Battle of the lightweights

One of the big concerns of UK farmers is that at the same time as farm subsidies are reduced, the UK Government will lower tariff barriers to agriculture and food products in order to conclude trade deals that are beneficial to other sectors.

Earlier in the month the usually reliable Financial Times learned from government officials that the Department of International Trade was preparing to offer a 'big concession package' to US negotiators in the coming months to reduce the cost of some agricultural imports. 

It was hoped that this would ease the path to a deal with the US.   The aim was to secure a deal while the Trump administration was still securely in office as it was felt that an incoming Democratic administration would take a tougher stance.

Defra officials were reported by the Pink 'Un to be concerned that reducing tariffs could be 'the thin end of the wedge' leading to concessions on animal welfare standards.  UK farmers generally adhere to high standards and can be undercut by countries with lower standards.

A long-standing complaint of the US is that its beef, chicken and pork has been shut out of European markets because of high tariffs and restrictive regulations.   These are, of course, sectors that are already in some jeopardy in the UK.

Not all Conservatives are enthusiastic about selling out to the Americans, although deteriorating relations with China have shut off one strategic option available to 'Global Britain', i.e., cosying up to the PRC in the manner of Dave Cameron and George Osborne.

A battle of the lightweights has been taking place between Defra secretary George 'Useless' Eustice and Liz Truss, the international trade secretary.   Someone has been feeding stories to the Daily Mail and the Daily Express claiming that she was set to betray UK farmers despite being a Norfolk MP.

However, it now appears that Boris Johnson has come down on George Eustice's side in what had become a Cabinet split. The intervention of 'Mr Fixit' Michael Gove on Eustice's side may have been decisive.     Johnson may have been fearing another dagger in his back, but his partner's interest in animal welfare issues may have played its part.

It was alleged in court that Carrie Symonds intervened to stop an extension of a badger cull to Derbyshire, but the NFU lost its attempt to secure a judicial review.

Life was much simpler for Boris Johnson when he simply had to worry about traffic problems in London rather than badger culls and 'Hilton beef'.

Bozza declared 'We must not let our farmers down.   One of the reasons for leaving the EU is we can do things differently and better on things like animal welfare.'

Sharp fall in lamb prices

Coronavirus has seen lamb prices fall by as much as 25 per cent, although there has been a steadying of prices. However, the 30,000 lambs sold last week was a fifth of the level normally sold at this time of year.

Sales of meat to restaurants and fast food outlets disappeared along with large parts of the export market that takes 25 per cent of UK production. The Rungis food wholesale market near Paris which deals with a large portion of the UK export trade is shut.

Rerouting meat to retailers is not easy as processors used to dealing with the food service industry lack the equipment to cut and package meat for retail. In any case, consumers are switching to cheaper meats such as chicken. Meat intended for more expensive cuts is being used for mince.

The National Sheep Association has called for deficiency payments to make up the gap between a baseline price and the market price. However, the budgetary cost of this policy instrument is always unpredictable.

Some have argued that the disruption to supply chains will give a higher priority to food security as many farmers would wish. However, attention is likely to focus on logistics rather than the point of production.

The sheep industry was already in poor shape before the virus struck. Many farmers also fear a no deal Brexit which could lead to the imposition of tariff barriers on their exports to European markets.

Collapse in milk demand hits dairy farmers

The closure of restaurants, cafes and canteens has hit demand for milk. Some 10 million litres of milk would normally enter the food service industry. Retailers are absorbing about half of that, with consumer stockpiling cushioning the impact at the beginning of the lockdown.

However, there is now a surplus of 5 million litres out of a total daily output of around 35 million litres after people stopped buying milky coffees and other dairy products they would normally consume away from home.

As a consequence some farmers are dumping milk after processors halted collections. Spot wholesale milk prices have fallen from 20p a litre to 15p during the week. The National Farmers Union estimates that 2,000 dairy farmers are under severe financial pressure.

Dairy farmers are asking for state aid. It is unclear what form that would take, although the NFU has made some suggestions, including cash grants of up to £25,000 under the Retail and Hospitality Grant Scheme: Saving iconic sector

The NFU has sought a meeting with the Defra secretary, George Eustice.

Farmers need biopesticides

In a recent article in Farmers Weekly Sean Smith the CEO of biopesticide developer and supplier Eden Research states: 'The British farming community has expressed serious concerns about the clampdown on conventional pesticides, viewing the bans as a threat to productivity. Pesticides are often a critical input and without them, commercial yields can be significantly affected.'

'This is why alternatives to conventional chemistry are essential, along with more integrated approaches to pest and disease control. As things stand, however, the banning or restricting of existing, traditional pesticides is happening at a much swifter rate than the approval of alternative chemicals and new biopesticides, which are pest control formulations derived from natural materials, such as minerals, bacteria, plants, or animals.'

