In a thorough and authoritative analysis, Alan Matthews examines the repurposing of the English agricultural budget since Brexit, noting that the only other developed country to attempt such extensive changes is New Zealand: http://capreform.eu/agricultural-policy-reform-in-england-and-the-2024-uk-budget/
There has been a much greater reallocation to agri-environmental funds in England than in the CAP.
My article with Alan Greer on the impact of Brexit on agricultural policy in the four nations of the UK is available to view free online: https://www.tandfonline.com/doi/full/10.1080/13501763.2023.2204118
My article with Alan Greer on 'Divergence and Continuity after Brexit in agriculture' in the Journal of European Public Policy is now available online: https://www.tandfonline.com/doi/full/10.1080/13501763.2023.2204118
Throughout British membership of the European Union (EU), agricultural policy was largely determined by the Common Agricultural Policy (CAP). This was viewed by the UK as a dysfunctional policy and while periodic reforms meant that the EU moved slowly in the direction advocated by the UK, many of the main policy elements remained in place. The devolved administrations in Scotland, Wales and Northern Ireland have always enjoyed a measure of policy freedom in agriculture and have diverged from England in some areas. This article explores the extent of de-Europeanisation in the agricultural sectors in the UK and the patterns of divergence between them, focusing primarily on the development of policies for agricultural support that will replace those in place under the CAP. Overall, there has been substantial divergence in policy, but also areas of continuity, which means that processes of de-Europeanisation in the UK agricultural sectors has been uneven.
This article appeared in the latest issue of South-East Farmer:
Many farmers breathed a sigh of relief when a last minute trade deal was agreed between the UK and the EU, avoiding the threat of tariffs and quotas on agricultural exports. Of course, this would have affected some sectors more than others, notably those farming sheep. Such enterprises exist within the south-east of England, but they are more characteristic of remote hill farming areas in all the four nations of the United Kingdom.
I must admit to having a personal interest as my brother-in-law and nephew are sheep farmers in a remote part of Wales. They have merged three farms in order to run as lean and efficient an operation as possible. However, the whole enterprise is reliant on selling sheep for meat and the price they receive is influenced by the 40 per cent or so of total output that goes to mainland Europe. The price received for wool scarcely covers the cost of shearing, if that, and rental income from properties and telephone masts is very much secondary. The suggestion made by one politician that sheep farmers could shift to beef ignores the realities of production.
Farmers are generally enterprising and keen to keep input costs under control. One farmer I know in Yorkshire produces honey with a distinctive taste from the moors, but still principally relies on his contract with a leading supermarket. The more general point here is that the basic payment received by farmers under the Common Agricultural Policy is being replaced by a smaller domestic payment that is being phased out more quickly than some had anticipated, particularly for larger scale farms.
Other new forms of payment will be available, principally the Environmental Land Management Scheme, although that is still being developed and tested. Along with other payments, it will fall well short of compensating farmers for the loss of the basic payment which made the difference between profit and loss for many farm enterprises. It will also involve form filling to obtain, along with monitoring of outcomes, and is likely to be more suitable for farmers in remoter areas. This is not necessarily a bad thing from an overall policy point of view, but it may prove challenging for, for example, larger scale arable farmers in south-east England.
In areas like the south-east there are, of course, opportunities for diversification that may not exist in remoter areas, particularly those that are less suited to tourism. In this area as well, farmers have been very innovative in the range of ideas they have put into practice. There can, however, come a point where one is no longer running a farm business, but a farm that enhances other projects such as wedding venues, restaurants, shops and petting zoos. [I have just read about a farmer who is made £50,000 by loaning out a goat for video calls].
It is, of course, a personal business decision how far to go down this route. A note of caution is necessary for late adopters. Much of the low hanging fruit has already been taken. The capital costs can be considerable and the skills required can be very different from decisions about what to plant, when to spray and when to harvest. That said, many farmers manage to both farm and run complementary businesses.
