Is there a migrant labour crisis?

I had to do a pre-record for ITV Yorkshire about the potential migrant labour crisis in agriculture, more specifically in field vegetables and horticulture (there are also many Fillipinos working in the dairy industry).

I think there is a potential crisis, indeed some signs of strain are already emerging, but there is also a potential partial solution.

The pound is 13 per cent weaker against the Polish zloty since January and salaries are rising there. Polish shipping agents are reporting increased business.

The solution would be to restore a version of the Seasonal Agricultural Workers Scheme (SAWS), but to extend it outside the EU. As far as I am aware, this could be limited to specific countries.

A SAWS type scheme does impose additional administrative costs compared with the free movement of labour. There is also some risk of those on temporary work permits disappearing into the illegal labour market.

However, the alternative scenario is a reduction in the quantity of fruit and field vegetables grown in the UK, reducing even further the percentage of temperate foodstuffs we can supply ourselves. Prices would be pushed up, as imported fruit and vegetables are generally moe expensive, especially if sterling is weak.

Looking to a positive future

The emphasis will be on the positive aspects of Brexit when I join Meurig Raymond, president of the National Farmers Union for a breakfast presentation at the Great Yorkshire Show next Wednesday: Looking to the future

As I have said before, we need to have a debate about the objectives and mechanisms of what will be an Englsh agricultural policy given that agriculture is a devolved matter hitherto constrained by the CAP.

Brexit and food security

Tim Lang from City University raises food security concerns in an article on Brexit: Feeding ourselves

Lang argues: 'If the UK really does want “independence” and to “take back control”, we might like to think about how our current food system, according to an Aberdeen University study this year, has 70% of its cropland located abroad, with 64% of its climate change impacts there too. Others feed us here and pollute there on our behalf.'

'UK self-sufficiency has been inexorably dropping from the high point that EU membership took it to in the early 1980s. Then it was more than 80%. Now it is down to 61% according to Defra’s statistics.'

'The UK imports 30% of what we eat from the EU. A huge amount of that is the good stuff for health: fruit and veg. We export whisky, biscuits, fat and meat. History suggests that a country which only just feeds itself is in a potentially fragile state. Just-in-time logistics means supermarkets operate on about three to five days’ stocks.'

NFU looks to the future

The National Farmers Union has sought assurances that existing EU schemes for British farmers can remain open until 2020: Reassurance sought

However, they also think there will be an opportunity to build a new domestic agricultural policy that is more adapted to national needs. Plant protection regulations are clearly one area of concern.

Along with NFU president Meurig Raymond, I will be addressing a breakfast meeting on the consequences of Brexit organised by the Future Farmers of Yorkshire at the Great Yorkshire Show on 13 July.

Where do we go from here?

Britain, or more specifically England and the devolved administrations, now need to think about what sort of domestic agricultural policy they want to have outside the European Union. I do not think that the decision to leave will be good for agriculture and the food industry more generally, but we now need to move on. Talk of a second referendum is in my view a distraction.

Of course, at this stage, we do not know what shape Britain's future relationship with the European Union will be. However, as a working hypothesis, I am assuming that we will have a domestic agricultural policy and that, hopefully, there will be no tariff barriers against British agricultural exports such as sheepmeat.

It is an opportunity to re-think what the objectives of a domestic agricultural policy should be, and which policy instruments could best achieve those objectives. However, there are many other items on the Government's agenda and agriculture is not likely to be their top priority, just as it was very much a secondary issue in the campaign outside farming areas.

Path dependency theory would suggest that the most likely outcome in terms of subsidies is a scaled down version of the single farm payment. I say scaled down because there are already considerable pressures on public expenditure and the economy is likely to grow more slowly than it would otherwise have done in the short to medium term following Brexit.

In an ideal world, farming as an economic activity would not be subsidised. However, we are faced with volatile prices and for many farms the subsidy payments make the difference between running at a profit and a loss. There are food security and environmental arguments for not reducing the total area farmed.

One could return to deficiency payments which made up the difference between the market price and a target or guaranteed price. However, the expenditure involved is unpredictable which means that they do not find favour with the Treasury as a policy instrument.