'Farmers are therefore facing a declining choice of crop protection products, with few alternatives approved and ready. This imbalance is making growing conditions more challenging. To counter this, there is a need for regulators, such as the UK’s Chemicals Regulation Directorate, to facilitate quicker approvals for new alternatives.'

'Despite the regulatory lag, sustainable alternatives are becoming available and being applied to all facets of farming. Allowing new sustainable biopesticides to enter the market will help make headway towards greener farming practices, meeting the ethical expectations of UK consumers.'

This is a topic I have worked on with plant scientists for over a decade and I have recently completed a book chapter with Roma Gwyn of Biorationale looking at global developments and in particular the regulatory framework within the EU and whether it inhibits or facilitates adoption of biological alternatives.

Our conclusion is that the agenda for more effective forms of regulation will only be fulfilled with sufficient political support. There is greater interest in biological technologies than in the past and an increased recognition of the contribution they can make to environmentally sustainable solutions to plant protection. This reflects a number of factors, including greater effectiveness on the part of the industry representative body, the IBMA, including a willingness to build coalitions with environmental groups.

It also reflects the greater involvement of major agrochemical companies in the sector as market opportunities improve. However, public knowledge and understanding of biological technologies remains limited and this means that there is no substantial constituency of public support for their greater use. This in turn influences the priority that political decision-makers give towards improving the responsiveness and speed of regulation that allows new products to enter the market.

Chancellor targets farmers' fuel tax break

Hints are increasingly being dropped that the Chancellor might target the 'red diesel' tax break available to farmers. Ending the overall freeze on fuel duty could be politically difficult, but the £2.4bn revenue foregone on construction and farming vehicles could be an attractive target.

Red diesel (so called because it is coloured red in an effort to avoid fraudulent use) has a duty of 11.1p a litre against 57.7p for standard diesel used by motorists. It is only supposed to be used on the farm itself for machinery such as tractors and combine harvesters. It is not supposed to be used on the highway. It is used by airport vehicles and most freight trains run on it.

It was originally thought that just the construction industry and perhaps airports would take a hit, but that might be difficult to enforce in practice. I would have thought it more likely that the reduced duty will be phased out rather than eliminated overnight. However, it will be another blow to farmers reeling from the phasing out of direct payment subsidies.

The Government launched a consultation on the subject last year which details its long history and the issues that have arisen: Red diesel

Farming not important says Treasury adviser

Treasury adviser Tim Leunig has said that Britain could do without its fishermen and farmers: Farming and fisheries are not important

Whilst he was expressing a personal view, this will reinforce a fear already held by farmers that the Government will give a low priority to their welfare in trade talks.

The NFU does tend to overplay food security arguments, given that there is a variety of suppliers, but a country with plenty of agricultural land would look odd if it did not grow some of its own food.

Is it useless Eustice?

Despite his farming background new Defra secretary George Eustice got a rough ride at the NFU conference last week when he was booed by angry farmers. Farmers Weekly commented that 'Reassuringly, Mr Eustice already owns a pair of wellies, and knows his way around a farm.' In fact his practical farming involvement was some time ago and I own some wellies and make farm visits quite often, but that doesn't qualify me to be a Defra minister.

As Farmers Weekly admitted, the Defra secretary has tasks other than being a MAFF style spokesperson for farming. (Anyone interested in the history of MAFF and Defra's relations with farmers can have a copy of an unpublished paper I wrote on the topic). FW noted, 'Questions have also been raised over whether he is the big hitter farming needs … Whether Mr Eustice can hold his own against Cabinet heavyweights remains to be seen.' More generally they said, 'Too often in the past the Department has been a dumping ground for ministers of mediocre ability.'

Farmers were particularly annoyed that Mr Eustice was not prepared to relax the notorious 'three crop rule' other than through individual applications claiming force majeure.NFU president Minette Batters said farmers were hugely frustrated. 'We have left the EU, half the country is under water and [yet] we are still going to abide by the three-crop rule and process thousands of force majeure applications. It just seems absolutely extraordinary.'

However, we are still in the transition period and Mr Eustice has no powers to set aside what he rightly described as a 'barking' rule despite shouts of 'rubbish' at the conference. To me it is a classic example of the CAP's ability to come up with poorly designed policy instruments: the relationship with the intended outcome (improving biodiversity) was poor and the transaction costs high. The rule requires farmers with more than 30 hectares of arable land to grow at least three different crops.

Perhaps more importantly, he declined to commit the Government to upholding existing UK food standards in future trade deals with countries, such as the US, that have weaker regulations. 'I can't provide any such assurances,' he said.

A House of Lords amendment to the agriculture bill would bar the Government from signing trade deals that do not require imported foods to meet UK standards on food safety, animal welfare and the environment.