The Government consultation document is now available with replies required by May 8th. I have not had time to analyse it yet, but hope to do so before long: Consultation
This is clearly an important stage in the evolution of a domestic agricultural policy after Brexit, although I have some scepticism about how much government is influenced by the responses submitted.
No one should underestimate President Macron's determination to modernise France, but farmers are one of the most difficult groups to deal with. They may be only three per cent of the population, but they have considerable public sympathy. British farmers have resorted to direct action from time to time, but if they blockaded roads as often as the French do, public opinion would soon turn against them.
I am no expert on France, but it does seem to me that food is absolutely integral to the national culture. Apart from perhaps Italy, there is no country where I can eat so well so consistently at reasonable prices.
I also happened to be up in the mountains the year before last when transhumance was taking place and this gave me some idea of how important farming is culturally in France. Britain is a much more urbanised nation in outlook.
Emmanuel Macron endured jeers and whistles on his first visit as president to France’s largest agricultural fair amid growing tension between his government and the country’s farmers, although earlier in the week 700 farmers have been invited to the Elysée Palace in a charm offensive. Mr Macron was confronted by hostile crowds on Saturday as he toured the showground in southern Paris, underlining the difficulties he faces in winning over France’s powerful agricultural lobby, which has been angered by EU trade talks and Chinese land purchases. Last year the acquisition of 900 hectares of farmland in Allier and 1,700 hectares in Indre by Chinese investors caused alarm.
In a tense exchange with a farmer over a weed-killer which the government has said it will ban, a visibly angry Mr Macron said he would find solutions for farmers who were unable to replace glyphosate, which is claimed to be carcinogenic. The Salon de l’Agriculture traditionally brings France’s political class into close, and often confrontational, contact with the country’s farmers. Last year, Mr Macron was hit by an egg when he visited as presidential candidate.
Macron wants farmers to move away from an over reliance on EU subsidies and to move towards less intensive production methods.
He has said that he will curb the forces of globalisation represented by Chinese land purchases. But he recognises that the EU will not have as much money for farm subsidies when Britain leaves, reducing net income by about eight per cent or some €15bn. (Sometimes I wonder if it might have been in the EU's interest to offer Dave Cameron a little more).
CAP is being eyed by Mr Macron as a French 'taboo' that needs to be revamped. 'We have come to this paradoxical situation in which the CAP has become a French taboo while our farmers continue to criticise the way it works', Mr Macron said in a speech at the Sorbonne last September.
Macron is prepared to pump in €5bn to help farmers to switch to environmentally friendly methods, find successors for their land and bring on a new generation of agricultural entrepreneurs. He wants 22 per cent of farmland to be managed organically by 2022, compared with 6.5 per cent today (ambitious in my view). He is also going to fund much needed early retirements. What he didn't seem to have much to say about were the efficient, competitive grain farmers in the Paris Basin.
As someone who has been wary of France and the French, my attitude is I admit paradoxical. I don't like their arrogance and elitism, but I would also admit their étatisme has brought some remarkable achievements. In a way I think they are most effective when they are assertive, which is why I like Macron and wish him well. But he has a tough task with the farmers.
It is generally accepted that farmers are going to face a more competitive environment after Brexit. Support payments will be lower; there may be more competition from cheap imports; exports could be disrupted.
At the very least, farmers might expect a level playing field domestically. But that has not been the case for some time. Power has moved down the food chain to retailers. They are engaged in intense competition, not least against the interlopers Aldi and Lidl. The most important element in that competition is price. So they ask farmers to produce high quality goods at the lowest possible prices.
I have been told some stories of retailer sharp practice over the years by reliable individuals that give me cause for concern. I cannot repeat them because I do not have an evidence base. Evidence is difficult to obtain because producers fear retailer reprisals.
The Groceries Code Adjudicator (GCA), sometimes referred to as the 'supermarkets ombudsman', was designed to tackle these problems. With modest resources, some progress has been made. However, in an announcement slipped out this week when other agricultural and food stories were dominant, the Government has said that it will not extend the remit of the GCA.
It suits the government to have intense competition between supermarkets which keeps down food prices. But farmers are left as price takers.
