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ALI Richard

In January on this site, I highlighted the need for the UK to have a post-Brexit vision for farming and the countryside.  Today, I suggest a policy framework that would enable future governments to provide both a strategic vision and tactical effectiveness.

Food, farming and the environment are complex: they stir passions, and they cost money (big money).  Between 2014 and 2020, the UK was expected to receive €25.1 billion in direct payments and €2.6 billion in rural development funds for the environment and rural development.

Now, farming isn’t easy.  It’s not for the faint-hearted or the lazy.  Neither is agricultural policy, as any politician or civil servant sat within the Department for Food, Environment and Rural Affairs will tell you.  Get it wrong, and not only will farmers protest but food chains can fail and the environment can suffer.

Get it right, however, and our farmers and growers can, and will, innovate and seize the opportunities that change will undoubtedly bring.  I’ll cut to the chase: there are three structures every enduring new build needs.

1.  The foundations

The first – the foundations – recognises that modern farming is overwhelmingly a force for good.  Not only does it provide the majority of the food we all rely on, but it shapes and cares for our countryside.  We pay farmers for the food they produce, but what about those public goods which are provided without a market place?  I don’t believe anyone argues that farmers and growers shouldn’t be rewarded for the public goods they provide, so the first structural component of my ideal post-Brexit farm policy is an Environmental Payment.

There is little point in reinventing the administrative systems we have spent millions in establishing under the CAP, so I do not propose a wholesale change in mechanisms.  What I do expect from government is an evaluation of what regulations farmers have to meet to claim those payments.  Rather than have an overly bureaucratic system of cross-compliance, we must have a system that is built for Britain.  In future, I have no doubt that government will want to consider whether upper (or lower) limits will be placed on these payments, and whether more value is placed on certain landscapes.

2.  The walls

The second is the walls.  This is where we recognise that farming isn’t easy, and is an inherently risky business subject to the vagaries of the weather.  It is one reason why farming is supported pretty well the world over.  There are many risk-management models in use from simple private insurance to more complex government schemes.  My own preference is for a national scheme triggered by price falls below say 80 per cent of the average costs of production over a specified time period.  Individuals would of course be free to take out their own private policies to guard against catastrophic localised weather events.

A national safety-net scheme would provide some certainty, and help guard against the degradation of farming’s asset base.  It would not, however, support the inefficient as average costs of production would be used as the benchmark.

There are many options to meet the costs of the safety-net, including out of central taxation, but also by introducing a temporary tax on food which would act as an automatic stabiliser, and prevent the creation of short-term windfall profits in the rest of the food supply chain.

3.  The roof

The third structure is the roof, which ultimately enables British agriculture the certainty to plan for the future and invest in the fabric of its own building.  My proposal is to establish a Sovereign Fund for investment in the food chain.

There are sound economic reasons for farming to earn an increasing amount of its income “beyond the farm gate”, which I won’t rehearse here for shortage of space.  Suffice to say, significant national funds have been used in this direction, but often in a scattergun way.  What I suggest is taking the funds earmarked for rural development, supplemented by private investment to create an investment trust for UK food supply chains.  By creating a specialised fund I envisage the UK food chain having access to capital earmarked specifically to add value to home grown food and fibre.  This fund would not be used to improve commodity production rather it is to help strengthen the market for British produce by supporting innovation.  Over time such a fund would become self-sustaining.

As Scott Mann has said on this site, it is important we have the policies that help British farming succeed.  Now is the time to design simple, joined-up policies that help deliver that success.

43 comments for: Richard Ali: Environmental payments. A safety net. And a sovereign fund. How to build a post-Brexit future for farming.

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