The bright side of Brexit: we can ditch daft farm subsidies

Published by the ipaper (15th August, 2016)

Slowly but surely, the consequences of that self-harming Brexit vote become clearer. The pound has fallen, the economy is shrinking, the jobs market freezing, pension funds suffering. Ministers given the task of overseeing departure from the European Union are squabbling while desperately seeking experts for their staff. Backbench zealots press the prime minister to move faster without specifying the destination. And no-one has come up with an answer to the key question: how do we retain open borders with Brussels for goods while closing them for people?

Now Chancellor Philip Hammond has confessed that the Treasury plans to pick up the £6bn bill in annual EU payments to farmers, academics and poorer regions of Britain post-Brexit until 2020. This was a move designed to give a degree of certainty to understandably alarmed universities, to those involved in development projects in places such as Cornwall and Scotland, and to all the British farmers sucking away thirstily on the bloated teats of the Common Agricultural Policy.

Since Britain pays £13bn each year to the EU, and exit talks are not expected to end before 2019, Hammond’s pledge was about headlines rather than anything substantial. Yet it does send a signal: Brexit will change little in the way our country is really run beyond moving some decisions from Brussels to Westminster. The stifling bureaucracy, the scandalous waste, the mania for red tape, the corrosive influence of corporate lobbying, will all continue to stymie smarter governance.

Yet if there was one single decent argument for Brexit, and one issue to unite both sides of that divisive debate, it is surely the need to ditch Europe’s backfiring, protectionist and regressive farming subsidies that shape our rural landscape. Not that you heard this much from those campaigning to leave; former environment minister Owen Paterson even hinted that farmers might get more money off taxpayers if they voted for Brexit. Perhaps this is one reason why a majority are thought to have done so. The words ‘turkeys’ and ‘Christmas’ come to mind.

By ditching a system designed decades ago to boost post-war food production, it offers a chance to stop landowners from milking taxpayers. Incredibly, 40 per cent of the EU budget is blown on agriculture, although the sector generates less than two per cent of GDP and represents just three per cent of the population. This is – thanks partly to British efforts that belie arguments we heard about lack of influence – down from almost three-quarters of spending three decades ago. Yet the system is preserved largely to featherbed bolshie French farmers. No other industry gets such astonishing levels of state protection – steel-workers in particular can only look on in envy.

British farmers get almost two-thirds of their income from subsidies. Yet this does not mean all are getting fat from public largesse. Many have paper-thin margins, their prices driven down by supermarkets, forcing thousands of dairy farms out of business in recent years. Meanwhile 80 per cent of the cash is scooped up by the richest 20 per cent of claimants. So the Duke of Westminster, Britain’s third richest man who died last week, saw his farms harvest close to one million pounds a year. And the family of Iain Duncan Smith, former Tory leader and scourge of welfare dependency, take a handy £150,000 a year from taxpayers. The smallest farmers, meanwhile, are excluded.

Banish any misty-eyed views that these policies protect ancient rural heritage or bucolic landscapes. Rich landowners and corporate farming combines soaking up huge subsidies are often the worst offenders when it comes to turning countryside into dreary tracts of land cleared for industrialised farming. They are likely to use intensive methods that degrade soil, while the system itself encourages devastation of wildlife. Yet at the same time, British farming seems to be becoming less efficient and innovative than its competitors.

Now we can stop pumping huge sums of public money into the wrong pockets and reform this distorted system. And there is one more potential benefit. If we stop propping up farmers, then a mollycoddled sector may shrink and price of land fall – by as much as 30 per cent, according to one estimate. This would make it easier to build urgently-needed houses, especially if outmoded planning restrictions were lifted. There is, incidentally, often more biodiversity in urban back gardens and city parks than in much of that featureless, pesticide-drenched agricultural land.

Meanwhile farmers in poorer nations are undercut by artificially-cheap, subsidised food produced in Europe, which is protected by trade barriers that disincentivise their own development. Take coffee: bizarrely, Germany makes substantially more from exporting a crop it does not even grow than the whole of Africa, which includes countries such as Ethiopia, Kenya and Rwanda producing some of the world’s best beans. This is done by repackaging coffee and exploiting EU tariff differentials, according to Harvard professor Calestous Juma.

Certainly Brexit threatens Britain’s thriving food-processing industry, with some of the world’s biggest food and drink conglomerates based here. They may be hit with heavy tariffs on cereals, dairy products and drinks, fuelling the wider economic uncertainty. Yet it also offers Theresa May an opportunity to put some meat on the bare bones of her social justice stance. Here is an an opportunity to stop subsidising rural fat cats at the expense of poorer farmers, consumers, wildlife and developing nations. So face down a loud lobby, ditch the subsidies, reform the system – and let the farmers’ chickens come home to roost.

Categorised in: Environment, home page, Politics, Public policy