Why is the reform of food systems so difficult?

Professor Alan Matthews gave the presidential address at the 100th conference of the Society of Agricultural Economics held in Oxford earlier this year.  The Princess Royal, Princess Anne, was present for the address and commended the concept of academics as 'honest brokers'.   I had the privilege of reading this and commenting on it in draft form.   The revised version has now been made available on an early view basis in the Journal of Agricultural Economics.   

I found the concept of ideal type policy ontologies particularly helpful.

Here is the abstract: 

Agricultural and food policy is increasingly shaped by geopolitical instability, ecological constraints, technological disruption, political polarisation and declining trust in expertise. At the same time, calls for food system transformation have gained prominence as evidence accumulates on the environmental, health and social shortcomings of current food systems. Yet reform has frequently stalled despite extensive scientific analysis and broad recognition of the need for change. This paper examines why. 

After reviewing some traditional explanations for policy persistence, the paper introduces the concept of policy ontologies: underlying ways of understanding what the food system is, how it functions, what it is ultimately for and how change occurs. Three ideal-type ontologies are identified: a productivity ontology, a power-focused ontology and an ecological ontology. These ontologies shape the definition of policy problems and the selection of preferred policy responses, helping to explain why stakeholders often appear to talk past one another. 

As the Society begins its second century in a more turbulent and contested policy environment, the profession's central role remains the production of rigorous evidence. That contribution will be strengthened by a greater awareness of the different ways in which food systems are understood and of how these perspectives shape both policy debates and the interpretation of evidence. Recognising these underlying assumptions can help agricultural economists contribute more effectively to policy debate as honest brokers of policy alternatives.

Labour's rural MPs concerned about Burnham's urban bias

Andy Burnham has been urged to stop rural voters “drifting away” from Labour by a group of MPs cautioning against too much urban bias.  The ’King of the North’ was told by those representing countryside seats won by the party for the first time in 2024 not to treat their areas as peripheral.

A policy blueprint by the Labour Rural Research Group (LRRG), which has 40 MPs — about 10 per cent of the parliamentary party — said any devolution drive should not only benefit major urban centres.  The comments came in a report, due to be published on Tuesday, that criticised successive governments for treating rural areas as “economically marginal”.

James Naish, vice-chair of the LRRG, wrote: “The purpose of devolution shouldn’t simply be to shift power from Whitehall to major urban centres.  It should go much further and ensure that communities with different geographies, economies and needs are properly understood within national policy. Rural Britain cannot be treated as an afterthought, nor can urban policy simply be retrofitted to rural communities.”

He added that these communities “shouldn’t be seen as peripheral to national renewal” and that the next phase of Labour in government should not see them as areas requiring financial support.

Figures cited by the LRRG showed just 27 per cent of voters surveyed for its report were confident the government would strengthen its rural policy, while 40 per cent were not confident.

Although concern was voiced over the scale of the challenge Labour will face in rural seats at the next election, the LRRG said there was still a chance for Burnham to change the party’s fortunes.   Among the policies he was encouraged to consider were a business rates taper for rural and farm-based firms, as well as making it easier for farmers to diversify their property to boost income.

Burnham was urged to make rural Britain a separate part of the government’s tourism strategy and give communities more perks for hosting renewable energy infrastructure.

English farmers exit industry

More English farms are up for sale than at any time in the past two decades, as rising costs, falling incomes and inheritance tax reforms hit small farms, accelerating consolidation of the sector.  In the first half of the year the number of farms put up for sale rose to 177, the highest number in any six-month period since 2007 and 16 per cent higher than the five-year average, according to land agent Strutt & Parker. 

“It’s generally smaller farms coming to the market,” Sam Holt, head of estates at the firm told the Financial Times. “It’s been a really challenging few years for the farming industry.” Rising fuel, fertiliser and machinery costs, heavy rain and drought, and tapering subsidies for farmers had slashed income.  Downward pressure on farm incomes and rising input costs make you start to question how sustainable it is to run a [small] farm,” he added.