Agriculture was the dog that didn’t bark in the night time in the very long legal text arrived at between the UK and the EU. Indeed, listening to the discussions during the negotiations, one was left with the impression that fisheries were the really vital sector despite the fact that it accounts for a smaller share of the economy than agriculture. Fish did enjoy considerable symbolic value in terms of ‘taking back control’.
There was an annex on trade in wine. This is not really my area of expertise, apart from enjoying it and investing in one well-known business in the South-East. As with most such agreements, the devil is in detail, but I would have thought that at first glance it was broadly acceptable to those growing grapes and producing wine in England. [A subsequent article in the Financial Times refers to certification costs which could add £1.50 to a £12 bottle of imported wine. This, of course, could make domestically produced wine more price competitive, although factors other than price can play a big part in purchase decisions].
In simple terms what the annex says is that EU and the UK should import and consume each other’s wine, although the flow is clearly from the EU direction. The documentation required is limited to a certificate which can be produced electronically. The self-certification is limited to eleven relatively straightforward questions. The agreement will be reviewed after three years, a shorter period than for fisheries.
Caroline Saunders, the president of the Agricultural Economics Society writes in its latest newsletter: 'Climate change is impacting on agriculture, both through consequences such as extreme weather events and through major changes in policy.'
'New Zealand [where she is a professor] is in an unusual position with 48 per cent of its greenhouse gases coming from agriculture. The New Zealand government has passed a Zero Carbon Bill with zero emissions by 2050. The agricultural sector has until 2022 to show how it will achieve this; otherwise, it will go into the Emissions Trading Scheme in 2025. In the UK, agricultural emissions are about 10 per cent of the total, but the UK also has the ambition of net zero emissions by 2050.
Both countries must work out how to measure the emissions, the point of obligation, the treatment of methane and the methods available to farmers to reduce emissions, and how to support farmers through the transition. There is also the issue of trade and the potential substitution of imports produced with higher emissions (New Zealand has relatively low carbon emission per unit of output).
New Zealand and the UK have strong links and it will be interesting to see how negotiations between the countries address these issues. Given WTO rules, this may be through a new trade agreement and/or through promoting consumer preferences for products with low carbon footprints. New Zealand was the first country to adopt a formal well-being budget in 2019.
Whilst it is early days to see how this will transform policy, it is a step in the right direction. One consequence is a shift in policy thinking to put more weight on the well being of those in the agricultural sector, given the changes mentioned above. A key challenge for the [agricultural economics] profession is to research the distinctive role of government to ensure transitions that consider farmer wellbeing.'
One interesting consideration is how Brexit will affect any future trade agreement which is likely to be sought by the UK. One issue could well be trade offs between financial services (for the UK) and agriculture (for New Zealand).
My presentation to the Geo-Agriculture conference in Beverley this week discussed the political landscape as it related to agriculture. I got it wrong in the preceding year when I forecast an eleventh hour fudged compromise given that EU decision-making was characterised by last minute deals. This would have left many issues unresolved that would have to be addressed during the transition or implementation period, but during that period economic relationships would continue much as before.
Why did I make a false prediction?:
The Agriculture Bill has been the victim of Brexit chaos. It finished its progress through committee in November 2018 and continues to wait for its Report Stage debate to be scheduled, now over 200 days since it was debated The NFU would like to see more emphasis on food production and food security, help for farmers to better manage risk and periods of poor market returns.
It is important to bear in mind that farm businesses vary considerably and this affects their ability to respond to Brexit. Some of the variations include climate/terrain; soil type; ownership structure: owned, tenanted, mixed (increasingly common).
Resilience enables farmers to withstand unexpected shocks and changing conditions. Farmers are being urged to unite, build resilience and look after one another, but there is a limited record of cooperation in the UK. It can lead to an emphasis on survival rather than adjustment and adaptation.
