Farming subsidies post-Brexit and why losing the red tape might not be so simple

Farming subsidies have featured in the news a lot in the last eighteen months since the UK voted to leave the EU. They returned to the fore once again in the last few weeks following environment secretary, Michael Gove’s, speeches to the Oxford Farming Conference and Oxford Real Farming Conference where we got a first look at what subsidies and general UK agricultural policy might look like post-Brexit.

Subsidies and the correct way to share them out have been discussed since they were introduced in the 1960s. The first major stalling block came in the 1980s when subsidies were based on the amount a farm produced and resulted in the first ‘food mountains’ as farmers simply began stockpiling produce in order to gain access to subsidies. The subsidies we see today, which are largely rewarding ownership of land, began as a reaction to this over-production crisis of the 80s – but has been criticised for rewarding those who don’t really need it, wealthy land owners looking for a worthwhile investment from a capital taxes point of view.

More meadows, less farming?

This month Michael Gove went in front of the Oxford Farming Conference (OFC) and the Oxford Real Farming Conference (ORFC) – which runs at the same time as the more traditional OFC – to give a glimpse at the new changes coming to subsidies post-Brexit, among other things.

Mr. Gove confirmed that the government will mirror the Common Agricultural Policy (CAP) until 2024. He suggested that this gives farmers time to transition smoothly to the new regime, although it’s probably also to give the government time to actually create and implement the policies, which will be a complex process in itself.

The environment secretary also made his biggest declaration to date; that the current Basic Payment Scheme (BPS) which accounts for 80% of spending on farming subsidies and rewards ownership/setting aside of land, will be replaced with a system of public money for public goods. The principle of these public goods will be environmental enhancement, including planting woodland, creating new habitats for wildlife and returning cultivated land to wildflower meadows.

More than 97% of the UK’s wildflower meadows have been destroyed since the second world war and this has had a played a part in the decreasing numbers of bees, birds and other wildlife – so this may give some explanation as to why the government is making this move. However it does beg the question – are we going to see a sharp rise in wildflower meadows, met with a decrease in actual farming?

The news may worry some, like the Agriculture & Horticulture Development Board who have already raised concerns about the UK’s productivity growing slower than major competing countries. This might be hampered further if we see farmers moving to return their land to a more natural state.  There would appear to be a direct conflict between Gove’s admirable environmental measures and the lagging productivity of UK farming.

You can read more of the things that were discussed at the recent conferences by browsing the #ORFC18 hashtag on Twitter.

No more red tape?

In Michael Gove’s speech he made the announcement that the UK would mirror the CAP until 2024. UK farming and agricultural policy has been integrated with the CAP since we joined the EU in 1973 – but it was one of the reasons people voted for Brexit in 2015.

The CAP, among other things, was designed to allow subsidies for farmers without compromising or distorting international trade and markets – so that one country couldn’t give themselves too much of an upper-hand via their subsidies.

The UK hasn’t always had a good relationship with the CAP and it has been criticised for being too costly. Many believe that in removing ourselves from it via Brexit we will be freed from a lot of red tape. However while we were handed these rules and regulations from the EU; they themselves received them from the World Trade Organisation (WTO).

The WTO identifies subsidies by ‘boxes’ with green being permitted subsidies, amber being subsidies that need to be reduced, and red being subsidies that are forbidden. You might be able to guess where this is going – in order to qualify in the green box subsidies must not distort trade or markets. This covers direct payments to producers (addressed by Gove in his OFC/ORFC speeches) among other government financial support.

So Michael Gove has given us our best look yet at what the future of UK agriculture policy looks like post-Brexit, but the rules of the WTO may become a significant obstacle in the government creating the policies and future they desire. We must also consider what a change in government might bring as that might take us back to the drawing board.