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By Catherine McBride – 10 minute read

A FEW WEEKS AGO Matthew Lesh wrote an article in the Daily Telegraph entitled Cheap food is more important than protecting failing farmers. While I don’t agree with everything in the article (for example: the new trade deals increased, not reduced, the tariff-free quotas, and subsidising environmental activities does not help UK farmers but mainly benefits wealthy landowners, who don’t rely on farming as their main source of income so can afford to grow wildflowers instead), but the jist of Lesh’s argument – that food security will come from more trade not less – is surely correct.

Sadly, the letter sent to the editor of The Telegraph the new president of the National Farmers Union, Tom Bradshaw, in response to Lesh’s article is quite extraordinary and shows how little Bradshaw understands about economics, trade and the sources of UK food.

Given such errors need proper rebuttal that The Telegraph would be unlikely to find room for I thought I should rebalance the picture on the Global Britain blog. Here goes:

1. ‘Previous generations spent over a third of their income on food, we now only spend around 11%.’

This is very basic economics. As people’s incomes grow they spend a smaller proportion of their income on food. Not only have UK incomes grown since our parents’ generation but we now have consumer choices that our parents and grandparents would never have imagined: mobile phones, electric bikes and foreign holidays to name just a few. Even between 1995 and 2022, Real net national disposable income per capita, using Chained Volume  Measures (CVM) to account for inflation, has increased from £17,944 in 1995 to £27,247 in 2023. But if any of this extra income is being spent on food it is probably being absorbed by restaurants, takeaway coffee and delivery drivers, rather than farmers.

2. ‘The notion that farmers have been benefitting from higher global food prices shows the need for an urgent lesson in how the UK’s food supply chains work.’

This statement demonstrates it is not Lesh that needs a lesson in supply chains but the NFU president has never read a publication entitled Farm Business Income by type of farm in England 2022/23,. After accounting for inflation, on average, for All farm types,  average farm incomes were 5% higher in 2022/23 than in 2021/22 and an incredible 75% higher than in 2020/21.

Whether farmers like Bradshaw believe farm incomes have gone up or down, will depend on the type of farm they operate and whether they keep their animals indoors and/or feed their animals imported grains. After accounting for inflation, average incomes increased for Cereal farms, Dairy farms, Specialist pig farms and Horticulture, while General cropping, Livestock grazing, Specialist poultry and Mixed farms had lower average incomes.

Farm incomes vary greatly within each farm type and also by the source of their incomes.

By type, while 65% of Dairy farms made over £100,000 in 2022/23, no Less Favoured Areas’ graziers did and only 5% of LFA graziers made more than £75,000 while 26% of lowland graziers made a loss.

By source, the majority of the Farm Business Incomes of dairy farms, poultry farms and cereal farms came from agriculture while both lowland and LFA grazing farms lost money on agriculture and made the majority of their income from government subsidies.

Grazing is the only farm type in England where the average farm has made a loss from agriculture in 9 of the last 10 years. There are far too many grazing farms and many are too small to ever be profitable. According to the Agriculture and Horticultural Development Board (AHDB) the average English beef herd has only 27 cows, cows that could at best produce 28 calves, which would need to be fed for 30 months before being sent to market. Is it any wonder the thousands of tiny UK grazing farms can’t compete with imports? Only 4% of English beef herds have more than 100 cows. The average beef cattle herd in Australia has over 800 animals. The real question Bradshaw should answer is: why is the UK taxpayer still subsidising thousands of small grazing farms that are essentially run as hobby farms rather than businesses?

3. ‘we have been beating the drum for fairness in the supply chain for many years’

Like many farmers, Mr Bradshaw seems to think supermarkets’ only costs are the purchase of raw produce. However raw produce is a small part of their operating costs. Any retailer’s largest costs will be rent, wages, warehousing, packaging, distribution, electricity to run refrigerators, lights, checkout machines and payment terminals, as well as advertising and marketing, accountants, inventory and other management teams.

While shoppers may imagine they are just paying for the goods, they are also paying for the convenience and the choice to buy a variety of foods and other groceries in one place, probably close to where they live. The cost of the produce is likely to be less than a third of the retail price. For example: According to the AHDB: ‘The annual average GB deadweight prime cattle price in 2023 was up 10.2% on the previous year at 476p/kg.’ This increase is more than the 8% increase in food and non-alcoholic beverages inflation in the 12 months to December 2023. The AHDB also has a helpful database of weekly supermarket prices, apparently at the end of December 2023, the price per kilo of beef ranged from £5/kg for standard mince to £33.35/kg for fillet steak. I am not convinced that UK beef farmers are getting an unfairly small amount of this sales price.