Farms are reliant on EU subsidies
16 per cent of farm business make a loss, but that is forecast to increase to 42 per cent as basic payments are phased out. Direct payments account for 61 per cent of farm net profits. An accountant who represents 100 agricultural businesses in the Highlands estimates just one would be profitable without subsidy. Average Highland estate receives two-thirds of its income from EU subsidies.
Some farms and sectors are more challenging than others, but enterprises can be well managed in difficult conditions. AHDB/Andersons study found that top-performing farms are generating £50,000 more, on average, than those in the bottom 25 per cent.
Top beef and sheep farms in less favourable areas (LFA) yielded an income of £45,200 a year compared with -£1,600 in the bottom 25 per cent. On lowland grazing systems, the difference between top and bottom was £55,100. The study states, ‘Almost all the determinants of success are down to the individual; the decisions made on the farm and how they are implemented.'
Brexit
Farmers Weekly sentiment tracker for April shows a continuing upturn in how farmers view their prospects (+3.18). There has been a slight improvement in commodity prices. Even though more see input prices rising faster than outputs, the gap is narrowing. There has been a slight improvement in how they think Brexit will affect their business. Overall producers remain more negative than positive about Brexit with half thinking it will be bad for their businesses, compared with 21 per cent who think it will be positive. Index (1.0 negative, 5.0 positive) has increased from 2.51 at the beginning of the year to 2.66.
It is difficult to get good data on how farmers voted in the referendum or what they think now. The Knight Frank rural sentiment survey (N just 200) shows they are deeply divided (as is the country). 26 per cent want a hard ‘no deal’ Brexit; 25 per cent want a second referendum leading to ‘remain’ (would it?); 22 per cent the EU/May deal; 16 per cent soft Brexit customs union;10 per cent other; 2 per cent, 2nd referendum leading to leave.
How are farmers preparing for Brexit? 51 per cent said they were making not making any preparations, which may not be irrational given the prevalent uncertainty. Top changes: Diversification; more land into conservation; make existing business more efficient; plant more trees; buy/sell land (the 'bigger is better' orthodoxy is being challenged, although there are still economies of scale).
As far as diversification is concerned, most low hanging fruit has been taken. It does require different business skills and capital costs can be high. Popular options include farm contracting; tourism; on farm niche food production (ice cream; yoghurt; cheese); farm shops; storage facilities or office space; leisure activities; eventually the farm can be just a context for the business.
We should not forget that the CAP has been a dysfunctional policy. It was not designed with UK agriculture in mind or contemporary problems. Basic payments have been only tenuously linked to outcomes. Policy instruments were poorly designed and often impact farm businesses without securing desired outcomes. It encouraged intensification of agriculture.
New policies in England
In England current land-based payments to farmers will be phased out over a seven-year period starting in 2021. They will be succeeded by public funding for public goods at the core of which will be the Environmental Land Management System (ELMS). Under the new system, farmers and land managers can enter into a contractual agreement with the government to produce environmental land management plans providing outcomes, for which they will be paid.
The National Audit Office has issued a highly critical report. Farmers will have little time to prepare for participation in a three year national pilot of ELMS, which will run from 2021 to 2024, because Defra is not planning to set out the environmental outcomes it will pay for or how much it will pay until April 2020. This is less than a year before the start of the pilot and when their payments will start to be reduced. Defra has consulted with farmers as it designs the Programme, but it has not provided the necessary guidance to enable farmers to plan how to adapt their businesses or how to work collaboratively with other farmers.
Defra has recently scaled back its ambitions for the level of take-up of ELMS during the first year of the three-year national pilot, from 5,000 farmers to 1,250, but is seeking to increase participation as the pilot progresses. It is not clear whether this lower number in the first year of the pilot will provide sufficiently robust evidence across the range of farm types and locations to inform further development of the Programme. This means that Defra only has two years to test how well ELMS will work at scale.
