Defra’s policy consultation: Key points and how to respond

Michael Gove’s Health and Harmony consultation, setting out his vision for the “future for food, farming and the environment”, has been touted as a “once in a lifetime opportunity to help shape UK government policy”.

The consultation gives English farmers an insight to the intended direction of government policy for agriculture outside the European Union and provides them an opportunity to have their say.

Defra secretary Michael Gove has made it clear that it is the quality of the arguments that will influence the final outcome of the policy consultation, not the noise coming from any particular pressure group or “vested interest”.

See also: NFU president says speak up for British farming

These are some of the main points that farmers need to be thinking about if they want to make a contribution.

The Health and Harmony paper

The document is split into three broad sections. These are:

1. Moving away from the common agricultural policy (CAP)
2. Implementing a new agricultural policy in England
3. The framework for this new agricultural policy

1. Moving away from the CAP

The first section sets out what is wrong with the current CAP (complexity, low uptake of Countryside Stewardship etc) and outlines in considerable detail the government’s thoughts on an “agricultural transition”.

This transition could last five, seven or 10 years  and includes the gradual phasing out of direct payments, possibly from 2020.

This can be achieved either by “progressive reductions” for many – starting with a 5% cut in BPS at £25,000, 10% at £30,000, rising to 75% above £200,000 – or by applying a straight cap on payments at, say, £100,000 (or a combination of the two).

The paper discusses the conditions farmers should meet to receive these payments, and sets out the idea of making direct payments based on historic receipts, detached from the land.

This money could then be used to invest in their businesses, or to exit the sector altogether.

The paper then looks at ways to make farming more “successful”, including benchmarking, investing in new technology, research and development, encouraging new entrants and developing a skilled workforce.

2. Implementing a new agricultural policy

The second section sets out the government’s thoughts on what should replace the CAP, namely a new scheme that delivers “public money for public goods”.

It lists five main areas for future taxpayer support:

• Environmental enhancement and protection
• Animal and plant health and welfare
• Improved productivity and competitiveness
• Preserving rural resilience, traditional farming and landscapes in the uplands
• Public access to the countryside

The main focus is on environmental enhancement, and the paper outlines plans for a new “environmental land management scheme” using money from BPS and building on Countryside Stewardship.

It lists the outcomes it wants farmers to deliver – better soil, air and water, more biodiversity, flood control, climate change mitigation – and outlines how this can be achieved, for example by tendering schemes, collaboration and/or capital grants.

Two other key areas in this section relate to “risk management and resilience”, and “ensuring fairness in the supply chain” – the first talking about insurance schemes and futures markets, the second about collaboration, co-operatives and the Groceries Code Adjudicator (GCA).

3. Policy framework

The third section of the paper looks at devolution issues, international trade and proposals for a new Agriculture Bill.

On devolution, it acknowledges the need to allow some policy divergence, but notes the importance of ensuring the UK single market functions properly.

On international trade, government points to the opportunities for UK farmers to export more based on quality, but it also wants to “open up our own markets… offering more choice and strengthening the discipline of competition that helps keep food affordable”.

The paper also emphasises the government’s commitment to “ensuring the maintenance of high standards”. 

What to consider when responding

In total, there are 15 different chapters in the document, spread among the three broad sections. But the two key areas are the “transition period” covering reductions in direct support, and the move to “public money for public goods”.

We would make the following observations:

An agricultural transition

As explained above, this sets out some of the options for phasing out direct payments and the conditions which should be attached.

Given the importance of direct payments to the profitability of most farms, and the fact that our main competitors post-Brexit are likely to continue receiving them, moves to phase them out are regrettable.

But that is not negotiable – the days of direct payments are numbered.

Of the options tabled, progressive cuts to BPS, rather than capping, would be fairer, so as to spread the pain more evenly.

Applying a straight cap is too blunt an instrument, which penalises farmers just for being large.

These farms are not necessarily the most profitable, but they may be doing the most for the environment, as well as employing more people and providing more business for the whole rural economy.

Whatever method is chosen, the transition period should be longer, rather than shorter, to limit any annual reductions in BPS and so reduce the impact.

How long it lasts, and what shape it takes, will very much depend on the terms of any future trade agreement with the EU and others, as well as any other support mechanisms that are put in place to help farmers improve their competitiveness.

As for the conditions to be attached – some form of cross-compliance is no bad thing, but it must be simplified, compared with what the CAP currently prescribes, and “greening” should be abandoned.