There are a series of difficult questions to be faced. For example, do we want to concentrate subsidies more on marginal upland farms which make an important contribution to landscape? The counter argument is that efficient arable farms would be disadvantaged in terms of competitors elsewhere in Europe if they did not receive similar subsidies.

There are also difficult questions about how the horticultural sector is to secure the unskilled or semi-skilled labour it needs for planting and harvesting? Could we and should we revive a version of the Seasonal Agricultural Workers Scheme (SAWS)?

What we certainly need is a debate about what sort of domestic agricultural policy we could and should have in terms of both objectives and policy instruments.

What would Brexit mean for British farms?

My last contribution to the referendum debate: Brexit and British farms

It has already been condemned by one commentator as a piece of agit prop, but we think that our report represented an honest appraisal of the evidence and that it is difficult to see clear gains for British agriculture from Brexit.

If there is a Brexit decision, hopefully we will have a thorough debate about the objectives of a domestic agricultural policy and the policy instruments that can best achieve them, but the pressure of events will probably dictate otherwise.

Consequences of Brexit for UK agriculture

This article summarises a contribution I made to a recent edition of EuroChoices on the consequences of Brexit for UK agriculture, along with summaries of contributions by Alan Matthews and Alan Swinbank: Brexit uncertainties

The need for a Common Sustainable Food Policy

An authoritative and informative survey of the CAP by Alison Bailey, Tim Lang and Victoria Shoen concludes with a call for change and the formulation of a Common Sustainable Food Policy: Common Food Policy

Whatever else the referendum debate has done, it has stimulated some excellent work on the future direction of policy.

Deficiency payments unlikely to return

Writing in The Spectator Matthew Parris cites as one of his six arguments for Remain that 'The EU good has been good for farmers and good for the countryside.' It's quite unusual to see agriculture mentioned in the general debate.

He then goes on to say 'Leaving the EU, the UK would probably have to revert to pre-membership system of "deficiency payments" to support farming. It was a costly, ill-controlled nightmare which the Treasury hated.' That's one good reason why it won't come back.

Deficiency payments do at least take some account of market prices. The problem is that the guaranteed price, with farmers paid the gap between that and the market price, was often set too high as a result of lobbying.

Path dependency theory suggests that what we are most likely to get is a scaled down version of the basic payment (formerly single farm payment). In the event of a Brexit, what we really need is a debate about what the objectives of a domestic agricultural policy should be and which policy instruments could best achieve them. However, we are unlikely to get it. Expediency and rushed decision-making is likely to prevail.

Is CAP beneficial for UK?

Alan Greer of the University of the West of England has written a particularly good contribution to the referendum debate in relation to agriculture for the Royal Society of Edinburgh: Agriculture, Food and Rural Policy. He covers a lot of ground in a relatively short space.

He notes that there is at least consensus about what the key issues are. Much of the debate reflects disagreement about whether or not the CAP is beneficial to the UK.

Looking at the views of the farmers, he says that the evidence is contradictory. However, the Farmers Weekly poll he refers to was based on self-selection rather than a sample. Supporters of Brexit are more likely to respond. I would place more reliance on the NFU poll.

Single market is key for agriculture

The importance of the single market to agriculture was emphasised by Martin Haworth, deputy director-general of the NFU, in a presentation earlier today at a conference in London organised by the UK in a Changing Europe programme. Subsidies to farmers were not the most important issue. 65 to 70 per cent of agricultural exports from the UK went to Europe and there was no other alternative. He also noted that the EU had over fifty trade agreements with third countries.

The uncertainty inherent in the Article 50 process was of itself damaging and the CBI had estimated that it could lead to a fall in GDP of 0.75 per cent to 1.5 per cent.

UK agriculture required 20,000 - 25,000 seasonal workers and there were another 35,000 full-time EU workers in agriculture. Analysis by Oxford University of the effects of a point system showed that 96 per cent of the workers would not get through.

Governments of other EU member states showed more sympathy with agriculture. Britain was a more urban society than most of the rest of Europe. He noted, 'I get much more access, interest and sympathy in Brussels.'