What the NAO is saying in coded language is that preparation is poor and it could blow up in Defra's face. Defra currently has no plans to test its assumptions about the level of take-up of the new system. If take-up is low, Defra will need to find alternative ways to achieve environmental benefits. Farmers that do not participate may leave farming or replace direct payment income by adopting more intensive farming methods that could damage the environment.
Trade effects
Under a no deal scenario, tariffs would apply to UK food exports (I do not think GATT 24 applies). Fresh lamb carcase and barley exports are likely to feel the largest impact given that the UK is a net exporter The sector facing the most challenges in a ‘no deal’ scenario is sheep meat. Tariffs under a ‘no deal’ Brexit would make exports uncompetitive, the sector is very reliant on exports to the EU.
There is concern about terms of trade agreements with third countries (the focus is often on the US, but there are problems elsewhere). Agriculture may be sacrificed for gains in other areas of the economy. There is concern about price competition from countries with lower standards, e.g., on animal welfare. But some countries are simply more price competitive.
The AHDB suggests that critical to doing things better on farms is to minimise overhead costs. Higher outputs account for 10-30 per cent of higher profits in top quartile farm businesses, but lower costs contribute 65-95 per cent. Farmers should set goals and budgets (business plan); benchmark; improve people management; be self-critical and use skills effectively.
It is difficult to say what the future holds. A no deal Brexit would be damaging. Perhaps Boris could deliver a compromise that he could get past the hard line Brexiteers, but the chances aren't good.
As far as the EU are concerned, the negotiated deal is one between the EU and the UK and it won’t be re-opened. Why would a different PM be able to persuade them otherwise? They will not abandon a small peripheral member state like Ireland. They don’t want to encourage others to exit.
A no deal Brexit is not in the EU’s interests, particularly Germany. There is scope for further negotiation on the political arrangements. It might be possible to offer a timetable on the backstop and alternative arrangements. The changing dynamics of the Franco-German relationship is the biggest uncertainty.
In questions, I was asked if I would advise sheep farmers to bail out now, given that production decisions need to be taken well in advance. My advice on balance was to hang in there.
I was asked how the attitude of banks and other finance providers might change. This is something I have researched in the past. The attraction of agriculture for lending is that it has been a stable sector with asset security. This will change to some extent after Brexit, but banks have considerable understanding of the sector and will be able to make informed decisions about future lending.
Concern has been expressed about the way in which EU pesticide rules are being translated into UK law by the University of Sussex Trade Policy Observatory: Not just a technical exercise
The commentary notes, "These changes to pesticide regulation in the UK can hardly be characterised as ‘technical’; they will weaken the rigour of the process by which pesticides are approved and monitored in the UK."
The EU could, of course, prohibit the import of crops from the UK produced with pesticides of which it did not approve.
Farmers are divided about how or whether they want Britain to leave the EU according to the Knight Frank 2019 rural sentiment survey. It should be noted that the sample size is just 200, but it probably does reflect a measure of confusion and uncertainty among farmers.
26 per cent of farmers wanted a 'no deal' Brexit, which would certainly be damaging for at least some of them, but 25 per cent wanted a second referendum leading to a remain conclusion. 22 per cent backed the deal with the EU negotiated by Theresa May and 16 per cent preferred a softer Brexit including a customs union.
30 farmers said they would change how they voted in 2016 and 80 per cent of them would switch from remain to leave. They blamed Brussels for the UK's inability to reach a deal.
51 per cent of respondents said they had no plans to adapt how they farmed to deal with leaving the EU. Those planning for Brexit envisaged diversification, putting more land in conservation schemes and making existing businesses more efficient.
The report can be read here: Knight Frank
The National Audit Office has issued a report on the government's new farming policy. Gareth Davies, the head of the NAO comments, 'Defra is moving forward with a policy which is a radical departure from the CAP farm payment regime we have known for forty years. Because it is such a big change, from acreage-based direct payments to an environmental stewardship scheme, we have looked at Defra’s approach to implementing its policy at an early stage.'
