Janet Dwyer's presentation to the Land Economy Department at the University of Cambridge, discussing the implications for the agriculture sector since #Brexit.

1. Janet Dwyer
2 November 2016
What prospects for sustainable
agriculture, in UK policies
after Brexit?

2. Themes to unpack
• Defining terms
• The likely shape of post-Brexit policy
• Current reliance on CAP support
• Implications of change and uncertainties
• Pillar 2 and agri-environment
• Focus on the food sector
• Concluding remarks

3. “Sustainable agriculture”
A triple-bottom-line approach:
• Environment – protecting the resource base and its
wider societal / other values (including ethics / animal welfare)
• Economy – enabling management by viable and
successful trading businesses producing food and other
goods and services, offering rewarding rural employment
and livelihoods
• Community – contributing to quality of life, identity and
culture, locally and nationally
– Could imply specific targets e.g. no net biodiversity
decline, no further net job losses, cleaner water, more green
infrastructure, carbon-neutral energy base, preserving distinct
‘agri-cultures’, etc.

4. UK view of CAP
A vision for the CAP (Defra/Treasury 2005):
‘The challenge for the EU is to remove current distortions so that
by the second half of the next decade EU agriculture is treated
no differently from other sectors of the economy… farmers
should be moving towards a situation in which they make their
business decisions on the basis of market judgements and
consumer requirements alone, rather than in response to
subsidy signals.
This would be an environment in which production-linked
support and the Single Farm Payment had effectively
disappeared. This vision requires a transitional strategy….
which will require financial support to continue in this period but
be phased out by the end of the period, enabling a very
significant reduction in the CAP budget.‘ …………………

5. UK view of CAP
A vision for the CAP (Defra/Treasury 2005):
‘A clear framework.. to define the goals of EU agricultural
policy, focussing in particular on maintaining the environment
and promoting sustainable rural development, particularly in
more environmentally sensitive regions;
• spending based on the current Pillar II…. allowing a
considerable reduction in total spending by the EU on
agriculture…;
• import tariffs for all farm sectors aligned with much lower
levels in other sectors of the economy, no price support,
export refunds or other production or consumption subsidies.
Farmers will want time to plan and ability to make most
effective use of available resources, to best manage the
transition.’

6. UK view of CAP
Defra evidence paper on the implementation of CAP
reform in England, October 2013 (under the Conservative/
Liberal Democrat coalition Government)
‘The majority of Pillar 1 expenditure remains on direct
payments, however there is little rationale for them. Direct
payments are not targeted on any particular market
failure, and provide little value for money for the taxpayer.
Other forms of public expenditure can usually
demonstrate greater benefits than direct payments.’

7. CAP support and UK
agricultural incomes
-40000
-20000
0
20000
40000
60000
80000
100000
120000
Incomeinpounds
UK Farm Business Income, 2015, by farm type
source: Defra FBS
Agriculture
Agri-environment
income
Diversifcation
income
CAP pillar 1 BPS
ied

8. Varied spatially: marginal farms
very CAP-dependent
– e.g. Exmoor, NFI by farming system
Data thanks to Gilbert and Archambault, 2015

9. While lowland farms may have
lower dependence
– e.g. Wilts Downs, NFI by farm system
Data thanks to Magnard and Sabourin, 2014

10. Variable over time -

11. Change, challenge & opportunity
• If UK Pillar 1 (c.£2.5bn/yr) is phased out, hits grazing stock, arable
and mixed farms hardest – key export sectors
• New tariffs with EU, or reduced non-EU tariffs, will hit most sectors
(though weaker currency may partly counteract)
• less efficient/ more stretched businesses will collapse / wind up; land
taken by neighbours, corporates, non-farms
• Fewer farmers/ family jobs in farming; weaker agri-communities &
cultures (e.g. hefting & gathering)
• Market opportunities in horticulture, high-value permanent crops,
niche products – more visual diversity
• Possible fall in land prices – more openings for new users / uses?