Farming formed part of a food chain and virtually the whole chain was in favour of staying in the EU. Food manufacturers would have to consider relocating in the event of Brexit. The catering industry was highly dependent on migrant labour.

He had not heard a credible argument on agriculture that suggested we would be better off leaving.

Responding to questions he said that the Ciolos reform had not offered a strategic vision of agriculture, but was a tactical attempt to green the CAP to attract more support. The division between Pillar 1 and Pillar 2 had been blurred.

Britain in the EU had been sullen and budget obsessed and had never punched with the weight we should have done.

Natalie Bennett, leader of the Green Party, said that going around the country food issues had been raised relatively rarely. However, she occasionally heard the demand 'We must take control of our fish' which created the vision of a fish swimming round with a passport tucked under its fin. We now had a reasonably sustainable fisheries policy that took account of the biological capacity of the ocean. The fact that we had been able to reform the CFP raised hopes for the reform of the CAP.

What is very clear is that fishers want to get out of the EU, in contrast to the more divided views of farmers: Fishermen and the EU

As for the referendum debate, it had degenerated into a Tory leadership contest masquerading as a EU referendum debate.

Big data could be the next big thing

'Big data' could foster the next wave of agricultural innovation, but there are some impediments that arise from the nature of the industry. Developing low cost measurement capabilities is key: Innovation

What is the Common Agricultural Policy?

CAP expert Robert Ackrill (there aren't many of us) explains in a very useful review: What is the CAP?

No bonfire of controls

Here are some extracts from a presentation I made at a conference at the British Academy on 'The EU and the UK: the Wrong Kind of Regulation?

Farmers find the most negative aspect of the European Union to be what they perceive as the excessive burden of regulation. There is particular complaint about the ‘gold plating’ of EU regulations in the UK, adding to what is required by the EU, although when farmers and their representatives are asked to come up with examples they can usually produce very few and some of those are trivial.

There is no doubt that regulations impose transaction costs on farmers, taking them away from the activity of farming. My brother-in-law is a sheep farmer and I have seen the paperwork associated with the movement of his animals. However, regulations are there for a reason and those farmers who anticipate a bonfire of controls if there was a Brexit would probably be disappointed. There are four main drivers of the regulation of agriculture and food:

• The protection of human health
• The protection of animal health and welfare
• The protection of the environment
• The protection of the consumer

It is worth noting that the UK has been in the forefront of pushing the EU’s smart regulation agenda which emphasises:

The need to take impact assessments for significant proposals

The desirability of seeking alternatives to legislation

The need to evaluate current legislation, so-called fitness checks

The importance of consulting on proposed regulations

Another defining characteristic of UK policy has been that risk management should be based on robust science and evidence. This has led it at times to question risk management decision as being unduly risk averse leading to disproportionate legislation, for example in relation to plant protection about which I will say more later.

Farmers receive substantial subsidies from the EU. The payment of these subsidies by the Rural Payments Agency is often badly delayed with consequences for farmers’ cash flow. This is partly the responsibility of the agency, but it also reflects the complexity of the regulations and the difficulty of applying them. Simplification of CAP rules has been objective of the EU for some time, but progress has been slow. In part, this reflects the fact that the regulations are the result of an often messy compromise between different interests.

The EU has effectively prevented the commercial use of genetically modified crops. However, whether this represents the right or wrong kind of regulation depends on where you stand on this controversial issue. Regulatory issues are not just questions of burden reduction but also of political judgment.

As far as food regulation is concerned, the emphasis has been on free movement and food safety. It has been argued that the regulations are safe and comfortable and not that useful. In particular, there has been a relative neglect of nutritional issues which are important in relation to obesity. However, that in turn reflects defects in the scope of the Common Agricultural Policy. Good policy instruments in the form of regulations rely on well thought out and comprehensive policy objectives.

David Baldock of the IEEP, also on the panel, and I agreed that the main areas in which regulations might be relaxed after Brexit were GM crops, the Nitrates Directive and some aspects of the Water Framework Directive.