'We urge Defra to give itself time and space to fully test and evaluate the policy, and for comprehensive planning, to avoid any unintended consequences for the farming community, our environment or ability to feed ourselves.'
The report notes that 'The government’s new farming policy will be a significant change for farmers in England and the Department for Environment, Food & Rural Affairs (Defra) has a lot to do to prepare for its implementation at a time when its resources are already under immense pressure from its preparations for EU Exit. The National Audit Office warns that government must approach its roll-out carefully to ensure farmers can prepare in the way they need to.'
'The UK farming industry provides over half of the food the UK eats, employs 474,000 people and comprises 217,000 farms. While a member of the EU, the UK takes part in the Common Agricultural Policy (CAP). Under CAP, farmers in England received €2.4 billion in subsidies in 2017. To prepare for exiting the EU, Defra is developing the Future Farming and Countryside Programme (the Programme) to implement a new agricultural policy and regulatory arrangements to replace CAP.'
'The key part of this new programme is the Environmental Land Management System (ELMS). Defra hopes to have 82,500 farmers enrolled on ELMS by 2028. Under CAP, most payments to farmers are based on the amount of land they farm. These direct payments will be gradually phased out over a seven-year period starting in 2021. Under ELMS, farmers will be encouraged to enter into a contract with the government to produce environmental land management plans, and be paid for the environmental outcomes they deliver, often working in collaboration with other farmers. The policy represents a major shift away from traditional farming towards a system that pays public money primarily for delivering environmental benefits.'
'Farmers will have little time to prepare for participation in a three year national pilot of ELMS, which will run from 2021 to 2024, because Defra is not planning to set out the environmental outcomes it will pay for or how much it will pay until April 2020. This is less than a year before the start of the pilot and when their payments will start to be reduced. Defra has consulted with farmers as it designs the Programme, but it has not provided the necessary guidance to enable farmers to plan how to adapt their businesses or how to work collaboratively with other farmers.'
'Defra has recently scaled back its ambitions for the level of take-up of ELMS during the first year of the three-year national pilot, from 5,000 farmers to 1,250, but is seeking to increase participation as the pilot progresses. It is not clear whether this lower number in the first year of the pilot will provide sufficiently robust evidence across the range of farm types and locations to inform further development of the Programme. This means that Defra only has two years to test how well ELMS will work at scale.'
'Defra currently has no plans to test its assumptions about the level of take-up of the new system. If take-up is low, Defra will need to find alternative ways to achieve environmental benefits. Farmers that do not participate may leave farming or replace direct payment income by adopting more intensive farming methods that could damage the environment.'
'The success of the Programme depends on government assumptions about how the farming community will respond to the new policy. Direct payments from the EU currently account for an average of 61% of farms’ net profit. Without these, 42% of farms would have made a loss between March 2014 and February 2017. The Department expects the withdrawal of direct payments to be offset by improved business approaches, new entrants to the sector taking over farms that have ceased to be viable, and productivity gains across the sector. However, there is limited evidence that many farms are equipped to increase their productivity.'
'Defra is starting to specify its digital requirements for the Programme before key decisions have been made about how the new policy will work in practice, increasing the risk that it will need to make significant technology changes late in the Programme. For example, Defra has not yet decided which environmental outcomes will be rewarded or how much farmers will be paid.'
'The NAO recommends that Defra gets a plan in place with realistic timescales, that has sufficient flexibility to allow changes to be made as more is learned about how farmers react to the new farming policy. It should extend participation in its pilots to a wider range of farmers and land managers to test their willingness and ability to participate in ELMS, and determine the level of ELMS take-up it needs to justify investment in its design and development.'
