Spending the Money Thrice


The whole system of farm payments is up in the air. To be brutally frank, this isn’t surprising. On a general, first world level, governments have blown so much money on the pandemic they are scrabbling behind the sofa for loose change. I would be surprised if, in five years’ time, any country hasn’t cut its agricultural support, or moved the money from one heading to another so it can burnish green credentials whilst still claiming to support farming.

But here in the UK we’re perhaps further down the road than many others. The problem comes when you assess the money spent in agricultural support. Originally, when you delve back into the past, the initial purpose was to ensure that UK (and EU farmers) were able to compete against foreign producers who didn’t have the same costs, many of them imposed by EU and UK regulation. It has long been accepted that consumers are not willing to pay for the higher standards that those who lobby for them claim that consumers want. So if we want an agriculture in the UK (and the EU) farmers had to be compensated for the extra costs the state imposed.

As an aside I’ve been somewhat amused to hear civil servants and ministers say that farmers cannot be subsidised ‘just to obey the law.’ Funny really, the whole CAP was based on doing just that.

The problem came when all agricultural support was paid through one scheme, ‘single farm payment,’ or ‘basic payment scheme’. When the money went out in scores of different schemes it largely passed under the radar. But when it was paid out through one scheme, there was one damned big heap of money sitting there. Every lobby group, every other government department, cast eyes on that pile and tried to work out how they could get some.

One way was ‘Rural development’. After all it was the ‘second pillar of the CAP’ and the idea was that some money destined to go to farmers would be used to support the infrastructure that would help their businesses. In one case a particularly smart local authority got rural development money to pay for a bus shelter.

Then there was environmental spending. The idea now is to support farmers through environmental payments. In itself it isn’t a bad idea. The problem comes when government takes money from the SFP/BPS pot and puts it into the environmental pot. Remember, the regulations, the extra costs, imposed on the industry are still here, and frankly are not going to be removed. But doing the work necessary to get the environmental payments is not cost free either. So the farmer who moves across to environmental payments now has to pay the costs entailed in the schemes, and if there is a ‘profit’ the farmer still has to pay the cost of the extra regulation out of that. By definition there isn’t as much to put towards these regulations as there was.

Finally it’s been suggested that farmers might have to hire advisers. This is understandable. The House of Commons Committee of Public Accounts has produced its Environmental Land Management Scheme report this month. One comment was, “We are concerned that ELM [Environmental Land Management Schemes] will be too complex and bureaucratic, and will not cater for the full range of farm types and circumstances.” So you have a scheme that is too complicated and bureaucratic and farmers will have to hire advisers to negotiate a way through it. Even if the money is paid for by the scheme, not by the individual farmer, the money is still being paid out of the same pot.

So now we are in a position where the scheme will pay expensive advisers to advise farmers what environmental schemes they should enter, but which they can no longer afford to join because they cannot make a living once they’re in them.

My advice to any farmer is to look at each scheme as if it were another crop. You have to ask yourself can you afford to grow it? What are the margins?

Now I’ve looked at the schemes and will apply for one on hedgerows, because, in reality, I’m doing that anyway. It is the only option of all the schemes that I can enter without it costing me more to earn the money (in a combination of new costs and lost production) than I’ll earn. It’s the only option that will not lead to me cutting production. As you’re the ones who eat that production, look forward to buying more from abroad.

Here’s the graph of world wheat prices for the last two decades. Still looking for cheap food?

Amusingly enough the government and the bureaucracy are also saying that farmers will have to become more efficient.

Let us look at the figures a moment. Beef and Pork are both cheaper, allowing for inflation, than they were in the 1960s. The consumer can pay less, in cash terms, for milk than they did in the 1990s. We’ve had sixty years of driving prices down. Perhaps we should suggest that MPs and civil servants should prove their efficiency by going back to their 1995 salaries?

Jim Webster farms at the bottom end of South Cumbria. Jim was encouraged to collect together into a book some blog posts he’d written because of their insight into Cumbrian farming and rural life (rain, sheep, quad-bikes and dogs) It’s available here.