4. ‘British farmers… being undercut by lower standard imports.’

British farmers don’t appear to be undercut by any imports. In 2023 the average UK import price for fresh beef was £5.99 per kilo from Ireland, (the UK’s main beef import supplier, supplying 80% of the UK’s 153,451 tonnes of fresh beef imports), £9.52/kg from Australia and £7.25/kg from New Zealand. As all of these prices are higher than the price paid for British prime beef cattle according to the AHDB (£4.76/kg), British farmers are not being undercut by imports, regardless of the standard of these imports.

Frozen beef imports were cheaper than UK beef at £4.32/kg from Ireland which supplied the UK with 41,079 tonnes, two-thirds of the UK’s frozen beef imports, and £4.83/kg from New Zealand, although the UK only imported a mere 1,360 tonnes of frozen beef from New Zealand. While Australia supplied the UK with less than a hundred tonnes of frozen beef but at an average price of £10.73/kg so Australian farmers were certainly not undercutting UK farmers.

If UK farmers are being undercut by imports, those imports are mainly coming from Ireland, and have been for many years, even before the UK joined the EU. Irish beef may be produced to a lower standard than UK beef, but it will meet EU standards – so we can’t reject it.

5. ‘imports that would be illegal to produce here.’

Here Bradshaw needs to look at the intended regulatory outcomes rather than at the letter of the regulations. Australian cattle can be transported for longer journey times under the letter of their regulations because the distances that could be covered are greater than in the UK, although, Australian animal transport rules are much more stringent for longer journeys, something that has been ignored by the various activist groups trying to block the UK Australia trade deal. However, in practice, Australian cattle are transported for less than 400km as Australia has more conveniently placed abattoirs designed to reduce animal journey times. Internationally cattle are sold by weight, and neither the farmer nor the buyer wants the animals to lose condition while they are being transported.

6. Bradshaw claims he has sent ‘letters to the main political parties asking for a core standards commission’

I imagine these letters will run into 3 main problems:

    • If a process is legal in any one of England, Wales, Scotland or Northern Ireland then a good made using the same process can be legally imported into any other home nation in the UK.
    • Countries can only block imports of goods that don’t meet their standard, they can not block those goods because they dislike other processes outside the trade agreement. For example, the UK can not block Australian beef imports because they don’t like Australian chicken production, because chicken was excluded from the UK-Australia FTA.
    • Similarly, if the UK allows imports from other countries, such as EU countries, that are produced to standards that would be illegal in England ,then the UK can not block imports produced to the same standards from other countries such as Australia and New Zealand.

7. ‘With war and climate change wreaking havoc on food production across the world, does Mr. Lesh really believe we can feed our nation, and a growing global population, by relying on imports.’

This is precisely the point of Lesh’s article. If war is ‘wreaking havoc’ on Ukrainian and Russian production and distribution of cereals and oilseed crops the UK would need new cereal and oilseed import suppliers away from  Europe, not from within the UK. However, Ukrainian corn exports were as high in 2023 as they have ever been, except for the bumper export years of 2019 and 2020. Ukrainian wheat exports are back to their 2018 quantities. Ukrainian exports of oilseed appear to have been also unaffected by the war: soybean, rape seed and sunflower seed exports were also all at pre-invasion quantities in 2023.

As for Bradshaw’s fears about climate change: any change in the climate that hurts UK farms is likely to also hurt our EU suppliers whether in Ireland or on the Continent. Hence our even greater need to find non-EU suppliers of food and agricultural goods.

8. ‘British farmers … produce food for the nation to some of the highest standards in the world.’

This lie has been repeated so many times that even the NFU president seems to believe it. UK standards are fine but they were designed to suit UK farms. They are not higher than other countries’ regulations, they are just designed for the UK environment.

For example: Australian cattle and sheep don’t have a regulation stating how much light they must get each day, because they live outside all year round and their ‘lights’ go on when the sun comes up and off when it goes down. British cattle and sheep, many of which spend at least part of the year indoors, do have and need a ‘light’ regulation. This doesn’t mean the UK has higher animal welfare standards, it just means UK farm animals are living in a country that is a long way from the equator and is dark and cold for six months of the year.

9. ‘British farmers … have an ambition to produce more. But farms need to make a profit to invest in their businesses to continue producing food.’

 I would very much like to see British farmers invest in their businesses and increase their production. But as I have already mentioned in point 2, some types of UK farm businesses are very profitable and have probably already invested in their businesses to increase production. However, others haven’t and this may be due to the high price of farm land in the UK which makes it difficult to expand production.