The letter from the minister to the chair of the Defra committee can be found here: Adjudicator
The House of Commons Defra Committee has issued a critical report on this topic: Brexit and food
It states, 'The Government has offered no clarity to the agricultural industry on its post-Brexit policy. The Government must offer this clarity and stability so that the industry has the confidence to invest and take advantage of the opportunities offered to the sector post-Brexit. We would like to see the Government offer policies that would stimulate home grown food production.'
'The UK has an international reputation for high animal welfare, environmental and food standards. These must not be sacrificed on the altar of cheap imports. Doing so could undermine the premium British brand and might affect our ability to negotiate trade deals with other countries. We will hold the Secretary of State to his assurances that there will be no compromise on animal welfare, environmental and food standards.'
'The Government must make it clear to industry how it intends to deal with potential regulatory divergence with the EU, and the mechanisms it will put in place to track divergence in the future.'
As a divided Government has difficulty in deciding what its policy should be on Brexit generally, I am doubtful that clarification will be forthcoming.
Sir James Dyson has written to the Spectator in response to an article that said that subsidies 'absurdly' favour bigger farms.
He writes: 'My family's farming business, Beeswax Dyson Farming, farms 33,000 acres directly and has invested £75m in technology, training, soil improvement and environmental stewardship over the past five years. Subsidies we receive go directly into the activities they are designed to support but are dwarfed by our own investments.'
'If Britain wants an internationally competitive agricultural sector, rather than a domestic theme park, we must encourage investment in innovation and stewardship. Removing subsidies from efficient farms simply because they are large would remove their incentive to invest at scale. This will hurt the farming economy as we become increasingly uncompetitive against our EU counterparts.'
The 'big farms bad, small farm good' orthodoxy does need to be challenged. It is also important to raise the issue of international competitiveness which is rarely mentioned in discussion of the future of UK farm policy. Post-Brexit, UK farmers will be competing against farmers on the near continent still receiving CAP subsidies.
However, when one pays out blanket subsidies, there is no means of tracking or ensuring that they are used for investment rather than consumption. Sir James evidently does use them for investment, but this cannot be guaranteed.
The NFU's director of strategy Martin Haworth told a Euractiv seminar in London: 'We need to explore the markets in China and the United Arab Emirates, but the chance of these replacing the EU market is remote. Without regulatory alignment, the costs (of accessing the EU market) could be really high.'
Tom Hind, director of strategy at the AHDB emphasised the importance of investing in the agricultural sector, noting that 'Brexit or no Brexit, productivity will have to be addressed as the imperative facing our industry.' The sector is currently ineffective in 'translating innovation into practice. The sector needs to seize the current opportunity presented [by Gove] to enable us to be more competitive and maintain market share.'
The views put forward by a range of industry leaders at the seminar can be found here: Invest to competeIn this short video speakers emphasise their key points, Martin Haworth noting that Michael Gove speaks only about public goods and environmental payments and nothing else: Video highlights
Farmers need financial guarantees from government post Brexit if a decimated industry is to be avoided, argues former Labour agriculture minister Lord Rooker: Need to avoid Brexit cliff edge
He said that there was no sign of the promised agriculture bill and no indication of what might be in it. [It looks as if the first step will be a white paper and a period of consultation].
My latest reflections after Michael Gove's Oxford speech: The future of farm policy after Brexit
The AHDB has produced a Horizon report on the productivity challenge facing UK farming: Driving Productivity
British farmers are falling behind their competitors in terms of productivity. For example, the USA and the Netherlands have raised their annual agricultural productivity by 3.2 per cent and 3.5 per cent respectively in recent years, while the UK has been limping along at 0.9 per cent.
The report argues that spending on research and development is heavily skewed towards 'blue sky' rather than 'near market' research and is heavily fragmented. There is also a lack of training with British farmers under investing in their skill base.
It's an argument we've made before, but this is a good blog article by Richard Byrne at Harper Adams pointing out that the migrant labour crisis is already here and cannot be solved in the short term by agri tech: Migrant labour shortage
Irish beef producers have not been reassured by Theresa May's pledge that cross-border trade would continue uninterrupted after Brexit. The promise of regulatory alignment was essentially a fudge that got round an awkward issue and allowed talks to proceed to the next stage. It was kept vague for political reasons.
Ireland's beef exports to the UK are worth €4.4bn a year. The largest groups have operations in the Irish Republic, Northern Ireland and mainland Britain.
