over the years we have had a fairly reliable income source which has allowed us to improve the farm.'

One issue with such schemes is that of ‘additionality’, whether payments lead farmers to behave differently from what they would have done in the absence of the scheme. Whether this is the case is very difficult to assess conclusively.

Mechanisms of support

Payments that are based on head of stock produce quantity rather than quality which is not the best outcome either for the industry or the environment and they may not be compatible with WTO rules. Whether it would be possible to devise a policy instrument that rewarded quality without placing too great an administrative burden on administrators and farmers is an interesting question.

Farmers in Wales have sought to move up market and add value by producing more speciality products that can command a higher return from the market. Anything that can be done to encourage and support these efforts would represent a good strategy. However, the buying power of the supermarket chains remains a challenge.

Regulations

The EU has devised a wide range of regulations that apply to agriculture. These are embodied in numerous EU directives such as the Nitrates Directive and the Water Framework Directive. These have been transposed into law by the introduction of primary legislation or by the introduction of statutory instruments under the European Communities Act 1972.

As well as environmental legislation, there are extensive measures relating to animal health and welfare reinforced by the recognition of animals as sentient beings in the Lisbon Treaty. There are 18 EU laws setting standards on the way farm animals are produced and reared, transported and slaughtered. There are 12 laws covering wildlife.

Existing regulations should remain in place after Brexit while they are reviewed in terms of their objectives and whether they are efficient means of achieving those objectives, in particular whether they place disproportionate compliance burdens on farmers.

Conclusions

How far Wales can pursue a differentiated policy after Brexit that is sensitive to Welsh needs and priorities depends in large part on funding arrangements. (The Barnett formula came up in discussion.

Four threats to global food security

This blog piece looks at four threats to global food security and what we can do about them: Food security

The four threats identified are drought, emerging diseases, salty soils and over dependence on fertilisers.

SAWS scheme to be revived?

Ministers are discussing with farming leaders the possibility of reviving a version of the SAWS scheme after Brexit to meet the need for migrant labour in the fruit and vegetable sector. Some producers have considered relocating abroad. A farmer in Suffolk recently placed on hold an order for £500,000 worth of cherry trees because of uncertainties about Brexit.

Planting and harvesting these crops is labour intensive and hard, monotonous work. About 75,000 workers a year are needed as British workers are reluctant to do the work. It's temporary and they would lose most of their benefits. Replacements such as robots are a long way off.

The seasonal agriculture workers (SAWS) scheme, which allowed people to come to Britain for six months to pick fruit and vegetables, operated for sixty years until 2013. It is felt that a larger and more flexible scheme is needed so that labour could be recruited from anywhere in the world. It is estimated that 90,000 workers will be needed by 2019.

Thinking about the consequences of Brexit

On a hot day a group of leading experts on the CAP and related issues gathered in a basement in London to discuss the challenges from Brexit on Chatham House terms.

Concern was expressed about the capacity of a hollowed out civil service to deal with the issues. How could we administer the more targeted policy that was likely to emerge after Brexit? Government departments were structuring and organising themselves with some staff transfers taking place, e.g., from Defra to the Brexit department.

It was somewhat ironic that the first trade pact being talked about was with Australia with which we had a small volume of trade. They would free access for agricultural products, not least for sugar. What would the EU think about that?

There was no idea how tariff related quotas or the amber box could be shared out.

After Brexit, should the focus be on labour saving technology development? But how near and how feasible/financially viable were some of the big developments like crops being picked by robots?

It was pointed out that existing domestic regulations were backed up in terms of compliance and enforcement by the possibility of reference to the ECJ.

The CAP was designed to slow down structural change, so we could expect more farm amalgamations after Brexit. Asset prices would fall. However, it was agreed that there were many variables that affected land prices, not least the availability of tax relief. There was no simple relationship between farm support and land prices.

The issue of price volatility was noted and it was pointed out that the 2010 food security study was very reliant on the fact that we were in the EU. Vulnerabilities to climate change could increase price volatility. A lot of things that were not really about price volatility were badged as such.

As far as food security was concerned, the biggest problem was the lack of storage in the food supply chain and the resilience of the system.

A farmer writes

A contribution from an upland sheep farmer, reflecting on prospects after the Brexit decision.

'At the moment we have a reliable source of revenue from our lamb sales but are concerned to what will happen when our exit from the EU takes place as it seems no negotiations with old or new partners can take place until that point. This could leave a gap of several years before anything is agreed. There have been discussions with the US taking place for a couple of years via the EU I believe for the sale of lamb to the States, these of course will come to a stop and we will have to start again. More than one country has indicated that we will be at the end of the queue.

The British government is being rather vague over the continuation of any support after 2020. Conservation support will not pay the bills commendable as it is. It is also very short term usually in 5 year blocks, you are then on your own and must come up with new areas of the farm to enter into a new scheme for another five years.

All farms only have a limited area that can be taken out of production and still allow the farm to be a viable producer of food. Conservation will only be successful if the industry feels secure financially. Some form of support is certainly needed to counteract the volatility in food production as we all need to eat.

Of the type of support even we are not sure. Any payments per head of stock only produces quantity not quality which is not good for the industry or the environment. Payments on the number of hectares held has caused some problems in Wales as to how you value different areas of land. Perhaps something more on the quality of stock produced and sold successfully, but I don't know how that would equate in the more arable areas.

One thing is for certain, if the family farms are not maintained they simply will not be there in a few years then who is going to look after the environment? Those making an income from the land see and understand the healthy balance of the land for all concerned, and that certainly includes the wild life in all forms.

Also the local communities who rely on agriculture, there are many people working self employed, be they fencing contractors, tree surgeons, agricultural mechanics, shearers- to name some who would find themselves having to move away for work. Our villages will become ghost areas or holiday parks. even those with holiday cottages I hear are sometimes finding it difficult to fill the vacancies as there seems to be so many of them.'

Pressure for green farm subsidies is mounting

Pressure for a greening of domestic farm subsidies after Brexit is mounting. Indeed, one might say that it is becoming the new conventional wisdom.

Such pillars of the agricultural establishment as former Defra ministers Caroline Spellman and Richard Benyon, along with agriculture select committee chair and former MEP Neil Parish, are among 36 MPs who have written to Theresa May urging her to shift farm subsidies towards protecting the environment. It may be that they think that this is the best way of maximising continuing payments for farmers.

The influential RSPB is expected to launch its 2016 State of Nature report this week, claiming that intensive farming methods are putting more than 120 species of wildlife at risk.

The NFU is seeking to put food security, which it sees as its strongest subsidy card, back at the heart of the debate. They claim that the food and farming industry is worth £108bn a year, but that includes second stage food processing which is not reliant on domestic ingredients and necessarily has to import ones like cocoa.

Tim Lang from City University admits that farmers are being squeezed by a vicious cycle of increasing costs and lower returns. He says that what we need is less farming and more horticulture.

However, the sector is being hit by a double whammy of the National Living Wage and difficulties in recruiting labour after Brexit. Wages are a particular problem in Scotland where the National Living Wage is not age banded so that you cannot pay less to under 25s. Foreign workers are concerned about Brexit and a large UK supplier of foreign workers to UK agriculture has seen applicants to its Bulgarian office drop by 70 per cent compared with a usual 25 per cent at this time of year.