What will happen to farming in Devon post Brexit?

Yesterday I attended the Devon Local Nature Partnership conference ‘New Horizons for Devon’s Natural Capital’. Great speakers, well attended and well organised. Whilst there are many exciting initiatives happening right now in Devon and the ‘Green Brexit’ mission of Michael Gove gives environmentalists much to be optimistic about with the mantra of ‘public money for pubic goods’, I nevertheless left the conference with a sick feeling in my stomach. What does the future hold for Devon’s multitude of small family farms?

Most of my friends are not rural policy wonks and therefore they are unaware of the situation that farming in Devon (and elsewhere) finds itself. Read on.

Here is Professor Matt Lobley from the Centre for Rural Policy Research (where I work) at the University of Exeter talking about  Farm Business Income. Matt told the audience that the bottom 42% of small farms in England contribute just 2% of agricultural output…. There will be those who say these farmers are inefficient and a widespread re-structuring of the industry is required, I say be careful what you wish for. The consequences for the natural character, landscapes, biodiversity and social fabric of counties like Devon in losing 42% of its small family farms would be immense and would led to outcomes which would fly in the face of the Green Brexit objectives.

The rest of this blog attempts to explain the predicament that farmers in Devon now find themselves and gives a small insight into what has to be done over the coming 5 years. The following data comes from various Defra Farm Income reports.

This graph shows the average Farm Business income in England for the various different types of farming. It shows that across England cereals, grazing livestock (lowlands), grazing livestock LFA (Less Favoured Areas) and  mixed farming all lose money on the agricultural side of their businesses.

This table gives the actual figures included in the above graph. So if we look at Grazing Livestock (lowland) i.e. much of Devon that isn’t on Dartmoor or Exmoor, the figures show that the agricultural business lost £8,700 but agri-environment payments (money for looking after wildlife) generated £3000, diversified income (e.g. running a B & B on the farm) produced £6500, the Basic Payment Scheme (subsidy for owning land) provided £15,300 giving an overall Farm Business Income of £16,100. So £24,800 comes from grants, diversified non agricultural businesses and the Basic Payment Scheme to offset the £8700 agricultural loss giving the family farm an income of £16,100. That is not a living wage, i.e. the income provided is unable to pay the farmer, spouse and other working family members a rate of pay equal to the minimum agricultural wage.

The above figures are the 2016/17 figures for England but if you look at the regional numbers other trends emerge.

These are the 2015/16 figures: the average England FBI figure for grazing livestock is £14,400 but in the south west this drops to £10,300. The dairy sector on the other hand is stronger in the south west.

Here are the summary forecasts for 2017/18.

And here are the detailed forecast figures for 2017/18 along with the trends since 2012/13, an 8% decline for upland hill-farmers (LFA) and a standstill position for lowland grazing livestock. A major increase for dairy and a substantial one for cereals. A volatile market but a very precarious one for livestock farmers.

There are some pretty stark numbers in these datasets. Many farms, particularly small farms make small margins and many others are very reliant on agri-environment grants and the Basic Payment Scheme. After we leave the EU the Basic Payment Scheme will be phased out and public money for farmers will be provided in return for the provision of public goods (e.g. wildlife, access, looking after the historic environment, carbon storage, flood prevention, provision of drinking water etc). The following table shows the scale of the shift in policy and the implications of what might happen if it can’t be achieved.

The column titled CAP (Common Agricultural Policy) Subsidy is the sum of the agri-environment grants and the BPS subsidy. This is the amount of money therefore that farmers will have to earn via the provision of pubic goods if they are to maintain their current income levels. The final column shows what the impact would be on their Farm Business Income if they are unable to do this.

And here’s the rub – some farms on account of their location are much better placed than others to provide a suite of public goods and therefore receive public money. So for example hill-farmers in National Parks have made a very strong case that they can provide these public goods as these areas are rich in natural capital and this has been acknowledged by Government. On the other hand lowland graziers perhaps will find it much more difficult to provide public goods as they are not situated in National Parks with Bronze Age landscapes and Special Areas of Conservation where millions of people go for access and recreation.

