Few sectors of the UK economy are set to see more change as a result of the June 23 referendum result than farming. The way in which the new UK agriculture policy is constructed will shape its political and economic resilience.
Farm support is coming home
For decades UK agricultural policy and spending has been settled in Brussels through processes few outside the industry understood or cared to follow. It has been insulated from the cut and thrust of domestic policy and budget trade-offs. That is about to change. The current Government has provided assurances on continuity of payments through to 2020 but budgetary allocations to agriculture will, post-Brexit, be in the mix with social care, hospitals, education, defence and other spending imperatives.
UK farmers have been able to sell into the Single Market; wider trade and tariff terms have been stable. Yet now the future international terms of trade for agricultural exports and imports sit among the many ‘known unknowns’ and could soon be radically different to those that have shaped Britain’s farming industry.
There are big decisions ahead
There have been calls from some in the industry for the future framework to focus on productivity and innovation, and on encouraging new entrants. Whether there is an appetite for fundamental changes to achieve those stated goals is not yet clear. How far are we prepared to go in pursuit of a nimble, innovative farming sector fit for post-Brexit markets?
For example, global research by the London School of Economics’ Centre of Economic Performance (CEP) found family-owned and managed firms where management is passed down from generation to generation have significantly worse management and productivity than firms with professional managers. CEP advised changes in UK inheritance tax to encourage ownership transitions and so boost productivity. Favourable tax treatment of agricultural land also attracts investment from outside the sector that pushes up land values that are already inflated by the subsidy regime. Yet high prices make access to the industry more difficult for innovative new entrants.
There is more in play than farm incomes
Many have also reminded us of the need to protect the natural environment as we navigate the economic transitions ahead. But this is mostly framed as a challenge - safeguarding the environment from the side effects of pursuing productivity - rather than as Brexit offering new opportunities to make a rural economy capable of sustaining more livelihoods as well as greater environmental and social benefits. Evidence that employment can be increased in upland areas by shifting from sheep farming to mixed uses, including the restoration of natural ecosystems, might suggest a new future built around a different kind of upland economy and landscape. Are examples such as this in the mix for the ‘big conversation’ ahead, or are the only options on the table to be based on traditional economic models, retaining rigid demarcations of agricultural use of land and current livestock systems? How far will we be prompted to rethink what receives public support and why?
How these choices are made matters
The farming industry has been gathering its thoughts for the debate ahead while those in government do their groundwork. As with the rest of the Brexit preparations, there is a sense of time pressing but the objectives and key parameters are not yet clear.
The exit negotiation timetable means that situation could change very quickly. There is a risk that, in the haste to get matters settled, the discussion about agriculture policy is framed in ways that exclude issues worthy of debate, and that decisions lock-in positions that close down future options. Is this debate about the future of food and farming to be a bilateral affair between producers and government, condensed under pressure of time and politics to narrow horse-trading over the terms of a new version of the historic model with less red tape and bigger red tractors? Or is it to be a public conversation about how and where we produce our food, what public goods are purchased on what terms, whether we rethink the role of parts of rural Britain, and how best to bring jobs to its communities?
If this vitally important topic is to be the subject of a genuine open debate it will need to be conducted in places and in media that connect to everyone with an interest. This means finding innovative ways to get Britain engaged. Done well this can foster genuine creativity and nurture the collective buy-in needed to provide the foundations for future policy stability in the more turbulent times ahead.