Opinion: Import tariffs could level the playing field
Chris Bennett @ Johnny Houston Farming’s poor return on capital and lack of profitability has been put in the spotlight recently because of how unaffordable the proposed inheritance tax change is.
But why do we find ourselves with such tight margins? An unlevel playing field is the most fundamental problem.
Allowing imports to enter our market that are produced to standards that would be illegal in this country is wrong and undermines our industry.
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We are simultaneously in a race to the bottom on price and a race to the top on standards.
Until recently, this effect has been masked by direct payments allowing farmers to stay in business even when the margin of the actual food production is small or non-existent.
The disparity in cost of production between domestic and imported products comes in many forms.
It can be less stringent environmental regulations, differing animal welfare rules and the legality of certain pesticides, but also the level of subsidy and other factors such as the proposed fertiliser tax.
There is no more stark example of the unlevel playing field than oilseed rape and the banning of neonicotinoid seed treatments.
The risk now associated with growing the crop would be more manageable if the price paid reflected this risk, but the import of oilseed rape produced in countries where neonicotinoids are still allowed means that the price remains frustratingly low.
When we signed the free trade agreements with Australia and New Zealand, this issue of an unlevel playing field was raised but seemingly ignored by politicians.
In New Zealand, they do not face as many environmental regulations as we do and have access to many pesticides banned here.
Their cost of production is significantly lower, yet we will be forced to directly compete.
Allowing these kinds of import reduces the farmgate price, but it also limits our ability to protest.
If we were to stop our produce from leaving the farm the only people we would be harming would be ourselves.
Imports would fill the void, and the public and politicians would see little effect.
In his speech to the Country Land and Business Association in November, Defra secretary Steve Reed promised the government would “make farming profitable again”.
He even said they’d “protect farmers from ever again being undercut by low welfare and environmental standards in trade deals”. How he plans to do this remains to be seen.
While we may call for the complete ban of these kinds of imports, it is unlikely to be feasible.
The UK being only about 60% self-sufficient in food means we rely too heavily on imported food for an outright ban.
If Steve Reed is looking for ideas, the introduction of a tariff dependent on the country of origin and related to the standard the food is produced to could have the desired effect.
If standards fall below our own, a tariff would disincentivise the products from entering our market while increasing our farmgate price.
Other countries that chose to produce to our standards would be allowed access and there would be no problem competing with them.
This is one of the few ways to reliably “make farming more profitable” without reintroducing direct payments.
The government lost a lot of credibility by altering the inheritance tax rules – maybe they could gain some back if they solved this problem.