The stated aim of these changes is to leave the environment in a better condition than it is in now, this means changes to the way things are done. Judging by the conversations that I’ve heard hill-farmers might be able to provide £22,800 worth of public goods to make up for the loss of their Basic Payment Scheme subsidy, the question is whether for example lowland graziers can provide £15,300 and dairy farmers £25,300 worth of public goods in return for the money.

I had a conversation with Robin Milton, Chair of Exmoor National Park, hill-farmer and NFU Uplands chair about this very topic yesterday and that was why I left the conference with a sick feeling in my stomach.

The 25 year Environment Plan – the wait is over

After months of waiting the Plan has finally been published and launched by the Prime Minister. So ….. has the wait been worth it? Of course this is just a plan BUT if it is delivered an awful lot to do with the environment will change for the better. There will of course be those who say it doesn’t go far enough here and opportunities have been missed there – they will probably be right too. BUT, my goodness who would have thought a plan such as this would have been published during the Paterson or Leadsom eras? I’m not going to systematically review the document I’m just going to pull out a few bits and pieces that caught my attention and made me smile.

You can download and the the 25 year plan here and I recommend you do 

To start with I wonder whether the cover of the report contains a Defra joke? This is Mam Tor in the Peak District with the sun rising in the background (at least I assume it is rising). It is owned by the National Trust who are developing plans to encourage hen harriers and peregrines back into the area. A new dawn is breaking …. hang on …. that was somebody else.

Back to Gove, he repeats in his introduction this –

We will support farmers to turn over fields to meadows rich in herbs and wildflowers, plant more trees, restore habitats for endangered species, recover soil fertility and attract wildlife back. We will ensure broader landscapes are transformed by connecting habitats into larger corridors for wildlife, as recommended by Sir John Lawton in his official review.

In the main report we are told again that subsidies are on the way out.

£3.2bn is spent in the UK under the CAP. £2.59bn of this is spent under ‘Pillar 1’ – the ‘basic payment scheme’ (BPS). This pays farmers according to the amount of land they own, rather than the outcomes they achieve. It concentrates money in the hands of those who already have significant private wealth, without improving environmental outcomes.

And that the ‘greening’ measures have failed and that only a fraction of the money has been spent on things that make a difference.

There have been efforts to improve this by ‘greening’ one third of BPS payments – but scholars have recently found these to be largely ineffective. Just £0.64bn – 20% of the total – is spent on environmental stewardship programmes under ‘Pillar 2’.

The principle public good ….. that is progress!!

After a period of stability to ensure a smooth transition, we will move to a system of paying farmers public money for public goods. The principal public good we want to invest in is environmental enhancement.

OK nothing specifically about uplands, hill-farmers or Commons but Gove covered them in his OFC speech last week – see here. These topics will be specially covered in the Agriculture Command paper due in the Spring and all will be well! Hill-farmers will be supported and the uplands will be restored.

Incentives ….. and ….. the ‘polluter pays’ – I never thought that I would read that regarding fertiliser and pesticide usage

We will introduce a new environmental land management system to deliver this. It will incentivise and reward land managers to restore and improve our natural capital and rural heritage. It will also provide support for farmers and land managers as we move towards a more effective application of the ‘polluter pays’ principle (whereby for costs of pollution lie with those responsible for it).

Here is the strong influence on Government that the Natural Capital Committee has had. Before the NCC ‘externalities’ were just jargon from economists but now it looks like we will all be using the word to reduce pollution.

Farming can be a powerful force for environmental enhancement but it currently generates too many externalities such as emissions from livestock and pollution from fertilisers and pesticides. Overall, farming is now the most significant source of water pollution and of ammonia emissions into the atmosphere in the UK. It accounts for 25% phosphate, 50% nitrate and 75% sediment loadings in the water environment, which harms ecosystems.

Finally a clear and not tacit admission that atmospheric pollution harms soils and alters vegetation.

By ensuring fertilisers are used efficiently, we can cut the air and water pollution that harms public health and the environment, and reduce greenhouse gas emissions. Poor storage of manure and slurry can lead to the release of harmful chemicals and gases such as ammonia (in 2015, more than four-fifths of ammonia emissions in the UK stemmed from agriculture). This can cause acid rain, combine with pollution from traffic and industry to form smog, and harm soils and vegetation.

A clear indication that peat bogs will be conserved and managed better in the future.