The report can be found here: New farming programme
The AHDB has modelled two Brexit scenarios, UK-EU free trade area and WTO UK tariffs: Assessment report
Farm business income drops under both Brexit scenarios for nearly all of the farm and enterprise types covered. For most sectors the main driver of the fall is expected increase in labour costs. However, in the Less Favoured Area (LFA) and lowland beef and sheep farms falls in production returns (from cattle and sheep sales) are much more substantial.
Most sectors fare significantly better under a UK-EU FTA scenario. In general terms trade impacts vary depending on whether the UK is a net importer or net exporter. Net importing sectors generally gain from rising prices, whereas net exporting sectors see falls. Under the WTO: UK tariffs scenario some net importing sectors (beef and pigs) also experience a price fall as the model expects cheaper world market product to make its way to the UK market.
As with the original 2017 study there is substantial variability of results by farm size and performance levels. The high performing farms, in terms efficiency of converting inputs to outputs, remain profitable under both scenarios.
The United States is playing hardball on agricultural trade as part of any future US-UK trade deal after Brexit. Last week the office of the US trade representative (in effect, America's trade minister) issued a document that said the US was seeking 'comprehensive market access for US agricultural goods in the UK' through the reduction or elimination of tariffs. The US is also looking for the removal of 'unwanted barriers' related to 'sanitary and phytosanitary' standards.
The US Ambassador followed up with an article in the Daily Telegraph on Saturday which said that the UK risked getting trapped in the EU's 'museum of agriculture' approach: Smears on US farms
The EU has shown itself more than capable of innovation in agriculture with a new era opening up with the digital revolution. However, what the so-called 'museum of agriculture' about is a vision for European farming which emphasises the production of high quality products in an environmentally sensitive way, including observing animal welfare standards. An ecosystems compatible agriculture reflects the preferences of European consumers and voters who have no enthusiasm for corporate, industrialised American models.
A vibrant and innovative food movement is growing in Wales and there could be new opportunities post Brexit. But is England holding Wales back? Brexit and Wales
The report argues that Brexit poses particular risks for Wales’s export-dependent farmers and food producers. It also gives Wales an opportunity to make a step-change into a new approach to food and farming. Wales has a forward-looking government with sustainability high on the agenda, and a diverse geography. The size of the country gives it an advantage: small enough for individuals and projects to make a difference, big enough for economies of scale, and diverse in its landscapes and culture.
It has several innovative pieces of legislation that could support a transition to fairer and more environmentally sustainable farming and food production, if political authority and public support can be mobilised to link them together.
Recent events may give the impression that a no deal Brexit is off the table, but it may merely have been postponed until the end of June. It is therefore significant that Theresa May has ruled in favour of Michael Gove in a battle over tariffs on sensitive agricultural goods.
There was a clash between Gove and chancellor Philip Hammond with the latter taking what he saw as the side of consumers while Gove argued for tariff protection.
Existing high EU tariffs will be maintained on beef and lamb. General duties will retained for pork products, milk and cheese. Products such as sugar will have tariffs to maintain duty free access from developing countries.
Quite what the Irish Republic will make of the prospect of high tariffs on beef, which will have to apply to them, remains to be seen. It may increase their efforts to find a workable solution to the Irish border issue.
Addressing the NFU conference yesterday, Michael Gove made it clear that a no deal Brexit would be highly damaging for UK agriculture. Tariffs of at least 40 per cent could be imposed on sheep meat and beef, rising to 100 per cent in some cases. SPS checks would be imposed on exports, slowing down their processing which would mean they would be less fresh on arrival: Full text of Gove speech
One piece of good news for farmers is that there will not be zero tariffs on food imports which might have been politically attractive as a way of reducing the price of food. However, as always, the devil is in the detail. It is not clear which sectors would benefit although Mr Gove implied it would be sheep meat, beef, poultry, dairy products and pig meat. There was no mention of grains, fruit, vegetables or flowers.
The Government could also provide direct cash support for hard hit businesses, although it is not clear what the budget would be or how it would be allocated. The vulnerable livestock sector would presumably benefit.
