Can DEFRA ‘Health & Harmony’ plan guarantee food security after Brexit?
The debate surrounding Britain’s future food security and the impact that a new agricultural policy will have on farmers, food manufacturers and consumers is gathering momentum.
While a lot of attention is being focused on delivering environmental benefits let’s not forget the most basic fact that farming equals food. Whatever the other benefits are, we must always have an eye to the impact that any changes will have on the quality, price and quantity of food our farming industry can supply to British consumers.
Moreover, we will also need to establish where we see a post-Brexit UK farming industry positioned in the global market. Will there be a focus on high quality, high priced food or will the focus be on competing at lower global price points?
What are we trying to fix?
The last decade has seen persistently stagnant productivity in the farming sector along with an over-reliance on direct payments. Government wants to encourage the industry to invest differently to raise standards, improve self-reliance and deliver better environmental outcomes for the benefit of everyone. These benefits could come in multiple forms, for example improved soil and wildlife habitat, climate change mitigation, more robust rural communities and better animal health and welfare.
The last decade has seen persistently stagnant productivity in the farming sector along with an over-reliance on direct payments.
The basic principal behind the new policy of payment for results and outcomes rather than for prescribed activities should, in theory, encourage the desired innovation that will be needed to effect all this change and improvement. The challenge between now and the beginning of the transition will be to formulate a clear picture of how all this can be practically delivered. Another challenge will be to maintain the balance of importance between food, farming and other ‘public goods’.
Timing is everything
Plans to phase out the EU Common Agricultural Policy Basic Payments Scheme to farmers during a post Brexit transition period have been mooted in the Government’s “Health and Harmony” command paper. However, the detail and timing of how and when it will be done are going to be crucial in allowing farm businesses the time to adjust gradually and not face a ‘cliff edge’ if funding is withdrawn too quickly.
What we would like to see, well in advance of any changes to current funding, is a clear plan for boosting productivity during the transition and a firmer idea of future trade and labour arrangements so businesses know what they need to plan for.
Without this certainty it will be dangerous to try and fix the terms and duration of a transition period. In theory the money saved in the phasing out of CAP payments will be used to fund trials of new policy approaches and invest in boosting business competitiveness. However, it will be vital to recognise that changes take time and businesses will need to adapt over multiple business planning cycles.
These innovations and improvements will take time to implement. Producers and manufacturers will need to look at everything, from how they use data to improve efficiencies through to robotics, genetics, automation and human skills development along with a host of other options.
Alongside that is how the regulatory landscape will need to change to reflect the new welfare, food security and environmental protection requirements. That would be the subject of a whole separate debate.
What does this mean for the British meat industry?
At this stage the two biggest areas of concern are how the supply of home-grown livestock may be disrupted and how post-Brexit meat imports will work.
To try and work out the potential impact on our industry, the new agricultural policy must be looked at in a wider context. Changes to how and what farmers produce need to be balanced with the new trading environment after Brexit. This would include the new customs arrangements as well as evolving consumer habits and changes in the food supply chain such as the proposed Sainsbury’s merger with Asda.
If the new environmental policy has the effect of encouraging farmers to reduce livestock production in favour of ‘producing’ other public goods, there would be a supply squeeze and meat prices would rise. In this scenario, manufacturers would face rising input prices (driven by falling supply) and increased pressure from retailers keen to reduce costs for their customers.
If, on the other hand, a post-Brexit trade environment allows for imports of cheap overseas meat there would be little change to prices but a possible lowering of standards for the consumer. In this scenario manufacturers wouldn’t necessarily be disadvantaged but British farmers, businesses involved in slaughtering and those that specialise in supplying British product would be unable to capitalise on a falling supply of domestic livestock. If this happened, those businesses would be progressively driven from the market as they struggle to compete with lower cost imports.
Ultimately time will tell. But the sooner we have a clear picture of the environment we will all be operating in, the sooner businesses will be able to take some concrete steps to deal with the new reality.