Earlier this week I was at a conference about ‘cultural’ and ‘natural’ landscapes. Throughout the conference we got references to how important agriculture was in creating these landscapes. Indeed Unesco in their granting World Heritage Site status to the Lake District pay generous tribute to the two hundred sheep farming families whose activities largely created the landscape everybody but George Monbiot loves.
For me the underlying problems were highlighted by a gentleman whose name I never caught who is involved in the Solway Plain AONB in North Cumbria. He complained that part of the plan to safeguard the cultural and natural landscape was the grazing of dairy cows. But in the last few years the grazing cattle have been moved inside all the year round and the grassland has been cropped rather than grazed. This had brought changes to fences and hedges (because they are no longer worth maintaining) and to plant varieties in the grassland.
There wasn’t time in the conference to unpick this, but I think it is actually an excellent example of how little real money is going into supporting environment.
If you assume a 200 acre dairy farm producing 1.5 million litres, then they’re probably getting £12,000 a year single farm payment as general support, and I suppose that if they’re very very lucky they might get as much again for pushing the aims of the AONB. So let’s assume £24,000. (This is very much the top of the range for that sort of farm.)
In the last few years for many dairy farmers the milk price dropped from 30p per litre to between 14p and 15p per litre. This means that the farm income has fallen by between £210,000 and £225,000 a year. This sort of income drop can mean bankruptcy. To put things into perspective we saw farming families going into Christmas with the bank overdraft at the limit, all family credit cards maxed out, and they hadn’t paid a bill for two or three months. They were surviving on ‘trade credit.’ Basically a lot of agricultural supply companies bit the bullet, pushed up their own overdrafts, and became lenders of last resort for these people. The companies were just hoping that the prices would pick up before everybody, including them, went bust.
While you could point to ‘market failure’, it was a decision by government (EU) to stop managing the market which made this failure possible. The sole beneficiaries have been the major retailers who have just pocketed the extra margins they made on milk.
In reality you cannot blame the retailers. Their shareholders, many of them pension funds and similar, need large amounts of money. These funds are under pressure because of changing rules due to the financial crisis and people living longer so demanding more money from their pensions.
But going back to the Solway plain, what do people actually want? If they want an environment managed by grazing cattle then they’ll have to pay for grazing cattle.
There’s three ways they can pay for it. The first is through prices. Just to give ourselves a sense of proportion; by some measures, after the Second World War, people in the UK spent 40% of their income on food. Now it’s between 10% and 13%. When I first milked cows there were about 100,000 dairy farmers in the UK, now there are about 13,000. When you’ve got 100,000 people being supported on the land, then they can do things like trim and lay hedges properly and do all the other labour intensive tasks. When you’ve got 13,000 being supported by the land, something has to give.
But when you stop to think about it, what happened to the money once spent on food? Well how much do you pay for your mobile phone contract, your internet connection, your netflix subscription? (Just to give three examples of things which weren’t even concepts back then.)
To a fair extent a lot of money has poured into companies like Amazon, Google, Facebook etc. As an aside it isn’t just food, think how cheap clothing has become. Now, rather than pay somebody a living wage to produce clothing in the UK, you can buy garments produced by somebody on another continent working for a pittance.
So if food prices went up, a lot of industries would just collapse because the consumer wouldn’t have the disposable income to spend on them.
The second way is to subsidise farmers to produce the goods. The problem is that this means the state has to step in and fill the gap between what the market has provided and what the family needs to survive. I know farming families that run a business turning over half a million pounds a year. But at the end of the year the family earn less than their eldest daughter who’s just started working as a teacher.
What the state would have to do is step in and fill the gap. When milk is 30p per litre at the farm gate there might not be a gap. When the price crashes to 14p per litre then the state might have to find a quarter of a million pounds per business to keep the sort of agriculture they wanted. Otherwise farming would evolve to become a system that could survive at 14p per litre.
Ironically before we went into the EU we had a ‘deficiency payments’ system which effectively did this. There was an annual Price Review where it was decided by government what price was necessary, and then a deficiency payment was made to cover the gap between the guaranteed price and the real price. Obviously if prices were higher than the ‘guaranteed price’, nothing was paid. When we joined the EU this system had to be abandoned for the far more expensive CAP.
The disadvantage of this system from the point of view of the environment is that the Treasury (and the tax payer) would probably rather fund the sort of agriculture we can have at 14pence per litre than the sort of agriculture we could have at 30 pence per litre.
Finally the state (or some quango) could just step in and run the land directly. This is inevitably going to be a far more expensive option in that you’re unlikely to get state employees who are willing to work 4,500 hours a year for less than the minimum wage.