Reform “grossly unfair” farm subsidies, expert says

Following an invitation to address the Conservative Party conference in Manchester, Professor Ian Bateman, Director of the University of Exeter’s Land, Environment, Economics and Policy Institute (LEEP), gave a speech setting out a new vision for a harmonisation of environmental and agricultural policy following Brexit.

Sharing the stage with Environment Minister Thérèse Coffey MP, Professor Bateman called for the scrapping of current agricultural policy which had overseen long-term decline in the natural environment, poor value for money to tax payers and a bad deal for the large majority of farmers.

Arguing that any improvement had to involve a new relationship between farmers and society that was good for both sides, Professor Bateman opened the session by highlighting that subsidies are currently distributed according to farm size.

This has resulted in three quarters of funding going to the biggest one quarter of farms, with billionaire landowners being among the largest recipients of public funding.

This supports intensive high-input/high-output farming so that society pays twice for food production, once through taxes and again via the shopping basket.

In contrast many small and average sized farms receive relatively little public support despite being vital contributors to environmental quality.

Professor Bateman said: “Society doesn’t benefit from small farmers being pushed into bankruptcy.

“So the gross inequality of the present system should be replaced in part with the fairer distribution of a basic income safety net across farms.

“This will also retain land for any possible future food security contingencies without wasting money now by subsidising overproduction and damaging the environment.”

Beyond this safety net, Professor Bateman urged that public funding should only pay for activities which have public benefits.

These benefits include supporting rural development, maintaining high standards of animal welfare, protecting the biosecurity of the country, protection from flooding and the development and application of low-impact farm technology.

However the majority of public funding should be targeted towards improving the country’s environment and the “natural capital” it provides, underpinning the economy and social wellbeing as well as providing a high-quality environment for all.

New methods of calculating the value of improving natural capital are available to help decision makers target public funding to those areas and uses which will deliver the best for society.

It is now possible to measure the contribution of landowners, farmers and farm managers to the environment, for example by calculating how much they reduce water pollution. 

The speech in full: 

A new deal for the UK countryside: Recommendations for a post-Brexit agricultural policy

The status quo and the opportunity

Whether you are pro- or anti-Brexit, withdrawal from the EU’s Common Agricultural Policy (CAP) should be welcomed.

While in recent years it has been somewhat reformed, over its lifetime the CAP has been the single policy most responsible for environmental degradation in the UK countryside through the over-intensification of agricultural production with insufficient regard for its wider effects.

This is not a parochial issue. Although agriculture only contributes about a half of one percent of GDP, it is responsible for over 70% of UK land use and either directly or indirectly affects us all.

The opportunity exists for a new deal for the UK countryside which delivers sustainable farming livelihoods, radical improvements to the natural environment and a much better deal for taxpayers. However, this requires that we first recognise that the status quo is indefensible; it is a bad deal for almost all concerned, including the large majority of farmers.

At present over 50% of the value of UK agriculture comes from public subsidies. Most of this is distributed on a per hectare basis which means that three quarters of this public money is captured by just one-quarter of farms. These include some of the biggest, richest farms in the country, many of which specialise in intensive, high input/high output, agriculture. So taxpayers pay for food twice, both via subsidies and through the shopping basket. At the same time the majority of small and average sized farms receive relatively little support.  

A new deal for the UK countryside:

We need a new compact between society and the farming community to deliver a new deal for the UK countryside:  

• Society doesn’t benefit from small farmers being pushed into bankruptcy. So the gross inequality of the present system should be replaced in part with a fairer distribution of a basic income safety net across farms. This will also retain land for any possible future food security contingencies without wasting money now by subsidising overproduction and damaging the environment.
• Beyond that there is a simple principle that public funding should not be about paying for those goods which are better provided and paid for through markets. Instead public funds should be for public goods.
• This is actually good news for farmers because alongside producing food, they can also produce multiple public goods. They can help with rural development, maintaining animal welfare and biosecurity and adopting technology which both raises output and lowers farming’s impacts. But most of all they can help deliver the Government’s objective “of being the first generation to leave the natural environment in a better state than that in which we found it”.
• The majority of public funding should be targeted to those areas and actions which generate higher public benefits, e.g. areas that yield clean drinking water, protect communities from flooding, link conservation habitats for wildlife, provide recreation for disadvantaged populations, protect cherished landscapes, reduce greenhouse gases and other air pollution, etc. Government figures show that environmental improvements, such as planting the right woodlands in the right places, provide excellent value for money to the taxpayer with benefits often three times larger than costs. Levelling the subsidy playing field between farming and woodlands is also long overdue.
• As part of this, Government needs to improve decision making by investing in decision support ‘tools’ to reveal the consequences of alternative policies and target spending.  
• Similarly, better monitoring of the effects of policies will allow us to move towards a system where we pay for outcomes rather than just activity.
• We should also introduce more competition to the allocation of public funding and provide firms with incentives to partner with farmers to improve the environment and generate win-wins for all concerned.

We have this one chance to make both the environment and farming sustainable, delivering benefits throughout society. I very strongly urge policymakers to take advantage of this once in a lifetime opportunity.