Payments should also be targeted at active farmers, rather than detached from the land. Any money saved from BPS should be reinvested in the agricultural sector.

Public money for public goods

Farmers already deliver much for the public good, both through maintaining land in “good agricultural and environmental condition” (GAEC) under the CAP, and through various agri-environment schemes.

There is a strong feeling that this has been completely overlooked.

But it is clear farmers are going to have to do more to convince the Treasury to continue directing funds to the sector.

The consultation asks respondents to list various aspects in order of importance, so it is not difficult to put improved soil health, high animal welfare standards, flood control and climate change mitigation right up there.

These are as important to agriculture as to society as a whole, and farmers need to play their part.

But there is a question: “are there any other public goods which you think the government should support?” and that is a golden opportunity to specify the need for greater self-sufficiency, food safety and full traceability.

Certain economists might argue that “food production” is not a true “public good” as an income can be generated from the marketplace.

But that income is often precarious. Furthermore, productive farming delivers much more, including rural employment, the creation of agricultural landscapes and food security, which should also be considered public goods.

As for the proposed new “environmental land management system”, the absolute priority is that it should be simple to access, policed with a light touch and relevant.

“Broad and shallow” used to be the expression used in relation to the earliest agri-environment schemes – and that is something we need to get back to.

Such a scheme must also be properly funded. There are limits established by WTO rules, which say that any payments must only compensate farmers for “income foregone”.

But that is open to interpretation, and we believe any payments must not only fully compensate, but also incentivise farmers to get involved in environmental delivery and reflect the true value to society.

Overall, while environmental protection is clearly important, profitable food production is paramount and government needs to get the balance right.

A successful future for farming

This part of the consultation contains many great ideas for helping farmers “improve productivity, profitability and performance through research, adoption of best practice, investment in new tools and technologies, and adoption of new business models”.

It’s all commendable stuff, but government needs to be putting its money where its mouth is.

It also needs to focus more on near-market research and development, give farmers a greater say when it comes to setting research priorities and help the industry access the labour it needs, both at home and abroad.

Supporting rural communities and remote farming

The paper recognises the specific challenges of making a living in upland areas (poorer soils, harsher climate, fewer opportunities to diversify), and attaches some value to “traditional ways of life” and maintaining populations in these areas.

In asking “how should farming, land management and rural communities continue to be supported?”, the consultation provides an opportunity to expand on farmers’ specific needs in these areas.

Proper broadband and rural infrastructure is an obvious one. The government should also maximise the opportunities for farmers to take part in agri-environment, forestry, rural tourism and public access schemes.

But if there is one group of farmers that really warrants continued access to direct support – albeit with specific strings attached – it is upland farmers.

Ensuring fairness in the supply chain

Much of the logic behind the government’s proposals to shift taxpayer support away from food production and towards public goods is that it believes farmers can make a living from selling their produce to processors and consumers.

To help them achieve that profitably, the paper is keen that farmers improve their productivity and co-operate to strengthen their negotiating power.

It also wants to see clearer price reporting and better contracts. Those are worthy objectives, but making it work is the biggest challenge, so legal enforcement and public funding may be needed.

The government says it will continue to “champion” the Groceries Code Adjudicator.

What it really needs to do is to extend its remit, to cover more of the supply chain so farmers have better protection from unfair trading practices. This point needs to be made loud and clear.

Devolution – maintaining cohesion and flexibility

Having acknowledged the need for flexibility in the way policy is implemented between different parts of the UK, the paper then asks: “what are the areas where a common approach is necessary?”

There are some obvious ones – for example, in setting standards for plant protection, animal welfare, organic farming and labelling.

It is particularly important to ensure full compatibility for things that are exported, as future trade deals will be achieved on a UK basis, so uniform standards must apply.

One area of concern is that of “coupled” support payments, where some organisations have expressed a desire to see subsidies linked to specific types of livestock in specific areas.

This has real potential to create competitive distortions and should be avoided. It is also necessary to avoid too much divergence in support schemes for farms that straddle regional borders.

International trade

There is a clear contradiction in the consultation paper between the desire to develop our exports based on high production standards, while opening our own markets to imports to help keep food affordable.

The clear message that government needs to hear is that “you can’t have it both ways”.

Either foreign produce coming here should be produced to the same high standards as UK farmers adhere to, or UK farmers must be given access to the same tools and techniques that are permissible abroad.