Arable farmers have been particularly hard hit by high fertiliser costs, as well as weak wheat prices. This was reflected in land values, with arable land priced 6 per cent lower in the first half of the year compared with last year. Pasture land values also fell, down 3 per cent. The average size of farms put up for sale so far this year was 330 acres.

Strutt & Parker categorises anything under 500 acres as a small farm. The number of farms in the UK has been falling steadily for decades, as large farms swallow smaller farms in financial difficulty. According to farm consultancy the Anderson Centre, the number of full-time farms has fallen from 66,510 in 2000 to 55,980 in 2010 and 51,350 in 2025.

The direct payments farmers received under the EU’s Common Agricultural Policy were replaced from 2021 by a new scheme that made farmers apply for funds in exchange for environmentally friendly practices, such as reducing pesticide use and planting diverse crops to improve soil health.

A government-commissioned review of the farming sector last year found that food production was no longer profitable for the average English farm, and that nearly a third of farms in Great Britain were lossmaking, in part due to the transition to the new subsidy scheme.

Changes to inheritance tax rules for farmers have also weighed on sentiment. The government announced in 2024 it was scrapping inheritance tax relief for farmers with assets of more than £1mn from April 2026. After intense lobbying by the industry, the government raised the threshold to £2.5mn. 

As a result, fewer non-farmers have been buying agricultural land. The proportion of farms bought by farmers rose to a seven-year high, or 59 per cent, in 2025, according to Strutt & Parker. The proportion of “lifestyle buyers” — people buying farms to live on, rather than farm — fell to 11 per cent last year, down from 20 per cent five years ago. “There’s obviously less tax advantages to owning land now,” Holt told the FT, adding that returns from farmland were “so poor” that buyers were better off leaving their money in the bank.

Burnham names farming as critical sector

A little noticed aspect of Andy Burnham's speech at the People's History Museum in the northern capital of Manchester was the following statement: "We need to safeguard sovereign manufacturing and production capability across the country in critical sectors like steel, defence, energy, food and farming. Rather than being prepared to let it go as we have sadly done in the past.”

Including farming in this list is interesting given the Labour Government's fractious relationship with agriculture after the inheritance tax changes.

There is great scope for improving productivity in this sector using new technology, but this requires more capital investment, training and knowledge exchange.  The maximum grant available under Defra's ADOPT (Accelerating Development of Practices and Technologies Fund) has been doubled, but the fund itself does not meet the challenge.

The maximum eligible project cost has increased from £100,000 to £200,000.   A new funding window will open every eight to nine weeks.

Projects have to be collaborative with the lead partner in England rather than elsewhere in the UK.  Projects should run for between six and 24 months and will receive 80 per cent of eligible costs, alongside facilitator support from the ADOPT Support Hub delivered by ADAS, UK Agri-Tech Centre and the Soil Association

Regen farming suits heatwave

Another summer of record-high temperatures in England is accelerating the take-up of regenerative farming, a method that helps restore soil quality by cutting out chemicals and intensive ploughing, making it better at retaining water during hot spells.

Research by Barclays, published this week, found that more than half of the farmers surveyed this year had adopted regenerative practices, with nearly two-thirds of the 233 farmers saying they were reducing their pesticide or herbicide use.   The report can be found here: https://www.barclays.co.uk/content/dam/documents/business/agribusiness/Barclays_Resilience_in_the_Field_1July2026.pdf

 “Farmers are panicking about what to do . . . But those that started regenerative farming 10 to 15 years ago are in a more resilient place,” Martin Lines, chief executive of the Nature Friendly Farming Network told the Financail Times. The acceleration was both climate change-driven and a commercial imperative, the Barclays report found.

Agricultural input prices have increased by 6.7 per cent in the 12 months to April 2026, significantly ahead of inflation, according to official statistics. Fertiliser prices are not as high as they were at the beginning of the war in Iran and closure of the Strait of Hormuz, giving farmers some breathing room.

The price rise provoked fears that arable production would fall significantly next year as farmers opted out of planting. “Much of that concern has dissipated,” Michael Haverty, partner at the Anderson’s Centre farm consultancy told the FT. “Fertiliser prices have not risen by as much as initially feared. As things stand, it gives time for supply to recover ahead of the next major applications of fertiliser in the spring.”