Our peat bogs and fens are important habitats that provide food and shelter for wildlife, help with flood management, improve water quality and play a part in climate regulation. Most peat soils support ecosystems that are sensitive to human activities including drainage, grazing, liming and afforestation. This makes them susceptible to degradation if poorly managed.

If I were still working at Wicken Fen on the National Trust’s Vision or the Wildlife Trust’s Great Fen project I would be very excited about this – opportunities, opportunities, opportunities.

Over the last 200 years, we have lost 84% of our fertile peat topsoil in East Anglia. The fens there could lose the remainder in just 30-60 years given current land management practices and a changing climate. In view of this, we intend to create and deliver a new ambitious framework for peat restoration in England.

Habitat creation on a grand scale …

Through changes in the way we manage our land, we will develop a Nature Recovery Network providing 500,000 hectares of additional wildlife habitat, more effectively linking existing protected sites and landscapes, as well as urban green and blue infrastructure.

Five years ago commissioning a review into National Parks would have been a recipe for their further emasculation – this can only mean they are going to be strengthened and properly funded! Who to chair the review? Dame Fiona Reynolds would be a good choice in my view.

The UK’s first National Parks were created by an Act of Parliament in 1949 following the government’s 1947 Hobhouse Report, which remains the basis for most protected landscape designation in England today.

Now, 70 years on, the Government will commission a review for the 21st Century. This will consider coverage of designations, how designated areas deliver their responsibilities, how designated areas are financed, and whether there is scope for expansion. It will also consider opportunities to enhance the environment in existing designations, and expand on the existing eight-point plan for National Parks to connect more people with the natural environment.

To my eyes much of this plan looks excellent, of course it will only be effective if things happen – that is the next stage.

This tweet which I posted earlier sums up my feelings

There is also an annex which was published alongside the main report – this is also very good – it is full of useful data with url links to the sources. You can download the annex here.

I can’t see the Defra joke though in this image – can you?

Farming Tomorrow?

On the 1st August this week a think tank, Policy Exchange, published a report entitled Farming Tomorrow: British agriculture after Brexit.  You can download the report from here.

Policy Exchange describe themselves as follows:-

‘Policy Exchange is the UK’s leading think tank. We are an educational charity whose mission is to develop and promote new policy ideas that will deliver better public services, a stronger society and a more dynamic economy. Registered charity no: 1096300.

Policy Exchange is committed to an evidence-based approach to policy development. We work in partnership with academics and other experts and commission major studies involving thorough empirical research of alternative policy outcomes. We believe that the policy experience of other countries offers important lessons for government in the UK. We also believe that government has much to learn from business and the voluntary sector.’

According to Wikipedia Policy Exchange is a British centre-right think tank, created in 2002 and based in London. It has been variously described as, “the largest, but also the most influential think tank on the right”, in the Daily Telegraph, and as, “a neo liberal lobby group funded by dark money”, in The Guardian.

Interestingly Michael Gove, the Secretary of State for the Environment was instrumental in setting up Policy Exchange in 2002 and was its first chairman. Even more interestingly Michael Gove’s recent speech on environmental policy ‘The Unfrozen Moment – delivering a green Brexit’ (download here) practically mirrors the ethos of the Environment section of the Policy Exchange document.

Gove has been more circumspect about exactly what Brexit might mean for agriculture other than saying that in the future ‘support can only be argued for against other competing public goods if the environmental benefits of that spending are clear’.

Perhaps the Policy Exchange document gives us an insight into what Farming and Food Green paper might contain?

The document contains 6  chapters and an Executive summary. In the Introduction the authors argue against a British Food Policy based on Food Security and self-sufficiency, arguing that World free trade will provide us with our needs and suggesting that a policy of self-sufficiency would lead to even greater environmental damage.

Such views are not uncontested. Jay Rayner in his 2013 book ‘A greedy man in a hungry world’ argues that with the rise of the middles classes in China, India and Indonesia many of the markets that would have traditionally supplied British supermarkets are turning their attention to these new emerging markets which will make it potentially more difficult for Britain to source its food at low prices.

Tim Lang, Professor of Food Policy at City University London tweeted the following yesterday which highlights his concerns of the proposed strategy.

The Policy Exchange position certainly seems to support the views of the previous Environment Secretary Andrea Leadsom when she spoke to the NFU in February this year (see here).

