Flamboyant economic pundit Sean Rickard has been upsetting farmers with his radical predictions about the future of their industry.Speaking at a conference in Scotland Rickard called for the abolition of all farm subsidies, and simply leaving farmers to cope with this by getting bigger, or go to the wall. Rickard said:
"There is a band of small full time farmers producing 15% of the [countries'] output. These are under pressure and do not have the economies of scale. There is nothing that can or should be done to save them. The top 20% with 80% of the output are in a different league, and can compete with the best in the world. They have the makings of a successful food industry"
Depressing words, especially for someone like me who belongs to the doomed 15%, but Rickard's just a glorified management consultant, what does he know about farming anyway? Former economic advisor to the NFU, currently the senior lecturer in Business economics at Cranfield School of management, has he ever had a real job?
Rickard seems to forget that farming is not just about food production, farmers also perform the very important task of maintaining the environment. They are often criticised for putting the drive for greater efficiencies before conservation, but in Rickard's Brave New World of market-led agriculture this is precisely what we will have to do to stay in business.
Not only Rickard is calling for an end to subsidies. A report by the Consumers' Association said that British families are paying £16 a week extra in taxes and high food prices because of the common agricultural policy, Its research shows that the Cap cost the UK £5bn last year, or the equivalent to 2p on the rate of income tax.
Food prices in the UK were found to be more than twice as expensive as those in New Zealand, where there are no subsidies or tariffs for agriculture production. According to their research, The total cost of a basket of 15 foods in the UK was £84.68, compared with £39.48 in New Zealand.
The Consumers Asociation says that CAP is increasing the cost of food, but with farm gate prices at an all time low one wonders why these savings are not being passed on to the consumer. Globalisation means that the 'world price' of food has become more important, ie what food is worth on the world commodity markets. Because transport now equates to only about 5% of the cost of food, if food is being produced cheaper in New Zealand then we can forget British farmers and buy it from there. The fact that food is cheaper in NZ is perhaps a greater reflection on the differences between our retail system and theirs. In his book 'the captive state', George Monbiot highlights some of the cynical tactics used by supermarkets to boost profits:
"The poor, perversely, are charged more than the rich. The cheapest available selection of a fixed list of groceries costs up to 69 per cent more in stores in poorer wards than in the richer ones. This is because in poorer areas, where people are less mobile and choice is more easily deleted, residents are less able to escape the grip of the local monopolist - who then can charge more. "
Let's get one thing straight, there is one thing that I and a lot of farmers, though possibly not those in the higher echelons of the NFU, would agree with Rickard on. The current system of subsidising agriculture doesn't work. Last Year farmers erected a sign on the road into Leek say "we don't want subsidies, just a fair share of the cake."
Currently Farm support equates to £12000 per farmer / year. I have to say i haven't had my £12000 yet, but then that's not how the subsidies work. 80% of subsidies are paid to just 20% of farmers. The people who need them most, the small farmers, aren't getting them. All the system does is encourage them to keep more stock to increase their support payments, which in turn leads to overstocking, oversupply and depressed prices, it's a vicious circle.
Take the example of a hill farm, which could receive £30 000 in subs yet make only £5000 profit. Clearly this is unsustainable. Yet, this farmer is maintaining the hills for everyone to use, where sheep have been removed by FMD, we see the problems this has caused for walkers.
So, there may be some case for supporting this farmer, but basing this support on the number of sheep he has is ridiculous. To gain more sub he keeps more sheep, more sheep means over supply, and lower prices, plus overgrazing which damages the environment. Caring for these sheep costs the farmer more than he eventually sells them for, so he ends up operating at a loss and is reliant on the sub to prop him up.
If we decide it is beneficial to keep this man in business, any subsidy given to him should be based on what he does for the environment. Stocking rates reduce, and hopefully the fewer sheep he has are worth more.
What I am asking is, is the landscape of the Peak District or the Lakes worth preserving? And are we prepared to accept that the taxpayer should contribute? If so we have to abolish the wasteful CAP and find a more acceptable and inexpensive way of encouraging sustainable agriculture. A way that gives the public the countryside they deserve for their money, and hopefully dismisses too the popular misconception of farmers as whining subsidy junkies in gold plated Range Rovers.