A report from Sustain argues that margins are wafer thin in the food chain with farmers in particular getting a raw deal despite the fact that they take a big share of the risks: https://www.sustainweb.org/news/nov22-unpicking-food-prices-new/
The report has a number of suggestions for change which it says should not force up prices for consumers, always a big worry for governments.
The appointment of Therese Coffey as Defra secretary confirms that the department is a way station for ministers on their way up or on their way out. Coffey lost her high prestige if somewhat meaningless job as deputy prime minister and, more importantly, the key role of health secretary.
Rishi Sunak wanted to make sure he included some Truss supporters in his government and no one was closer to Truss than Coffey. The fact that Coffey represents a rural constituency is little consolation.
Some of the crucial decisions will be made elsewhere and not just at the Treasury. Labour shortages in agriculture create a need for more seasonal visas, but Suella Braverman is unlikely to look on that need favourably given her views on migration.
Defra is something of a peripheral department in government, one of the last to be announced along with the likes of Welsh Secretary. It lacks the clout it needs for some important tasks.
The Truss government is reviewing farm policy and may delay the phase out of the domestic version of the CAP Basic Payment due in 2027.
The NFU has been banging the food security drum, but the Government seems to be more concerned about breaches in the blue wall after two rural constituencies were lost to the Liberal Democrats in by-elections.
The Treasury has always been opposed to the extent of farm subsidies, both because of their cost and the weak relationship with desired policy outcomes. Delaying their phasing out would cost money, but with the Treasury under new management, fiscal prudence has been effectively abandoned by what is a new Government.
The Government is also reviewing plans to make environmental payments for 'public goods' under the ELMS scheme. The roll out of this has been slow, but farmers taking part in the pilot were angered by a press report that it could be scrapped.
Conservation groups had already made clear their anger at the threat to environmental rules in the investment zones announced in last Friday's 'mini' budget. The National Trust commented that scrapping environmental payments would 'squander one of the biggest Brexit opportunities for nature.'
Farmers are also concerned that a reversion to payments based on land area rather than public goods would be more vulnerable to being reversed under a future government.
No final decisions have been taken, but kites are being flown.
UK growers are scaling back production in greenhouses as energy costs increase, a pattern that is replicated across Europe. Crops that require intensive heating in colder climates such as tomatoes, cucumbers and lettuce are the most directly affected.
However, the energy crisis is impacting the EU food supply chain more directly. Bakers, dairy farmers and other producers, including growers of sugar beet and olives are struggling to pay bills. The price of inputs such as fertiliser and animal feed has shot up, alongside rising refrigeration and transport costs.
The UK's support plan for small businesses lasts just six months and so far lacks detail. It is claimed that 75 to 80 per cent of UK salad growers will not plant next year.
In the Netherlands, which accounts for a quarter of world tomato exports, many glasshouses are going dark. The largest tomato supplier in Sweden and Denmark is also switching off this winter. Growers in Spain and Morocco may not be able to fill the gap.
In Italy, where growers are already struggling with a drought, it is estimated that a third of farmers are operating at a loss. Monthly energy bills have typically tripled and fertiliser costs are up fourfold. Many farmers on fixed contracts are choosing to sell the energy on.
Farmers may increase output of less energy intensive crops such as peppers.
The latest Defra secretary has no direct experience of agriculture: https://www.fwi.co.uk/news/farm-policy/ranil-jayawardena-announced-as-new-defra-secretary
The Minister of State does have a farming background: https://www.farminguk.com/news/former-chief-whip-mark-spencer-appointed-defra-farming-minister_61090.html
Eustice hardly impressed despite the farming connections he often referred to, but will this be another case of up or out?
My new book on agricultural and food policy is now out.
This book takes stock of the urgent challenges facing food chains globally and provides a critical evaluation of radical new thinking and perspectives on agricultural and food policy. Wyn Grant investigates the principal drivers of change in food and agriculture, including globalization, climate change, the structure of the industry, changing patterns of consumer demand and new technologies.
Rethinking Agricultural and Food Policy provides a comprehensive account of the contemporary challenges impacting the food chain. Chapters explore the various barriers towards positive progress, exposing the deficiency of institutional architecture at a domestic and international level and examining how attempts to reform and revitalize it encounter inertia, embedded production structures, defenders of the status quo and vested interests. Proposing that a holistic, interdisciplinary approach is essential in making progress towards revitalizing policy and encouraging innovation in international governance, Wyn Grant calls for a new agenda to deliver real and necessary change and offer hope for the planet and its people.
Using critical insights from natural and social science to uphold its calls for a holistic, integrated approach to agricultural and food policy, this timely book will be an essential read for policy makers, as well as students taking undergraduate or postgraduate courses in agriculture, food and the environment.
More information here: https://www.e-elgar.com/shop/gbp/rethinking-agricultural-and-food-policy-9781800881204.html
Professor Tim Lang analyses the Government's disappointing National Food Strategy, concluding that it contains more politics than policy: https://foodresearch.org.uk/blogs/tim-langs-field-notes-more-politics-than-policy-in-the-government-food-strategy/?