There is a full chapter in the report on agriculture in Britain from the ‘Corns Laws to the CAP’, of course repealing the Corns Laws in 1846 opened up tariff free trade and British agriculture acted as a free market with little government intervention, subsidy or protection. It would appear that we are heading back at least metaphorically to 1846 but on this occasion without an Empire or a navy that ruled the waves.

The final four chapters cover consumers, producers, the rural economy and the environment.

Consumers
Policy Exchange state that the most important stakeholder in food and farming is the consumer and that they want inexpensive, high quality, safe food which is available in the right quantity at the most convenient time and place.

This chapter also addresses the issue of food standards and discusses the controversies around chlorinated chicken, hormone-treated beef and Genetically Modified and genetically edited food. The authors seem to be suggesting that there is no evidence that these practices threaten human health but have been banned by the EU on the grounds of the ‘Precautionary Principle’. The Consumers chapters ends with the following two recommendations, you can make of the second one what you want!

  • After leaving the EU Customs Union, the UK should unilaterally phase out tariffs that increase consumer food prices and complicate new trade deals.
  • The Food Standards Agency should be given new powers and resources to collate, commission, and review scientific evidence on food safety and animal welfare.

Producers
This is a brutal section as it discusses the decline of British farming over the years, it takes no prisoners and offers no solace.

The chapter suggests that UK farming income in 2016 was £3.6b which included £3.1b in subsidies so actually farming only made a profit of £500m. Indeed they also suggest that between 1997 and 2007 farming profit was below the subsidy level so in effect agriculture produced a negative effect on the economy overall. The recommendations from this chapter puts much of British agriculture to the sword.

  • The UK should work to phase out direct subsidies for agricultural production and income support. This will free up Government revenue to fund other taxpayer priorities, such as the NHS.
  • Any remaining subsides should be redirected towards protection for natural and public goods, and increasing R&D to boost innovation and the sector’s long-term productivity.
  • The Government should work to identify environmentally suitable freed-up land that can be used for housing or commercial development, sharing the planning uplift with the original farmer.
  • Subsidies should be phased out gradually over a five-year period from 2020, with farmers given the option of receiving a final payment as a single one-off payment instead.
  • Seeking self-sufficiency in food should not be a goal of agricultural policy.

Rural Economy
This section challenges the accepted wisdom that agriculture is a core part of the rural economy. The authors state that in terms Gross Value Added agriculture, forestry and fishing represent just 2% of the rural economy.

The chapter begins to discuss the environment and highlights the importance of natural capital,

Conventional economic statistics only capture a limited proportion of the value created by rural areas, much of which takes the form of positive externalities. The ONS’s preliminary work on natural capital identifies as many as 29 separate mechanisms by which the natural environment can create value, including: agricultural production, timber, wind power, wildlife, air pollution removal, waste water cleaning, flood protection, scientific, and scientific and educational interactions. The recreational value of day trips alone to the natural environment was estimated to be £6.5 billion — not far below the entire GVA of agriculture.

In other words, nobody really expects areas like Dartmoor, the Lake District, or the New Forest to be highly productive from a narrow economic point of view. Greater productivity of agriculture allows it to operate in a more intensive fashion, freeing up significant land areas for managed re-wilding, increasing biodiversity, and preserving many of Britain’s most beautiful landscapes. As science writer Matt Ridley has argued:

Post-Brexit environment policy should be one of gardening: managing for a diversity of outcomes in different places. Productive farms here, deep forests there, wild moorlands elsewhere. Freed from the one-size-fits-all shackles of the EU, we should localise our policies, and host as many habitats and species as the climate will support.

The text suggests that many current agricultural workers could in effect become ‘gardeners’ tending natural capital via payments for ecosystem services.

But in a world such as this what about farming?

Here the authors argue that British agricultural should move away from its productionist past and through innovation become a world leader in AgriTech (Tim Lang and Michael Heasman in their 2015 book Food Wars call this the Life Science Integrated paradigm). This is the world of biotechnology, GM and the use of enzymes, robot driven tractors, precision drilling, fertilising and pesticide application , the use of ‘big’ data and drones. Some will be able to go down this route but not everyone …….

Here are the recommendations from the Rural economy chapter.