Food culture and Brexit

The March meeting of the Food Ethics Council Business Forum considered the consequences of Britain remaining in or leaving the EU for food and agriculture and have now produced a concise report on the meeting: Business Forum

An interesting point is how the UK's food culture has strengthened since the country joined the EU. How much this is to do with the EU and how much due to other factors such as more sophisticated and informed consumers is a moot point, although the report argues that European food culture has had a beneficial effect which might be lost after Brexit.

In addition, Dan Crossley gives his reflections on various events on the subject (one of which I participated in) organized by the Food Ethics Council: Enough time to decide?

More on Brexit and agriculture

My latest contribution to the Brexit and agriculture debate, this time for the Global Plant Council: Global Plant Council

We need to stay in the CAP but we must continue to work for reform

I was one of the speakers at an event on the impact of Brexit on food at the House of Commons last night. It was organized by the Food Foundation, Food Research Collaboration and the Food Ethics Council. The other speakers were Tim Lang of City University and Fiona Smith from Warwick who covered the complex international trade dimension which she described as a 'quagmire'.

Tim Lang claimed that the issue of how food and drink would be affected has been 'largely ignored' in the debate so far. His report suggests there will be 'volatility, disruption and uncertainty' in a post-Brexit trade world. 'The UK should wake up to the significance of our and the EU’s food role in this changed world,” said Lang. 'The public isn’t yet interested, seeing it as a matter of farming. This is dangerously wrong.'

I argued that Pillar 1 subsidies would be vulnerable after Brexit, Pillar 2 subsidies less so. Kerry McCarthy, the shadow cabinet member for Defra, asked why this was the case. I responded that Pillar 2 subsidies would be defended by a coalition of environmental and conservationist lobbies along with farmers, whilst Pillar 1 subsidies would be defended by farmers alone. Pillar 2 subsidies would also receive more support from academics as they were seen as providing public goods.

There was agreement among the panel that the emphasis needed to be on sustainability and that the CAP needed to address public health issues. There was increased public concern about these issues, but it would take at least ten years to make progress. If the UK remained in the EU, the Government needed to take a more systematic and engaged approach to CAP reform.

Kerry McCarthy made a good point when she referred to the Janus-faced nature of the CAP, on the one hand encouraging niche, high valued added, quality production and on the other hand intensive forms of commodity farming.

As President Obama pointed out, we live in an interconnected world and that is why we need a policy like the CAP, for all its imperfections.

Brexit and agriculture

My latest contribution to the debate can be found here: Brexit

Brexit fears hit farmland prices

English farms have seen the steepest fall in their value since the financial crisis, as investors worry about what might happen to farm subsidies after Brexit. Values fell 3 per cent in the quarter to March according to an index constructed by estate agent Frank Knight. This is the largest quarterly fall since the end of 2008. Average values have risen nearly 180 per cent in the last decade.

Knight Frank think that farmland values will fall 8 per cent this year on the assumption that commodity prices remain low and there is not a collapse of sterling.

Farmers Weekly has noticed a 24 per cent drop in the acreage of land advertised in its pages in the three months since January compared with the same period last year. The average price of an acre of English farmland has dropped below £8,000.

NFU release Brexit report

The National Farmers Union have released the report they commissioned from Wageningen University on the possible implications of Brexit for EU agriculture: The report explores three alternative scenarios of what might happen after Brexit.

The NFU Council will decide in mid-April whether to take a position on the referendum. Most farmers probably favour remaining in membership, but a sizeable minority want to leave.

Feedback meetings on the report being held by the NFU around the country are attracting big audiences. This is in line with my experience of addressing meetings in Yorkshire on our Yorkshire Agricultural Society report on Brexit. These attracted audiences of 200 and 160. I will be addressing a meeting in Cumbria on May 5th.

The results of each scenario show that the biggest driver of UK farm income change is the level of public support payments available. The positive price impacts on farm incomes seen through both the FTA and WTO default scenarios would be offset by reductions in direct support. A reduction of direct support, or a complete elimination of it, would exacerbate the negative impact effects seen under the UK Trade Liberalisation scenario.

The cattle and sheep sectors are particularly dependent on direct support payments, but so too are mixed farms and field crops. Consequently, the combination of a more liberal trade policy and a reduction or elimination of direct support would make many British farms less viable.

The report can be linked to from here: Report