Interesting that farm management company Velcourt has acquired a 50 per cent stake in the regenerative agriculture consultancy Oakbank Game & Conservation: https://www.oakbankgc.co.uk/velcourt-acquires-stake-in-oakbank-as-demand-for-greener-land-management-increase/
Despite the recent clamour for a return to maximising production in the interests of food security, Velcourt's executive chairman James Townshend cited the importance of climate change and biodiversity in dictating the need for a fresh perspective in UK rural land use.
The National Farmers' Union have asked for a two year halt in the phasing out of support payments to farmers in the form of what was the EU's Basic Payment. In this article for South-East Farmer I explain why this is unlikely to succeed.
The war in Ukraine has strengthened concerns about food security. The Ukraine and parts of Russia are regarded as the bread basket of Europe. Ukrainian farmers would normally be planting crops at this time of year. Admittedly, a large proportion of their output goes to the Middle East and North Africa, but the threat of shortages of supply has already pushed up wheat and other global commodity prices.
These
developments have led to hopes by farmers and their representatives that there
may be more support for them from Defra.
Although the terms of the debate in Europe have changed, I think that it
is unlikely that there will be any major changes in UK policy.
Farmers are facing a perfect storm in terms of input prices. Red diesel prices have increased
substantially despite the lower level of taxation on them. Electricity costs for businesses are
increasing significantly, a major concern for dairy farmers or those with on
farm processing businesses. According to the US Department of Agriculture
fertiliser prices have doubled in the past year and in some cases supplies have
been difficult to obtain. Russia and
Belarus are leading producers.
For fruit and vegetable producers there are serious concerns about the availability and cost of labour. Ukrainians have formed a key part of the harvesting force since Brexit. 67 per cent of the almost 30,000 people recruited in 2021 under the seasonal workers' scheme came from the Ukraine. They are now fighting in the army or are unable to obtain visas.
A spokesman for
Kent salad grower LJ Betts told the Financial
Times that he had managed to recruit 38 Romanians to replace 40 Ukrainians
but these workers would require training and would be less productive than
experienced workers, pushing up costs.
All these factors are contributing to what is expected to be
substantial food price inflation which particularly affects less well -off
families as food forms a greater proportion of their budgets. There have been some signs of a shift of
emphasis in the Common Agricultural Policy (CAP), urged on by President Macron
who faces a presidential and then a legislative election. Green transition and farm to fork objectives
may be modified, but this is only indirectly relevant to Britain.
There are a number of reasons why, for example, there is unlikely to be a reduction in the phasing out of the UK’s continuation of the basic payment which for many farms represents the difference between a profit and a loss. Defra seems disinclined to change its policies, in particular to place less emphasis on a still ill-defined environmental support scheme.
However, even if there was a change of heart at Defra, it is
questionable how much influence it has on broader government policy. It was particularly hollowed out as a
department under the austerity policies of the coalition years and lost many
experienced and knowledgeable staff. In
any case many farmers would doubt its commitment to their concerns and, of
course, the main purpose of replacing the Ministry of Agriculture by Defra was
to give it a wider remit and change its perspective and emphasis.
What is evident is that the Treasury has long been opposed to the farm support payments that were provided under the CAP. Its reasoning would be that they were a blunt instrument which could be used for consumption rather than production, or even if they were used for production support might not be invested in a way that boosted productivity.
If there is a
food poverty problem, then one should increase payments to poorer consumers
rather than to producers. If world
commodity prices increase, this will offset rising input costs, although
livestock and dairy farmers will be hit by rising animal feed prices.
It also has to be realised that there are substantial
expenditure pressures on government. The
NHS and social care is not far short of accounting for nearly half of
day-to-day expenditure. Although the
Chancellor has so far resisted pleas to increase defence expenditure, these are
not going to go away. The cost of
servicing government debt has rocketed as interest rates have gone up (about a
quarter of it is inflation linked).
So how can farmers secure better support to help them
through the costs cisis? After the
Brexit referendum, but before the conclusion of the negotiations, I was invited
to give a presentation at the Foreign Office on the future of agriculture to
civil servants from a range of departments.
It must have gone down reasonably well as I was invited to meet the
Foreign Office cat afterwards!
One good question was how would I convince the Treasury to
support British farming? My answer was
that the industry was on the verge of a digital revolution with opportunities
to improve efficiency and productivity.
However, farmers needed support for capital investment and training.
There are some grants available to boost investment and productivity, but they
amount to at best toonly 10 per cent of total funding. A convincing argument could be made boost
this type of funding and hence improve domestic resilience.
In a new report, Labour shortages in the food and farming sector, MPs conclude that UK’s largest manufacturing sector faces permanent damage if the Government fails to address the lack of workers due mainly to covid-19 and Brexit.
Despite the sector flagging significant concern, the shortage of labour in 2021 took a toll on food security, the welfare of animals and the mental health of those who work in the industry, MPs on the Environment, Food and Rural Affairs committee report.