With Brexit uncertainty continuing, this analysis by well-known authors looks at the risks associated with Brexit for farming and the agri-food supply chain. In particular, zero tariffs for food might be politically attractive in a 'no deal' scenario but would hit farmgate prices hard: Farming on the edge
The Government's intention to switch to public goods payments for farmers after Brexit may fall foul of the poor record of implementation of existing agri-environmental schemes. About 30 per cent of the farmers signed up to the various green programmes are still waiting for payments from 2017.
Payments often come up to a year late. By the government's own assessment, delivery of the country stewardship scheme has 'fallen short' and 'the situation is unacceptable' according to the latest annual report from Natural England.
The new schemes are likely to be even more complex and will have more money going through them, making even more delays likely.
Given the likely complexities of making applications, farmers could simply opt to farm their land more intensively, reversing previous environmental gains.
The text of Michael Gove's speech to the Oxford Farming Conference: Defra Secretary
He comments, 'I cannot, here, entirely pre-empt the outcome of the Government’s Spending Review.' Indeed, but it is of crucial importance and the Treasury has a long held suspicion of farming subsidies. Gove claims, 'Embracing change, supporting reform is the key to unlocking the Treasury’s special box.'
The Secretary of State admitted, 'It’s a grim but inescapable fact that in the event of a no-deal Brexit, the effective tariffs on beef and sheep meat would be above 40% - in some cases well above that. While exchange rates might take some of the strain, the costs imposed by new tariffs would undoubtedly exceed any adjustment in the currency markets.'
In addition, 'The combination of significant tariffs when none exist now, friction and checks at the border when none exist now and requirements to re-route or pay more for transport when current arrangements are frictionless, will all add to costs for producers. As will new labelling requirements, potential delays in the recognition of organic products, potentially reduced labour flows and the need to provide export health certificates for the EU market which are not needed now.'
'Nobody can be blithe or blasé about the real impact on food producers of leaving without a deal.'
Dieter Helm from Oxford University in a video presentation of policy options for agricultural policy after Brexit: Dieter Helm
He argues that we are at a critical historical turning point for agricultural policy, as important as the post-war settlement embodied in the 1947 Act and joining the then common market in 1973. We need to be clear about what the problem is you are trying to answer in agricultural policy. Why do we have to intervene at all? Post-war policy across Europe was influenced by a 'dig for victory' narrative which is no longer relevant.
He argues that we no longer need policies to deal with volatile prices given the availability of futures markets and financial instruments. I am not convinced that these address all the challenges, particularly for smaller farmers.
What earlier policies failed to address were negative externalities and public goods. Economists have a tight definition of public goods, but public perception equates public goods with the public interest. The Treasury may be tempted to transfer non-agricultural policies to the agricultural budget, e.g., rural broadband access.
There is an asymmetric information problem between farmers and those implementing public policies. Helm suggests the use of auctions and discusses this in the context of river catchment areas.
The Food Research Collaboration has produced a briefing paper on pesticides policy after Brexit: Pesticides at a crossroads
It is noted, 'With Brexit looming, there is an opportunity for the UK to reshape its relationship with pesticides. It could choose to mirror or even surpass the standards of EU pesticide rules. On the other hand, it could bow to the pro-pesticide lobby and use Brexit as an opportunity to deregulate. This would allow a greater variety and larger quantity of harmful pesticides to be used, thereby putting the environment and the public’s health at risk.'
Among the recommendations are that the UK should maintain the EU’s hazard-based approach (rather than revert to a risk-based approach) to pesticide regulation and introduce a clear, quantitative target for reducing the overall use of pesticides in agriculture. A new government body should be created to support Integrated Pest Management (IPM) techniques. A pesticide tax should be introduced to drive reductions in pesticide use and fund research, development and innovation.
Farmers are, of course, concerned about the removal of active substances they see as essential to plant protection.
