Lawrence Wright and Dr Richard North on the subject of Farmers' Payments for providing environmental "features"

I was disappointed by Richard North's prescription in 'Death of British Agriculture' for the payment of farmers for providing environmental 'features'. Why should these be valued only in terms of their effect on the financial efficiency of industrial farming methods? If the provision of interesting countryside [with a variety of plants, insects, birds and animals to - entertain people, share and contribute to the quality of life, maintain a healthy, sustainable ecology which retains the assets of which no one has yet discovered the value or importance - and so on] is a worthwhile activity, why not invent a method of paying for it directly. Paying for it as a compensation for the deemed loss of profit from industrial farming seems to miss the point - and present the prospect of the absurd situation applying to 'Country Stewardship' payments last year. Just because the market price of an agricultural commodity has collapsed - perhaps for some artificial reason - doesn't mean that the maintenance of the environment is less valuable. It probably means that the farmers engaged in providing the environmental benefits need to be paid more for this aspect of their production. Why should the provision of environmental benefits be linked financially to the production of agricultural commodities? It is like suggesting that payment for all crops should be valued in relation to the price of - say - wheat.

If landowners or farmers can sell, lease or otherwise charge for shooting rights over their land [- and consequently manage the land so that it provides more interesting 'game', covers, etc.] why can't farmers sell access rights, bird-watching rights, visiting farm animals rights and so on? Instead, our misguided government, pandering to people who do not understand what is involved in environmental management, are taking these rights away. The result of uncontrolled access without provision for management, maintenance and repair is likely to be just as damaging to the ecology of the countryside as industrial farming methods.

Dr North's reply

What I tried to do with my "differential payments" suggestion was devise a relatively simple system that would pay the difference between the income which could be earned from operating a farm as a fully commercial (i.e., intensive) business and actual income received if the farm was operated on a more "environmentally friendly" basis. The scheme tries to give maximum flexibility with a one-stop shop of a single assessment and a single cheque, freed from the plethora of multiple, complicated schemes.

The crucial aspect which I took into account was that any support system must be politically sustainable - i.e., it must attract the broad support of non-farming taxpayers. In my scheme, the key is that farmers are not being offered subsidies but are being paid for services (not compensation) which provide a public good for which there is no free-market mechanism for making payments. Even rabid free-marketers do not object to this proposition.

As for linkage to agricultural commodities, there is a case to be made that farming, like any other business, cannot be totally isolated from the market, so there must be an element of adjustment to take account of prevailing prices. However, the differential payment scheme, perforce, will have to rely on "notional" earnings that could be obtained from a fully commercial operation, which are capable of being adjusted in a manner favourable to the farmer.

For instance, notional commodity prices could be calculated on a five-year rolling average, to iron out wild fluctuations. They could also be calculated on the basis of UK production costs, rather than on actual world prices. Those and other mechanisms could ensure that the central requirement for the scheme was achieved, that farmers were assured of a minimum income, as long as they were prepared to manage their farms in a manner acceptable to the society (i.e., taxpayer) who pays the bill.

An important side-effect of any such scheme is that, necessarily, there is no direct production support and, crucially, no export subsidy - so that there is no dumping of surplusses on the world market, a pernicious practice which drives down world prices. Even the UK's contribution here would help stabilise world prices and, importantly for the calculation of "notional prices", would give us the moral (and legal) authority at the (WTO) negotiating table to justify the prices which formed the basis of differential payment calculations.

What cannot be sustained is the current practice of dumping produce on the world market and then erecting barriers to protect ourselves from the effects of that dumping.

In the final analysis, however, there are many different possibilities for providing farming support. Mine was but one suggestion. I have yet to see anything better. For instance, the "green" idea is to tax intensive farmers (internalising external costs) in the expectation that this would drive up their costs and make "environmentally friendly" farming more attractive. That, of course, is a recipe for bankruptcy for all farmers, unless you erected massive import barriers, which could not be done under the current regime and is, in any event, hardly desirable.