Longer term, farmers are advised to plant hedgerows and trees that provide shade for animals while also supporting biodiversity. “The best time to plant a tree was yesterday,” Holly Purdey, an organic livestock farmer in Somerset told the Pink ‘Un.

Nine years ago Purdey started planting hedgerows and trees to create natural shade for her sheep and cows. She also created natural water storage and flood management by digging ponds and trenches. “Sometimes [farmers] only act when it goes into a point of an emergency, because on farms, we’re often firefighting,” said Purdey.

This year’s arable harvest is projected to be better than last year, which was one of the worst harvests ever recorded. Despite a very dry April and May, late rainfall in May provided some relief for crops, according to the Agriculture and Horticulture Development Board, a farmer-funded advisory group.

While yield outcomes for the harvest will depend on the severity of the heatwaves this summer, AHDB analyst Helen Plant said there was “reason for cautious optimism”. The take-up of regenerative agriculture has been aided by the UK’s post-Brexit agricultural support schemes, which pay farmers to adopt sustainable farming practices and restore the natural environment.

The scheme should in theory successfully accelerate a transition to environmentally friendly farming, but that the former Conservative government arguably failed to ensure funds were fairly distributed. Last year, 4 per cent of England’s farms were receiving 25 per cent of the available funds, according to Defra.

The Labour government has since redesigned it to ensure smaller farms that were not yet enrolled in the schemes could also access it, opening it for applications in September this year.

Is English farm policy better under Brexit?

The Economist thinks that getting rid of the Common Agricultural Policy has led to a more effective farm policy in England so it is one example of a Brexit dividend (Wales and Scotland are different cases).

The journal comes from a stance that favours market oriented policies so the views expressed in an editorial and article are no great surprise.  In broad terms I agree with them.   This doesn't mean that Brexit was a good idea viewed in the round, but the CAP remains a dysfunctional policy in many respects.

First, I think that blanket subsidies for farmers related to the size of farm discourage innovation.  They could well be used for personal consumption rather than investment in the enterprise.   Scotland continues to give direct subsidies as part of a generous package for farmers (but they have elections in May).  Wales offers such support to a lesser extent.

Funds should be linked to specific policy targets and in particular genuine public goods such as the environmental benefits specified in current policy.

Given the sector's poor productivity record and the need to take advantage of digital technology, money should be made available for capital investment and training.  New capital grants have recently been announced, but the funding does not match the scale of the problem and is likely to run out quickly.

The conflict in the Middle East has given farm organisations the chance to bang the food security drum to justify a restoration of direct support, but food security is a merit good rather than a public good.  Our imported food comes from a wide range of countries.

As The Economist points out, diversification has been important for the viability of farm businesses.  A family moved from Wales to the better land of Warwickshire in the 1930s.  The land is still farmed and the farm manager was short listed for farm manager of the year a few years back

However, their main now comes from a very successful removals and storage business (I am a satisfied customer of both aspects of their operation).   Business is so good they have a coffee shop on site.

Watching the latest series of This Farming Life it is also evident that many farms rely on the off farm income of at least one partner.  (One farming relative has married a university lecturer).

Farming involves hard physical work, good business sense and long hours, but this doesn't justify distorting subsidies.

Who would be a farmer?

Farming is often hard physical work, involving long hours and often poor returns on capital.  It is also a dangerous occupation with a poor health and safety record.  Yet programmes on television show that many people want to become farmers.   A nephew is a nth generation farmer and finds it a very fulfilling role.

I was therefore interested in a survey from the Agriculture Society that showed that being a farm manager can be a lucrative role.   The average gross salary is £64k and non-cash benefits come in at £16k (typically accommodation and a vehicle).   Average bonuses are £3.6k.   So a typical package could be £80k+ but one in five receives a total package worth more than £100k a year.   Moreover, one third earn income from other sources,

Physical work accounts for less than 25 per cent of their time and the highest earners do the least amount of physical work,   Most farm managers are in southern, eastern or central England, i.e. they are most likely to be found on big arable enterprises, but many are expected to identify non-farming income streams.    The role involves managing people and risk as well as production.

Only five per cent are women.