Beef exporters remain concerned that the UK might yet seek to enforce different food safety and animal health rules to the EU. They fear delays when exporting to the UK; disruption to meat shipments to continental Europe via Britain; and the prospect of having to compete with cheaper imports from the likes of Brazil.
There is a concern that without full regulatory alignment, the UK could take imports from the US, Brazil and Australia - countries with different food safety and animal welfare standards to the UK.
Farm subsidies will stay at their current levels (presumably without an inflation adjustment) for five years after Brexit, Michael Gove will announce today: Farm subsidies
After 2024 they will be replaced by a new system designed to secure environmental outcomes and support rural infrastructure. There is also reference to giving greater access to the countryside which may worry livestock farmers who already have problems with out of control dogs.
The extension of subsidies represents a considerable victory for the NFU and gives farmers more time to plan for the future. The downside is that it may lead them to delaying necessary adjustments to their businesses to prepare for a life without existing blanket support payments. It will create something of a 'cliff edge' in 2024. I have always been an advocate of tapering payments to facilitate adjustment.
The largest landowners may have their payments capped before 2024. The government has yet to make a decision on the cap, but it could be implemented using a sliding scale with the 3,500 farmers who receive more than £100,000 each annually getting a lower amount per hectare above a certain number of hectares.
Mr Gove is expected to tell the Oxford Farming Conference today: 'Paying landowners for the amount of agricultural land they have is unjust, unfair and drives perverse outcomes. It gives the most from the public purse to those who have the most private wealth.'
Mr Gove hopes that the UK will leave the CAP when Brexit happens in March 2019. Whether the UK remains a member of the CAP during the transition period is still a matter for negotiation. but most officials in London and Brussels believe that Britain will still be a member for a period of time after Brexit.
There have been a considerable number of reports on Brexit and the agri-food sector and Birmingham Food Council has compiled a list of them with links: Brexit reports
Perhaps the question I am asked most often is, 'Why did farmers vote for Brexit?' Well, the short answer is that they didn't. Or, at least, we don't have any reliable data. Opinions have been based on self-selected polls by Farmers Weekly and my hunch is that they tend to over represent supporters of Brexit.
However, they are the only data we have. The latest poll suggests that, just like the population as a whole, most farmers have not changed their mind about the way in which they voted, despite being more pessimistic about the outlook for their businesses. The Remain camp gained just one percentage point.
The latest poll of more than 1,400 respondents (two-thirds of them farmers) shows that 53 per cent of them voted to leave the EU and 45 voted to remain with two per cent not voting. This would imply a 98 per cent turnout among farmers and reinforces my view that the more committed are over represented in the poll which would tend to be Brexiteers, given that many Remain voters were not enthusiastic about the EU but thought that on balance the UK was better staying in.
The non-farmers taking part, mostly those in ancillary occupations and the wider food industry, voted 57 per cent to remain and 36 per cent to leave, 7 per cent not voting.
It is no surprise that support for leaving was highest in those sectors that have not received much in the way of subsidies: 67 per cent in sugar beet; 66 per cent in; and 57 per cent in horticulture. Dairy and sheep farmers would be more inclined to stay in the EU.
It would seem that for many leave farmers concerns about sovereignty and immigration trumped purely agricultural issues. One farmer commented, 'My biggest hope is that we will get away from the strangehold Brussels has on this country. The EU has got too Big Brother and dictatorial.'
12 months ago 45 per cent of farmers were confident that Britain would get a good trade deal after Brexit, but that figure has now slumped to 35 per cent. Among non-farmers 67 per cent have little faith in a good trade outcome.
Just 28 per cent of farmers now think they will be better off after Brexit with 46 per cent expecting to see an income decline. Before the referendum 37 per cent thought they would be better off and 43 per cent thought they would be worse off. Just 22 per cent of those in the non-farming group see a benefit to their businesses from Brexit compared with 54 per cent who they will be worse off.
Medium-term confidence among farmers has hit an all time low according to the latest NFU survey: Business confidence goes into the red
One in five plans to cut investment and there is concern about rising input prices, regulation and Brexit. NFU president Meurig Raymond commented, 'everyone is concerned about the trade deal that we'll have with the EU, the domestic policy that will replace the Common Agricultural Policy and labour shortages.'
The survey showed that arable and sheep and beef producers were most pessimistic about the medium-term outlook.
