Brexit will involve significant change for the arable farming sector, but attention now to improving productivity will help mitigate the impact, a joint BCPC and Voluntary Initiative conference heard last week.
The political environment around farming has always changed, advised BCPC chairman Stephen Howe opening the event. In the last 50 years policy has moved from Food From our Own Resources to Sustainable Intensification, but the current Brexit process has ratcheted up the uncertainty.
The Brexit negotiations will be complex and their effect on agriculture, the environment and the wider rural economy impossible to predict. However, technology will help the industry improve its competitiveness, but at a price, and only if it is supported by a rational regulatory system.
Farmers and the supply trade are resilient, he said. They need to take a long term view, despite the Brexit distraction, and benefit from a growing world population demanding safe, wholesome food
Head of farming at Strutt & Parker Will Gemmill believed that EU subsidy has led to a UK agriculture that is probably larger and less efficient than if it hadn’t been supported.
Post Brexit, UK taxpayers will seek better value, so farm support payments will fall. At the same time, new trade deals outside the EU will expose the sector to tariff and quota free competition from highly competitive overseas suppliers, he warned.
Already, a large number of farm businesses are under considerable financial pressure – Defra figures show an average arable farm income of £35,000 in 2015, of which £30,800 was from the Basic Payment Scheme and £5,900 from agri environment schemes. After allowing for diversification income streams, there was a £10,000 loss from actual cropping. Only 20% of farmers had spent less than £128/tonne on crop inputs, when wheat was fetching £130/tonne – 20% had spent over £175/tonne.
The AHDB has also warned that the UK’s cost of production is among the world’s highest, with labour and machinery especially high, Mr Gemmill continued. It is clear that any reduction in farm support will be painful for the majority of producers – they need to take action now to increase output while reducing the cost of production.
The best farm businesses are seeking to control their variable costs through ensuring treatments are necessary and paying attention to timings. They are reducing machinery costs by making kit last longer, or using joint purchases and sharing, as well as making less passes.
Formulating a new domestic UK farm policy will not be straightforward, he argued, as it will have to encourage food production while maintaining landscapes, supporting rural communities and reducing carbon and greenhouse gas emissions. A post Brexit “bonfire of regulations” is very unlikely, Mr Gemmill concluded, and only the fittest farm businesses will survive.
Guy Horsington is the new director of future farm policy at Defra. Work is going on at to prepare for Brexit at Defra, the Department for Exiting the EU and the Department for International trade, he stressed, while conceding this isn’t always visible from outside.
With 80% of Defra’s legislation based on EU legislation, the imminent Great Repeal Bill would be crucial to the Department’s work.
Mr Horsington promised a fundamental rethink of future UK farm policy, with a commitment to supporting the industry through the changes, and examining measures to raise UK farm competitiveness outside the EU.
When asked if a new UK farm policy could be in place within two years, Mr Horsington stated that a “cliff edge” Brexit would not be in the industry’s best interests. A phased transition out of the EU would be much better and he estimated this would need at least 5-6 years to complete.
NFU president Guy Smith noted that the UK’s entry into the EEC had taken six steps over six years – perhaps there should be six steps over six years on the way out.
Mr Smith acknowledged that NFU members were split over Brexit, but called for the industry to see it as an opportunity, not a threat, and to approach the new policy consultation with confidence. He reiterated the danger of undercutting domestic agricultural markets with lower standard imports produced under conditions not allowed at home, advising now is the time to trade up to higher standards.
Government must help reduce volatility. Any support system needs to be simple to be effective – as the RPA debacle over the last decade has shown. Area based payments are crude – but what would work better? Insurance could be a solution, but the industry will need time to adapt to it. Support should also be targeted at raising farm productivity by a phased switch of funding from support to R&D. Technologies such as robotics and telemetry can increase output while reducing emissions.
Mr Smith said there was also growing pressure on the government to switch production support towards the environment – but Defra should ensure a new policy incentivised food production, not ‘park keeping’. Opening the UK up to cheap food imports of questionable standard would simply export environmental problems and habitat destruction to other countries. The new policy must achieve a balance.
Above all, government must provide farmers with some certainty if they are to plan ahead, Mr Smith concluded. For example, far more farmers are leaving the ELS and HLS stewardship schemes as they come to an end than enrolling in the new Countryside schemes with fewer long term guarantees. Finally, famers should not think that leaving the EU meant they no longer had to fight to save pesticide active ingredients – once they were lost, they would be hard to get back, whether in or out of Europe, he argued.
Openfield’s Cecilia Pryce told delegates that the UK accounts for just 1% of the world wheat trade and 4% of the barley, but grain exports keep domestic values up.
Currently 89% of UK grain exports go to Europe. But it would be difficult to find global markets for this volume post-Brexit since there are only a handful of UK terminals able to handle the larger boats needed for longer sea voyages.
The UK was unlikely to become a major grain exporter, post Brexit, but it could find markets for high production standard and fully traceable crops. She recommended incorporating the Red Tractor and TASCC trade accreditation alongside APHA, FSA and ISCC protocols into a single UK crop assurance standard. Defra would need to engage with this to produce a Government-backed UK grain certificate with independent data on quality to help differentiate UK grain in a competitive world market.