Written by Catherine McBride
This article was first published in Briefings for Britain and we re-publish it here with their kind permission.
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Policymakers should not be swayed by emotional rhetoric or economic philosophy when it comes to a trade deal with Australia. While some UK farming sectors and some well-run farms in all sectors are highly profitable, a large proportion of UK farms have been losing money for some time and have only been propped up by government subsidies. Protecting uneconomic farms from (unsubsidized) Australian competition is a double charge on British consumers – they subsidize UK production through their taxes, then they pay higher prices for it at the market.
Cabinet Ministers are apparently at war with each other over free trade versus agricultural protectionism. Minette Batters, the president of the NFU, uses highly emotional language in her letter to the Mail On Sunday to oppose a trade deal that would benefit the UK’s 67 million consumers and consequently the whole UK economy. Surely it is time to look at the reality of UK farming, with some cool heads and hard numbers about the industry, unimpassioned with rhetoric about poor hill farmers or the 1.5% of the population who signed a petition about animal welfare.
Luckily, the Agriculture and Horticulture Development Board (AHDB) has already paid for this research even though neither they nor the National Farmers Union (NFU) have made a big deal about its findings, other than to use its most negative results to convince the Government to continue UK farm subsidies and the gangmaster visa scheme for importing cheap seasonal workers. Defra’s annual survey, Agriculture in the UK 2019, also publishes statistics that few Members of Parliament ever seem to read. Instead, the debate has been highjacked by the emotional and the ill-informed.
But if we look at the base case returns by commodity sector in the Agribusiness Consulting Informa report, Quantitative Modelling for Post Brexit Scenarios, commissioned by the AHDB, we see the problem almost immediately. Some agricultural sectors in the UK are much more profitable than others. And dramatically so. Even though Farm Business Income (FBI) includes EU CAP payments and the benefits of cheap imported labour, the low productivity farms in every farm sector, still lose money. This is not due to trade with Australia. This work was done in 2017. In any other industry, such failing businesses would have been forced out of the market and their land and equipment bought by more efficient farmers or consolidated into neighbouring farms.
According to DEFRA’s Farm Business Income by type of farm, England, 2019/20, the average FBI for UK Dairy farms was over 9 times that of a Lowland sheep and beef farm; the average FBI on General Cropping farms was also 9 times as high; specialist Chicken farm average FBI was 9.4 times as high; Cereal farming FBI was almost 7 times as high; Specialist pig farms FBI was 4 times as high; and Horticultural FBI was over 4 times. Incredibly even the Sheep and Beef farms on so called ‘Less Favoured Areas’ (LFA) have an average FBI twice that of the average Lowland sheep and beef farmer in the UK.
But we hear little to nothing about these more profitable farm sectors. Why is the National Farmers’ Union solely concerned with the least profitable sheep and beef farms? Some claim that as many such farms are in Scotland and Wales, free trade would fuel their independence movements. However, Scotland would be one of the largest beneficiaries from agricultural exports in trade agreements with Australia or the US, as it has been with Japan. Wales’ main export commodity, lamb, is seasonal and so not in direct competition with Australian lamb and the US is a net importer of lamb.
So, politicians should not let the entire argument for free trade be swayed by an emotional plea from the president of the NFU about just one section of UK farming, let alone one sector of the economy. Most UK farmers will be fine with a free trade agreement with Australia. In fact, many of them may discover that free trade with Australia opens new markets for their products or increases their Australian market share. Australians do generally have British tastes in food and drink. And while Australia produces brie that is better than the French competition, Australian blue cheeses are unremarkable compared to Stilton.
Australia also does not produce much pork and was a net importer of over 100,000 tonnes last year. UK pig farmers should be capitalizing on this. But despite the relatively high return of UK pig farms, the UK still imports about 40 per cent (by volume) of the pork it consumes.
Yet, pigs are the easiest farmed animal to increase in herd size. While cattle mainly have single births, pigs have litters of 8 to 12 piglets at least twice a year. But still UK farmers have been content to watch pork being imported from the EU by the truck load. And UK consumers have been happy to buy it, despite anything the President of the NFU may be claiming about UK consumers’ preference for high welfare meat. The largest pig farms in the EU produce hundreds of thousands of pigs each year. The French company, Cooperl Arc Atlantique has 250,000 breeding sows while the Spanish company, Vall Companys Grupo, has 195,000. These are not artisan suppliers. The EU has over 200,000 zero-hectare farms (indoor intensive feedlots) mainly used to produce chicken and pigs.
This brings us to the crux of the problem. Why aren’t UK farmers willing to change their production to meet UK market demands? More importantly, why is their Farmers’ Union trying to perpetuate protection from Australian and the US imports, but untroubled by imports from the EU? Have UK farmers simply become rent seekers? Well, no, at least not all of them.
(To be continued with Part 2 tomorrow)
Agreements for free trade in agricultural goods by the UK with Australia or other countries outside the European Union are prevented by the Trade & Cooperation Agreement. The TCA stops the UK from straying from the EU Single Market’s Sanitary & Phyto-Sanitary (SPS) rules. Those SPS rules about the hygiene of agricultural products were designed by the EU to stop agricultural imports from outside the EU. Under the TCA the UK can only stray from those SPS rules with the agreement of the EU side of the Partnership Council, which of course will not be granted.
Boris has not delivered the Brexit he promised by a long way. All it needed was for him to say “NO”, mean it, and settle for WTO rules. The only way he can redeem himself is to bin the WA and accept WTO rules. If he does not do that I will take it as final confirmation that he is a traitor, just as too many PMs before him.
PS: we never hear anything about military “cooperation” either…
The Tory Party is a busines. At root it’s MPs are ‘partners’ in a business venture – just like ‘partners’ in the big four accountancy firms or ‘partners’ in JP Morgan the American mega bank. Of course they don’t all see eye to eye all the time but Johnson would never have got the top job unless he had agreed to work to further the interests of the ‘firm’ and their investors (party donors). Having ‘dirt’ on the Fat Boy would no doubt reassure the ‘executive’ that he would stick to his assurances. The Tories (like Labour and Lib Dems too) will tell us any tosh you want to hear but ultimately serve the interests of their ‘investors’ not useful idiots who vote for them.
Dead right
Not to my knowledge have pig and poultry farmers ever received any subsidies like daiy, beef and sheep farmers have done. Why was that? Simple, the Tory toff farm and estate owners were not poultry or pig farmers. Let the farmers swim or sink, like everyone else in small and medium sized business has to do.