The weak pound led to higher subsidy payments and helped exporters, but the devaluation has recently fed through to higher import costs including feed, fertilisers, energy and machinery.
Following the recent workshop of the Brexit working party of the Yorkshire Agricultural Society we have produced an interim report on policy instruments in a domestic agricultural policy after Brexit: Interim Report
A more detailed report is in preparation.
Defra secretary Michael Gove has told the House of Commons Defra committee that subsidies for hill farmers will continue beyond 2022. He said, 'Farmers in less favoured areas, and upland hill farmers who are producing sheep meat as well as wool ... will need support for several years to come.'
Whether payments would still be made on an area basis is unclear.
Mr Gove was not sympathetic to the NFU argument that subsidies were needed to prevent the UK becoming more reliant on imports. I have always been sceptical about the idea of self-sufficiency targets.
Theresa May has said that Britain will leave the Common Agricultural Policy at the same time as it leaves the EU in March 2019. She said, 'The relationship we have on [the CAP] continuing through the implementation period with the European Union will be part of the negotiation of that period, which will start very soon.'
She added: 'Leaving the CFP and leaving the CAP gives us the opportunity to actually introduce arrangements that work for the United Kingdom.' What these arrangements might be remains unclear, as is the issue of whether the basic payment would cease in 2019.
Michael Barnier has said that Britain would remain in the CAP in the transition period. In practice the political priority, certainly for Michael Gove, might be getting out of the Common Fisheries Policy. In any event there is now more uncertainty about the future of British farming.
A new report Assessing the costs of environmental land management in the UK commissioned by The Wildlife Trusts, RSPB and the National Trust, shows how much Government might need to pay farmers and land managers for their role in looking after our natural heritage.
The report estimates that meeting existing government commitments to improving natural assets such as water quality, soil health and biodiversity will cost £2.3 billion per year. But meeting existing commitments will not be sufficient to halt the decline of the UK’s wildlife and reverse this trend.
£2.3 billion is five times more than is currently spent through agri-environment schemes – the source of most current environmental land management funding. This figure does not include wider financing required in the farming sector, for example for research and development or providing advice to farmers.
The total includes £876m for protecting and improving priority habitats, which include woodlands, marshes, bogs and fens; £402m for hedges and stone walls; and £78m for flood plains.
Ellie Brodie, Senior Policy Manager, of The Wildlife Trusts said: 'Farmers can sell the food they grow through the market. But they can’t sell a whole range of services that society needs them to provide, whether it’s reducing the risk of floods downstream, creating habitat for bees or improving the health of our soils. The Wildlife Trusts believe that farmers should be paid for this as it benefits us all. A healthy, wildlife-rich natural world is valuable in its own right and is also at the core of people’s well-being and prosperity. We must be prepared to pay for these benefits.'
Christopher Price, head of policy at the Country Land and Business Association said that government agri-environmental schemes were over bureaucratic and fragmented and drew attention to the CLBA's vision of a land management contract.
The associated policy briefing can be found here: Policy briefing
A hard border between Northern Ireland and the Irish Republic would create particular problems for the agriculture and food sectors.
Food and live animals account for the largest share of trade with Ireland. Northern Ireland is reliant on the republic for more than 60 per cent of its food and live animal exports. Agri-foods are particularly important to Northern Ireland and the sector is 'one of the few economic bright spots' according to the CBI.
Aiden Gough of InterTradeIsland told the Financial Times that 'The food industry is absolutely predominant in the cross-border trade in the island. The vast majority of trade is supply chain and goods cross the border multiple times before coming final products.'
A quarter of Northern Ireland milk and more than one-third of its lamb are processed at plants across the border. Baileys liqueur is produced in Ireland and sent north for bottling before returning to the republic for export.
Shaun Murphy at KPMG says that agriculture is 'the sector that is most at risk' because 'integrated cross-border supply chains are complex and costly to unravel'.
Given that the UK Government is not prepared to countenance Northern Ireland staying in the customs union or internal market, it is apparently prepared to consider continued regulatory convergence between the north and south of Ireland to prevent border problems.
However, that solution is unacceptable to the DUP whom the Government depends on for its majority. It would in effect create a border in the Irish Sea. It might also attract objections from other member states who could portray it as giving an unfair advantage to Northern Ireland.
