After the ball was over

combine

 

So what happens after UK agriculture when we leave the EU?
Perhaps a history lesson first; in the UK we’ve relied upon imported food to keep prices down since the repeal of the Corn Laws in 1846.

Before the First World War we imported vast amounts of food, and there was a major effort to increase home production during the war. After the war land prices collapsed, imports flooded in and during the 20s and 30s we saw rural poverty what was on a par with what was seen in some of the industrial areas.

I talked to men whose fathers were allowed onto farms ‘rent free’ because the landlord was desperate for somebody to stop the land degenerating into scrub.

With the Second World War we saw the panic again, and government stepped in to bring land back into agriculture that hadn’t been ploughed in living memory.

After the Second World War, some farsighted people sold land, assuming they’d buy it back cheaper when the inevitable collapse came. Except the inevitable collapse never came because effectively the Second World War never ended, it morphed seamlessly into the Cold War.

From 1945 through to the collapse of communism and the opening of the Berlin Wall, UK and EU agricultural policy was fixed by Gross-Admiral Karl Dönitz whose U-boat campaign concentrated minds wonderfully. Mind you given that there were people in the EU commission at that time who’d eaten grass to stay alive in the winter of 1944/45, minds didn’t take a lot of concentrating.

After 9 November 1989 and the end of history, there was going to be no more war and the world was going to be a more peaceful and civilised place. So obviously the need to be self sufficient in food wasn’t as big an issue. On the continent, there are different political drivers to those in the UK. For example the Code Napoleon means that a lot of farmers rent their farms from a number of family members who all inherited a piece. Add this to regulations which in some places link rents to agricultural income and you can see why there are many people in urban France who care passionately about the profitability of farming.

Another factor is that we had our industrial revolution a number of generations before many of our European neighbours. Therefore they have a lot higher proportion of their population who understand agriculture.

In the UK under the Blair administration the mantra of MAFF/Defra was that we could always import food more cheaply.

In 2008 this changed with a vengeance because we had an international ‘weather event.’ UK wheat prices leapt from £90 a ton to over £200 a ton. Even more importantly we discovered that many countries that had previously been our sources of cheap food just stopped exporting because they barely had enough for their own populations. Their governments just blocked exports, no matter how much the buyer wanted to pay.

Defra produced a paper which stated, “We produce much of our own food, and because the UK is a developed economy, we are able to get the other food we need for a nutritious diet by buying from abroad. However, these recent increases in food prices have sparked a debate about self-sufficiency, food security and the resilience of our food supply network.”

As it is we’re in an interesting place. All predictions, including those made by Defra and other UK governmental organisations; say that we’re going to need to produce more food. In 2010, the UK produced 73% of ‘indigenous-type foods’.

Given our increase in population we’re going to have to increase output just to keep hitting the 73%. Obviously we can throw our economic weight about and import more, we’re a rich country. Morally that’s a very dubious argument, we’re exporting starvation, jacking up world prices and ensuring the poorest cannot afford to eat. Economically it’s also short-sighted, the rest of the world is growing wealthier, and the middle class in Asia is increasing rapidly. In a few years time it could be that it’s the poorer elements of our population who are being priced out of the world market. Obviously that’s the time when we feed the proles soma and kibble.

The other alternative is that we pay more for food. In 2010 the average UK household devoted about 9% of its expenditure on food, down from 16% in 1984. Obviously that money is going elsewhere in the economy; some families spend more on their Sky subscription than they do on meat or its vegetarian substitutes. Remember this is whilst we were in the EU which was supposed to be guaranteeing the future of agriculture.

So what will happen when we leave the EU? If we continue down the ‘feed the public cheap crap’ policy so they have plenty of money to spend on phone contracts and streaming TV content, then we’ll see agriculture in this country fall into fewer and fewer hands. Companies will be big enough to spread the fixed costs and with the lobbying power to ensure that ministers are ‘on side’.

They’re also the only ones who can afford the levels of investment now necessary. A decent dairy set-up now costs several million pounds and even at low interest rates, it’s difficult to put together a way of paying this off without having other businesses contributing to cash flow.

 

So where are we now? Basically we have a subsidy system which means that farmers can continue to provide supermarkets with produce at below the cost of production. Is the UK government willing and/or able to change this system? The last thing the government needs in our current situation is rapid food price inflation, it could destabilise a lot of things.
The idea that cheap food will flood in is somewhat idealised. Whilst countries outside the EU do have lower costs of production (some due to climate and geography, some due to the lower burden of regulation) it is naive to assume that they will sell into the UK at that low price. They’ll sell at the highest price they can get, because they want the margins. So they’ll sell just slightly cheaper than the UK product. There aren’t great surpluses to bring the price crashing down. Indeed if the Brazilians find the UK beef market price too low, they’ll just switch to selling it to Asia.

And underlying all this is that the world’s population is growing and yields aren’t keeping up with them. The rest of the world is switching technologies, and moving over to GM amongst other things. At some point in the future the EU will allow GM if only because its population can no longer afford to eat non-GM food.  All in all food security is becoming more, not less important.

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16 thoughts on “After the ball was over

  1. simonjkyte February 21, 2017 at 4:16 pm Reply

    blame economists

    • jwebster2 February 21, 2017 at 4:46 pm Reply

      it’s always a reliable fall-back position that covers most of the bases 🙂

      • simonjkyte February 21, 2017 at 4:50 pm

        yeah but it us who always bleated on about comparative advantage, got beans into teh supermarket from kenya and then told people to walk there to save the planet

      • jwebster2 February 21, 2017 at 5:03 pm

        I’m always wary about food exports from third world countries. Where they’re the only people who can produce specialist crops, chocolate, bananas etc that’s one thing. But where you have corporations taking over land to produce for our market stuff which we can produce, they’re also denying access to that land to the people of the country who also need feeding 😦

      • simonjkyte February 21, 2017 at 5:04 pm

        yep

      • simonjkyte February 21, 2017 at 5:07 pm

        Not how economists are told to push things through though. Ditto some of the EA stuff you have on your blog. You are right of course but that is not the point!

      • simonjkyte February 21, 2017 at 5:07 pm

        what is also amazing is that the post war labour govt set out to make the country self sufficient in food and then successive govts set out to make sure it wasn’t.

      • jwebster2 February 21, 2017 at 5:19 pm

        I think the words ‘post war’ explain everything. They were close enough to the reality to understand

      • simonjkyte February 21, 2017 at 5:24 pm

        Still, we may not be able to eat but at least we all have ipads – they will come in handy as plates or something

      • jwebster2 February 21, 2017 at 5:41 pm

        may be nothing to put on the plates, but the plates are at least elegant 😦

      • simonjkyte February 21, 2017 at 5:42 pm

        may still be heatable

      • jwebster2 February 21, 2017 at 5:44 pm

        I’m sure you can get them running hot enough to keep food warm 🙂

      • simonjkyte February 21, 2017 at 8:14 pm

        if you still have leccy

      • jwebster2 February 21, 2017 at 9:46 pm

        bicycle generator 🙂

  2. Mick Canning February 22, 2017 at 10:01 am Reply

    This all rings true, Jim. Surely food prices will simply have to rise – I don’t see any alternative. BTW I remember that ‘end of history’ quote. I laughed at the time, and I laugh now.

    • jwebster2 February 22, 2017 at 11:02 am Reply

      I think we’ll see a major shift in our economy if food prices do rise, because the money that was once spent on food is now spent on other ‘stuff’. But yes, the ‘end of history’ amused me as well 🙂

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