The pig sector was particularly badly affected, with 35,000 pigs being culled due to a lack of butchers to process them. The Report calls on the Secretary of State to use the Department’s power to provide direct support to pig farmers.
The Committee was frustrated by the reluctance of Government to engage with the industry over labour shortages. Despite valiant attempts by the industry, Ministers failed to understand the issues and even sought to pass the blame onto the sector. Today’s report urges Government to have a radical rethink to prevent future interventions coming too late.
Revised immigration measures could address the current crisis. For example, the Report calls for a review of the Skilled Workers Visa scheme including the complexity and costs faced by employers and tailoring the English language requirement to meet the needs of the sector.
While there have been welcome changes to the Seasonal Worker Pilot, the inclusion of the ornamental sector necessitates the Government to make available the extra 10,000 visas ear-marked and for the scheme to be made permanent.
However, a reliance on overseas labour must be reduced in preference for a long-term labour strategy that grows and develops home-grown talent, combining attractive education and vocational training packages with the deployment of new technology.
While the Committee welcomes some of the Government’s work in the area, it warns that without fundamental change, the UK is facing a chain reaction of wage rises, leading to price increases and food production being exported abroad.
The Chair of the EFRA Committee, Neil Parish MP, said:
“In 2021 farmers faced an extraordinary situation – crops were left to rot in the fields and healthy pigs were culled due to a lack of workers. This has serious implications for the well-being of the people who put food on our tables today and in the future. The Government’s attitude to the plight of food and farming workers was particularly disappointing.
“While some of the reforms put forward by Government have helped in the short term, and we agreed that we must look to expand the domestic workforce – this won’t happen overnight. In the meantime, it must use the powers available – including over immigration policy - to support the sector. Otherwise we will export our food production and import more of our food.
“Even more importantly, Government must change its attitude to the food and farming sector – trusting them and acting promptly when they raise concerns."
Good luck with that.
A government minister caused controversy recently when he suggested that Ukrainians could come to Britain to pick our fruit and vegetables. However, in reality in recent years Ukrainians have formed a key part of the harvesting force since Brexit. 67 per cent of the almost 30,000 people recruited in 2021 under the seasonal workers' scheme came from the Ukraine.
Seasonal workers became an important part of the farm labour force when East European countries joined the EU. At the same time fruit farmers were making increase use of polytunnels on farms, allowing more reliable production over a longer season. These attracted some local criticism in Herefordshire as a blot on the landscape.
Workers were provided with temporary accommodation on the farms. The better employers arranged courses in English. There was an incentive to treat workers well as they came back year after year. Some eventually became supervisors and others decided to stay and became UK residents.
However, as their home economies became more successful, and the rate of the pound against the euro became less favourable, the attractions of doing this demanding physical work in Britain diminished. I have watched workers in a Norfolk field working behind an automatic harvester on field vegetables and it is back breaking work.
The Government hoped that after Brexit that local workers would fill the gap. In practice, few were willing to do so and those that did were regarded as less productive than seasonal workers from abroad. Why this was the case is controversial. The seasonal workers scheme was reintroduced as a pilot in 2019 after being dropped in 2013.
Now Ukrainian males are either fighting the Russians or can't leave the country provoking a recruitment crisis. One who worked at a Kent grower has been killed. A lack of visa processing facilities in Kyiv is another factor. The main harvesting season starts in six weeks.
The estimable Judith Evans wrote a good article on this in the Financial Times yesterday. Fruit and vegetable growers are now trying to recruit workers from countries such as Morocco and Mongolia. Tajikstan and the Philppines are also in the frame.
A spokesman for Kent salad grower LJ Betts told the Pink 'Un that he had managed to recruit 38 Romanians to replace 40 Ukrainians but these workers would require training and would be less productive than experienced workers, pushing up costs.
It could be 'back to the future' as farm organisations use the war in Ukraine to bang the food security drum. There are, of course, real issues here, given the importance of Russia and Ukraine in wheat production, but there is a risk of reverting to old fashioned blunt instrument subsidies and downgrading the sustainability agenda.
In particular one could create a false dichotomy between food security and sustainability: https://www.foodnavigator.com/Article/2022/03/07/Ukraine-war-detonates-EU-food-security-debate-but-will-sustainability-be-collateral-damage#
Farmers may hope for a halt in the phasing out of the basic payment, but the Government faces heavy expenditure pressures with a likelihood of increased defence spending and more support required for household and industrial energy bills. Rather than providing a general subsidy that is not tied to outcomes, it would be better to spend more on boosting productivity through capital investment and new technology.
I will write more about this issue in the coming days.
There is increasing interest in sequestering carbon on farms as a contribution to combatting climate change and this report reviews the scientific evidence on the various interventions: https://green-alliance.org.uk/The_opportunities_of_agri-carbon_markets_policy_and_practice.php
This report reviews the evidence behind mainly agri-carbon offsetting approaches and ranks 17options against multiple approaches: https://www.gov.uk/flood-and-coastal-erosion-risk-management-research-reports/achieving-net-zero-carbon-emissions-a-review-of-the-evidence-behind-carbon-offsetting
