Tom Clarke is a former Local Govt advisor and management consultant who has run his family’s farming business in Cambridgeshire since 2009.
Michael Gove fired up the green lobby on 24th July by announcing that future farm subsidies would be tied to provision of environmental public goods. Meanwhile, in America and Australasia Liam Fox and Boris Johnson gave a green light for more food imports, such as chlorinated chicken and frozen lamb, in return for fast trade deals.
Put these two ingredients together, and you have a recipe for less homegrown food, and a sharply higher dependence on foreign farming regimes. That doesn’t seem like “taking back control” and, so far, no one in government has said much about food security.
Food security is a fancy term for being able to feed ourselves. It is easily forgotten and rarely near the top of any voters mind. In normal times.
As I laid out on ConHome last year the UK is only 61 per cent self-sufficient in food. Bluntly, Britain can feed itself breakfast and lunch, but has to import its dinner.
Meanwhile, the global population is increasing by 83 million a year, and according to the UN will likely hit eight billion by 2024, reaching ten billion in the 2050’s. That is a lot more mouths to feed, and possibly with less land and harsher climates in which to produce it.
It is easy, but lazy, to underline our position by conjuring images of Dig for Victory posters or Atlantic food convoys. Such things seem alien to the world of plenty we live in today.
So instead, cast your minds back to last winter and the ‘courgette crisis’.
A tabloid and social media storm brewed as bad weather in Spain led to empty supermarket shelves and quadrupled the price of fresh vegetables. Suddenly, Britain couldn’t take year-round plenty for granted.
“Britain is only nine meals from anarchy,” says Lord Cameron, Chairman of the Government’s Global Food Security Programme. “Food is essential to our national security; because if you cannot feed a country, you haven’t got a country.” says Ian Wright, Director General of the Food and Drink Federation.
Empty shelves are an extreme, and we will never be able to grow our own courgettes in December. But what the winter vegetable crisis highlighted was our stealth dependency, and hence our vulnerability.
A grip on your own food supply is a strategic asset, and affordability of food is as crucial as its supply, just as economic stability is part of national security. Over time, high food prices can have a similar effect to scarcity. The Arab Spring was in part triggered by a spike in bread prices.
Food prices today are at an historic low. On average, British households spend only ten per cent of their income on food, half the proportion of 40 years ago. Some free marketeers (including the Executive Editor of this website) assert that after Brexit, food prices could tumble even further as we slash the average 18 per cent tariff on food from outside the EU.
Yet for us (a soggy island which imports its dinner every day) the exchange rate has a greater and more immediate effect on food prices than tariffs ever could. Since the referendum, Sterling has fallen 18 per cent. Food price inflation is on the up. It is a major cause of the current rise in overall inflation, lower real wages and hence falling living standards. All imported food is now more expensive. The same is true for farmers’ costs of production, as we import the bulk of our inputs.
This is a structural issue that won’t go away unless we can enhance our ability to feed ourselves. Almost every country in the world has a policy to achieve this – mostly involving subsidies to food producers.
We have to ensure that our new agricultural policy, and new trade deals, don’t sacrifice food security by permanently offshoring our food production to regimes with greater protections, higher subsidies or lower standards.
I am not calling for subsidies to remain unchanged – the current system is not good. I am not calling for protective tariffs – behind which our agricultural sector would atrophy. I am not calling for lower standards – which would short-change consumers and degrade our own environment.
I am suggesting a Conservative approach rooted in supply-side reforms. A programme to “pump prime” farming to be a more productive, competitive and profitable enterprise without current subsidies.
Productivity is the key – the ability to grow more for less. The UK has been lagging our climatic cousins in this regard for 30 years, but increasingly so in the last decade.
New Zealand is cited (often by those with access to Google and a spare five minutes) as a case study in how to reform. In the 1980’s the New Zealand government abolished all subsidises almost overnight, and nowadays New Zealand’s efficient farmers thrive without any tariffs and next to no Government expenditure.
New Zealand’s agricultural productivity is higher than ours, and has grown faster. But they are still being left far behind by Germany, the Netherlands and Denmark.
Factor in, too, that agriculture is to New Zealand what financial services are to the UK. It is the main sector of the economy, and the largest exporter. When subsidies were abolished, the New Zealand Dollar was devalued by 55 per cent, and every facet of the government was geared to assist the industry make that transition. A similar response is unlikely from a UK government – so I suggest this is not the model we should seek to emulate.
The Government has guaranteed funding of £3 billion a year to farming through till 2022. A serious Conservative DEFRA Secretary would be seeking to outline how a large part of this £15 billion could be better directed at restructuring, professionalising and commercialising the industry.
A proportion of these funds could be used, as Gove suggested, to reward the provision of environmental goods. Another tranche to underpin some kind of insurance scheme to counter the volatility inherent in agricultural markets.
But the bulk of these funds should be split between aid for reforming the industry structure, and funds for boosting productivity and skills. Much can be done with improved R&D, direct grants for infrastructure improvements and a keener farming population more willing and able to adopt innovation and best practice.
These measure should go alongside revoking some historic privileges which are holding back reform. Inheritance tax (IHT) relief for farmland (and farmhouses) distorts the market, inflates land prices and encourages it to be hoarded under family ownership. This ties up capital which could be deployed more productively, and reduces the return possible from the actual farming. Pension schemes seek to hold agricultural land as a secure investment yielding a mere 1-2 per cent. Some rich businessmen buy farmland as a way to avoid inheritance tax, and make a convenient trading loss for income tax purposes, too. The phasing out of IHT relief (also proposed by Defra advisor Prof Dieter Helm recently), alongside a tax amnesty for transferring the land to corporate ownership, would go a long way to freeing up resources for food production.
In an increasingly hungry and potentially more unstable world a more productive, competitive and profitable farming industry will be the best long term guarantee of our food security.