The government should soon publish its national food strategy white paper. A lot has changed since Henry Dimbleby published his independent recommendations last summer. Food price inflation in the UK is at its highest level in over a decade and food security has been propelled up the political agenda by the war in Ukraine. Here’s why EU-style subsidies won’t help and five alternative steps the government could take to bolster Britain’s food security in the forthcoming white paper.
Reverting to EU-style subsidies won’t help
The challenge for Britain is predominantly rising input costs rather than a shortage of supplies. We are feeling the pinch from rising agricultural commodity prices despite having good self-sufficiency in wheat and oilseeds. Fertiliser, fuel and energy have risen with the price of gas. Grain prices have rocketed due to the war in Ukraine and an extreme heatwave in South Asia, made more likely by climate change, which has led India, the world’s second-largest wheat producer, to impose an export ban.
This has led to siren calls from the NFU to pause the government’s reform of farm payments and stick with the old EU-style subsidies for maintaining agricultural land, known as basic payments.
On the surface, subsidies may seem an intuitive response to a supply-side challenge. Except, the land-based payments are precisely that - they subsidise land holding, not food production. Defra’s analysis found that basic payments have undermined the productivity and competitiveness of the agricultural sector.
Nor would sticking with basic payments help the farmers struggling most. Arable farmers will benefit from higher farm gate prices, so their profits should be stable. The government has brought forward half of this year’s basic payment to alleviate pressure on cash flow. The new Sustainable Farming Incentive will pay farmers to supplement some of their fertiliser needs by planting crops and plants that fix nitrogen in the soil.
The producers that face the biggest challenge are pig and poultry farmers due to the rising cost of feed. But only a very small proportion of their revenue (1-2%) comes from direct payments as they don't occupy much land. So keeping direct payments would not be a well-targeted or helpful intervention.
Nor would a reversion to the even older EU-style payments from the 1990s, which paid farmers per hectare of crop or head of livestock, be a helpful intervention. This would just subsidise expensive fossil fuel inputs such as fertiliser, energy and fuel - precisely the things we need to support farmers to move away from in order to reduce their costs and improve their resilience. It would disincentivise farm efficiency improvements such as nutrient management plans, precision application techniques, and feed efficiency improvements. And it is unlikely to affect food prices which are rising globally and linked to international commodity markets.
However, it would mean English households paying twice for their food during a cost of living crisis: once through taxation and once at the supermarket checkout. It could also undermine food production longer-term by exacerbating environmental pressures like climate change, soil degradation, and biodiversity loss, which a recent government report highlighted as the gravest medium to long term risk to British farming.
1) Support farmers to transition to lower input regenerative farming practices through the Environmental Land Management Schemes (ELMS)
The rising cost of inputs provides a strong market signal to use less of them. We should support farmers in transitioning to new practices.
Improving soils and biodiversity through regenerative farming, such as covering soils during winter months, reducing tillage and creating field margins for wildlife, can improve fertility and promote natural pest management - reducing reliance on expensive fertilisers and pesticides. This is precisely what ELMS should reward. Those farmers that have already reduced their fertiliser use are better insulated from the present price hike while benefiting from higher farm gate prices.
2) Embrace new technologies to reduce the need for inputs linked to the price of gas
The government is supporting the development of novel technologies which improve productivity and sustainability through the Farming Innovation Programme.
New fertiliser products developed domestically could become cost-competitive with imported chemical fertilisers. For example, CCm Technologies uses captured CO2 from industrial power generation to recover nitrate and phosphate from organic waste, like sewage and food waste.
Biogas, hydrogen and electric batteries could all play a role in decarbonising the agricultural vehicle fleet, and precision technologies can enable a more targeted application of fertiliser.
The Genetic Technology Bill will remove barriers to precision breeding. This will enable British scientists to improve crop productivity and resilience to pests, disease and climate change - reducing the need for fertiliser and pesticides and improving yields. This is a big Brexit dividend because EU law prevented us from using this technology.
3) Signal support for new production methods in the forthcoming food strategy white paper
We currently only meet around half of our vegetables and 16% of our fruit consumption domestically. Scaling up indoor growing systems, including vertical farms, will enable us to produce more fruit and vegetables in Britain.
Henry Dimbleby also recommended the government invest in a commercial cluster for alternative proteins, including lab-grown meat. The UK is already the largest market for plant-based alternatives in Europe. Meeting demand for alternative proteins domestically could create an estimated 10,000 new factory jobs and secure 6,500 jobs in farming to produce inputs for the manufacturing processes.
4) Maintain our high environmental standards in future trade deals
As we move to greener farming in Britain, we should avoid dropping tariffs on imports produced to lower environmental standards in future trade deals so that we don’t undermine British farmers and offshore food production.
5) Ensure more of the food we produce is fed to humans
Every year the UK wastes around 9.5 million tonnes of food. Food waste costs £470 per UK family each year. The government should mandate food waste reporting for food companies, as recommended by Dimbleby.
The government could also weaken the requirement to mix biofuels into petrol, as Finland and Croatia have done. The climate benefits of growing crops for fuel are contested as they displace food production, driving land use change for agriculture elsewhere. Around 107,000 hectares of crops are used to meet the UK’s bioethanol demand. Analysis by Green Alliance suggests these crops could feed 3.5 million people, offsetting up to 40% of the anticipated increase in global undernourishment caused by the war in Ukraine.
To conclude, sticking with EU-style subsidies will not help the farmers most in need and will do nothing to alleviate rising food prices. The government should continue to help farmers mitigate rising costs by supplementing their fertiliser needs and set out a plan to produce more food domestically without abandoning our environmental commitments.
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