Land is the key ingredient for most types of farming: 71% of the UK’s land mass is already used for agriculture, with 17.426 million hectares in 2022. This has fallen from 18,248 million ha in 1984,  75% of the UK’s land mass.  Over the same period, the UK’s population has grown from 56.4 million in 1984 to an estimated 68.4 million in 2022.

The UK has increased its population by 12 million people but reduced our farmland, so why is the president of the NFU surprised that the UK is relying ever more on imported food? The UK was not self-sufficient in food in 1984, and it was not self-sufficient in 1884 either, so there is no chance of it being self-sufficient now. This lack of self-sufficiency is not just because of the loss of farmland, we do not have the climate to produce all of the food types that the UK’s diverse population likes to eat.

The threat of a further drop in the amount of land used for agriculture is likely if more British farmers take up the government’s environmental subsidies. Although growing wildflowers doesn’t have the same revenue as wheat or beef farming, wildflower input costs are considerably lower and there are no fears of bad weather or a drop in commodity prices. So it would be understandable if more UK farmers took up the government’s ridiculous offer.

10. Bradshaw’s closing remark is: ‘we need the right regulatory framework to [improve UK farm productivity].’

What kind of regulatory framework would make UK farmers more productive? Defra publishes productivity tables for various farm types, While the cereal output index has risen from 100 in 1975 to 183.8 in 2022, industrial crops have increased from 100 to 237.5 over the same period, and poultry from 100 to 276. But beef cattle output has only increased from 100  to just 108. Not much in 47 years. According to Defra’s Agriculture in the UK, beef and veal production has been steady at around 900 thousand tonnes, dressed carcass weight, since 2010. This doesn’t look like an industry that is eager to expand.

I would suggest it is over-regulation that is making UK farmers less productive. UK farmers need fewer regulations not more.  The best type of government intervention would be practical, not regulatory. The government should set up an agricultural bank to lend money to farmers for productivity-increasing investments: such as buying more land to support larger herd sizes; better animal housing; improving crop and cereal machinery and storage facilities; or improving farm drainage or installing irrigation systems. Defra could dredge the rivers to reduce flood risks, it could build reservoirs and dams on higher ground to reduce floods on lower land and to store winter rain for summer crop irrigation. Defra could repurpose disused canals to transport water to areas suffering from drought.

I would also suggest we remove all farm subsidies, especially non-farming subsidies. The loss of subsidies made Australian and New Zealand farmers improve their productivity, just as the loss of the UK export market after the UK joined the EU, forced Australian and New Zealand farmers to look for new markets and to produce the products those markets wanted to buy.

Non-farming payments are counterproductive to improving UK food security. UK taxpayers should not be paying the uberwealthy to re-wild farmland. If the land can not be farmed profitably without subsidies, then it will ‘re-wild’ itself.

Britain’s ‘green and pleasant’ fields surrounded by hedgerows are not a natural landscape. It has taken years of hard work to create what many non-farmers believe is natural English countryside. Without farmers, this land will quickly revert to type. Removing subsidies would make farmland a less attractive investment for wealthy ‘non-farmers’ and may even bring down the price of farmland so that it is within the budgets of real farmers and make farming in the UK profitable again.

Some UK farmers are standing up against some of the environmental regulations: Welsh farmers are right to be protesting about the Welsh government’s mandatory requirement for 10% of all farms to be left fallow and a further 10% of all farms to be planted with trees. These regulations hit all farms regardless of whether they are too profitable to be left fallow or appropriate for planting woodlands. If the Welsh government just stopped subsidising farmers,  the market would determine which farms are viable concerns and which farms should be allowed to revert completely to nature reserves. This won’t necessarily make the land worthless. Many farms that lose money on agriculture already make part of their income from non-farming activities such as holiday lets, operas and rock concerts, petting zoos, farm shops and unfortunately wind and solar farms. (Although the last option is not a real industry and like the farms they would be replacing, only exists because of the large taxpayer subsidies paid to operators.)

In conclusion, Matthew Lesh is right, we will need more imports in the future and the more diversified our supply chains the more secure our food supply will be. The new president of the NFU is wrong, imports are necessary to feed the UK population, imports aren’t always cheaper as sometimes availability is just as important. Nor are foreign standards lower than UK standards – they are just different as they were designed for different climates, farm sizes and production methods.

Here endeth the lesson Mr Bradshaw requested.

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Catherine McBride OBE is an economist and the author of Brexit and UK trade – What has changed?  a paper analysing UK trade performance by sector since Brexit. She is a member of the Government’s Trade and Agriculture Commission.

Wiltshire rapeseed fields via Adobe Stock

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