Time To Cap The CAP
We must abandon food production subsidies to forge the kind of new trade deals we require
The Common Agricultural Policy was conceived as a regime of subsidised food production and employment protection. Since the reforms of Raymond MacSharry and Franz Fischler as Agriculture Commissioners, however, the subsidies have ceased to be tied to food production. The policy has moved to a regime of area payments which are becoming ever harder to justify and increasingly untenable politically. It is evolving into a policy designed to impose common environmental outcomes on the vast geographical area of the EU member states. The CAP has failed as a policy for food production — the UK’s self-sufficiency rate of 61 per cent in 2015 was 13 percentage points lower than 20 years ago — and for environmental protection.
Since the referendum, there has been great debate in rural areas about the continuance of current farming subsidies after Brexit and their nature. But this is looking through the wrong end of the telescope: abandoning the CAP provides an opportunity for far-reaching reform. Leaving the Customs Union and lowering the prices of food, clothing and industrial materials benefits all consumers, particularly the most disadvantaged, many of whom live in rural areas. The economist Patrick Minford has suggested that prices will be reduced overall by around 8 per cent after our withdrawal, with the price of food dropping by around 10 per cent. It is vital that we embrace the opportunities for global free trade which leaving the EU provides. Given the UK’s substantial trade deficit with the EU, it is vital to establish reciprocal free trade arrangements with it.
Global free trade, therefore, should be the key priority, but we must recognise that abandoning production subsidies for food is a prerequisite for forging the kind of new trade deals which we require. There are clear lessons to be learnt from the policy adopted by New Zealand, which abandoned production subsidies in the 1980s and demonstrated that food production can increase when farmers are given the freedom to react to the market. In the 30 years since, New Zealand’s sheep numbers have more than halved from over 70 million to below 30 million, but the spectacular increase in productivity means they still export a similar quantity of lamb.
As well as the removal of protectionist subsidies, proactive work on market access has been a vital component of this remarkable progress. New Zealand approached trade liberalisation from many angles, and today has free trade agreements with all 10 nations of ASEAN. It is the only country in the world to have separate arrangements with China, Hong Kong and Taiwan. New Zealand’s food and drink exports have grown at a compound annual rate of 8.3 per cent over the last 15 years.
By freeing farmers from overbearing regulation and allowing them to embrace the latest technologies, certain areas of the UK will undoubtedly be globally competitive in the absence of subsidies. The benign British climate, the length of its days and its soil quality provide some of the most productive land in the world. We can have every confidence that our food-producing areas will continue to prosper once released from the constraints of the CAP and benefiting from the best agri-tech developments.
Central to this will be an overhaul of the EU’s overly-prescriptive interpretation of the “precautionary principle” more influenced by the emotions of vocal activists than by scientific evidence, which has seen it abjectly fail to keep pace with advances in agricultural technology. In its stead the UK government must now implement the “innovation principle”, dedicated to facilitating and stimulating evidence-led scientific development.
While this approach will be suitable for some areas, there will be others, including marginal land, mountainous regions and national parks, which are unable to remain competitive against global producers and for which food production is inadequate as the sole means of generating income. Hillside livestock farming, for instance, will need some sort of support. But farmers must be rewarded in a far more tailored way for their environmental and conservational role than the present arrangements allow.
Successful examples of such schemes abound. In Switzerland, Alpine farmers are supported by direct ecological payments, exceeding CAP payments, for the work they do in maintaining the iconic landscape. Many of them would struggle to compete on the basis of food production alone, but they are crucial to the environmental maintenance of the Alps.
Our farming activity creates and nurtures a rural environment which sustains a £30 billion tourism industry; payments could be made to reflect this. The additional roles of providing national food security, maintaining the cultural landscape, and conserving and ameliorating biodiversity can all be fully rewarded as part of an integrated rural policy. Given the floods of recent years, there would be clear public support for rewarding farmers for water management, the delivery of clean water and good soil quality.
The understanding which underpins this approach is that livestock farming provides the best tool for conservation efforts. If remote areas were to be abandoned, they would soon revert to scrub, unmanaged bogs, hillsides covered in bracken and self-seeded trees populated by carrion crows and magpies. Such areas would not attract the visitors on which they depend. The idea that such areas should be “rewilded” with long extirpated predators is a Rousseauian fantasy which should not be encouraged or supported with government funds.
Instead, we can demonstrate that there need not be any conflict between an efficient farming industry and an environmentally aware one. A bold new approach, encouraging free trade while tailoring support to those areas most in need, can invigorate the profitability and competitiveness of British farming whilst improving the environment.