  • Environment: preserve and enhance the UK’s Natural Capital
  • Connectivity: enable rural workers and businesses to integrate withthe wider economy
  • Innovation: use the opportunities from Brexit to become a world leader in AgriTech

Environment
This section sets out that agriculture dominates land use and the current model of exploitation is simply unsustainable.

It goes on to talk about water pollution, air pollution and climate change, soil degradation and the impacts on biodiversity. It states that reform should focus on the ‘Payments for Ecosystem Services’ model and that this should be integrated with biodiversity offsetting. It argues that forestry and agriculture need to be much more integrated. The recommendations include:-

  • Rather than giving production subsidies to farmers under the CAP, all remaining public support should go towards public goods, such as preserving and enhancing the natural environment and the environmental and aesthetic benefits that derive from it.
  • This should be achieved using a ‘Payments for Ecosystem Services’ approach, linked to the Defra 25 Year Environment Plan and the work of the Natural Capital Committee. Payments should be available both to farms and other landowners, creating a competitive market for the provision of ecosystem services.
  • As part of Defra’s 25 Year Plan for the Environment, Government should consult on the most appropriate mechanisms for commissioning ecosystem services (including consideration of the optimal scale), and explore how they could work alongside tools such as regulation and biodiversity offsetting.
  • Develop an integrated land management policy framework, which facilitates the deeper integration of forestry and agriculture. Explore the potential of re-forestation as a cost-effective approach to mitigating carbon emissions.
  • Perverse EU rules such as the crop diversification rule should be reformed or abandoned.
  • Transpose the key environmental directives that govern the environment — notably the Water Framework Directive, and the Habitats Directives — so that there is no post-Brexit period in which no laws apply.

The report finishes as follows.

As described above, Payments for Ecosystem Services can be used to achieve a range of environmental benefits, such as carbon sequestration, improving water quality, reducing flood risk, or improving the landscape. For other goals, where valuation is harder, regulation may be more efficient. In this context, who will decide what outcomes are desired, and in which locations? Will different locations pursue different objectives? What is the approach scale to make these decisions?

As a practical example, consider the Lake District — recently identified as a UNESCO World Heritage Site. The Lake District is regarded as having a landscape of great beauty, in particular its cultural landscape. The current landscape is the product of centuries of human management, in particular of upland sheep farming, which has resulted in deforestation and relatively low levels of biodiversity. In the post-Brexit farming policy framework described in this report, should this landscape be preserved as it is to maximise its cultural and heritage benefit? Or conversely should it be ‘re-wilded’, as suggested by some commentators, and returned to nature to maximise its biodiversity and wider environmental benefit?

These are the sorts of difficult decisions that will need to be made in the creation of Defra’s 25 Year Plan for the Environment.

So does this document contain the blue print for the Defra 25 Year Plans for Farming and the Environment? Of course we will have to wait and see. This neoliberal future certainly appears to offer huge opportunities for the environment but at what price to farming? The report openly talks about re-structuring the industry – this means forcing uneconomic businesses off  the land freeing it up for other uses such as housing and re-wilding.

What does it mean for Dartmoor? It would appear that the money will be there for hill-farmers but will this be for livestock production or their potential future new role as ‘gardeners’?

 Polly Toynbee, writing in the Guardian (see here) has said ‘no wonder farmers fear the Brexit wolf in sheep’s clothing. Most farmers voted leave. Now they are beginning to dread the withdrawal of EU subsidy and see their traditional protectors in the Tory party as enemies’.

The vision set out in this report shares little common ground with the NFU’s  ‘recipe’ for success post-Brexit which consisted of the following three ‘ingredients’

  • Access to the Single Market
  • Access to labour
  • A new agricultural policy which facilitated productive, progressive and profitable farming
The National Trust’s Director General has also joined in the debate saying that the ‘countryside faces damaging uncertainty unless the current level of subsidies are maintained for farmers. The Trust said affordable, high-quality food and wildlife-friendly farming can be secured for the current subsidy of £3bn a year (see here).
Finally, Vernon Bogdanor, Professor of Government at Kings College London has raised the prospect of the need for a second referendum (see here)  ‘Brexit after all raises fundamental, indeed existential, issues for the future of the country. That is why the final deal needs the consent not only of parliament, but of a sovereign people’.

So much up in the air, so many lives in limbo, one person’s threat is another’s opportunity.