12. CAP pillar 2
2015-2020
Support (by value)
currently favours
agri-environment,
marginal areas and
farm / added-value
investments for
improved
productivity.
Modest funds for
wider rural
development also
valued (LEADER
especially)
Dwyer et al, 2016
report to European Parliament

13. Environmental
needs, UK
• Many resource
trends positive
• Biodiversity
concerns
• Soils – much to do

14. UK pillar 2: Environmental c.£600m/yr
land in ‘higher tier’ agri-environment schemes
JNCC/Defra, 2015 – NB total farmed area in UK is 18.5m hectares
land in ‘entry level’ schemes,
reducing now
• Also £300m/yr targeted funding for productivity schemes, LEADER,
micro-businesses, advice, collaboration, adding value and innovation
• This funding ‘sits on top’ of the much bigger basic CAP aid budget : if
the latter goes, how much can the former achieve?

15. The role of the food sector
If public funding reduces, farms will respond more to
commercial signals -
How far would / could markets help to underpin sustainable
UK production, if subsidies reduce?
• How far do processors, retailers, consumers have loyalty
to home-grown food, or links to the countryside?
• What benefits does home sourcing confer?
• What room for Corporate Social Responsibility, what
scope for government encouragement / obligation?

16. UK food sector
Agriculture in the UK 2015
(Defra 2016)
7.2% of national GVA
UK production: supply ratio
60% total
75% indigenous
The changes will expose UK farmers more to the strategic
choices of major food retailers and processors
If a post-Brexit UK positions itself as a ‘beacon of free trade’,
UK food sector buying patterns will be critical to UK farming
fortunes

17. UK food sector: mainstream
• C.100,000 UK growers / producers, competing for sales,
products perishable (to some extent)
• Intermediate demand controlled by few, very large players
– e.g. big 5 supermarkets supply 85% fresh produce
• Unequal bargaining power can lead to price-setting by
buyers – discounting, loss leading, also lack of security in
contracts: big shifts between suppliers, even globally
• Buyer requirements large-scale, standard quality – tends
to encourage concentration, standardisation in supply
chains
• Where big players encouraged to ‘take a stand’ on an
issue, changes can be significant and swift

18. Quality schemes: promoting
sustainability?
Niche
• Protected Designation of Origin (PDO) or Protected
Geographical Identifications (PGI) (EU) “promote and protect
names of quality agricultural products and foodstuffs” – UK
now has more than 20
• Organic standards (OFG, Soil Association)
• LEAF marque: Integrated Farming methods
• Conservation Grade/Nature-friendly farming
• Fair trade marks – various, mainly imported goods
Mass market
• Assured Food Standards (the Red Tractor Scheme);
• Supermarket protocols / pesticide lists
• Baseline: Eurepgap & now Globalgap, fresh produce

19. Local food and Alternative
Food Networks (AFNs)
Interest grew in the 1980s and
1990s, sustained since
– Community Supported
Agriculture
– Box schemes
– Local ‘Food Links’ groups
– Urban/city farming
– Grow your own
– Farm shops
– Public procurement
– Direct online sales
– Farmers’ markets 19

20. What role for the food chain
actors?
Major retailers / processors
• There will be an interest in securing some level and
variety of domestic supplies
• Most key actors have codes, and community goals
• Scope for discussion and planning prior to policy
change, with government and sector partners
• Persuasion and some incentives more feasible than
regulation / obligation?
AFNs
• Continuing potential to invest and develop using Pillar
2 support?

21. Beyond food – other markets
• Energy: anticipate stuttering growth (strong
policy influence, too)
• Tourism and leisure: varied opportunities,
constant evolution
• New service businesses
• Real estate
– Most require business acumen, strong
communication skills, an eye for opportunity,
skill, risk-taking, serious investment /
commitment

22. Capacity: adaptability
The B family run a farm with 800 ewes, eggs for a high-end supermarket
from 12,000 hens , 200 acres of arable and from July 2015, 600 goats for
milk and meat. The new venture has been steered by two sons, who plan
increasing the herd in the near future.
Dave farms land rented from The National Trust and on returning home
from college, his father offered him ‘either wages or sheep’. He chose
sheep, as with good management and hard work, he could develop the
business. He improved the performance of his sheep and the grassland.
The farm includes moorland as well as permanent pasture; all cliffs and
moorland are protected. He brought together a group of younger farmers
to promote improved performance, and now chairs the farmer network.
Geoff rears Friesian calves on a small farm part-bought, part-rented from
the local council. He says ‘profit margins are less for smaller farms, but
they are far more productive. It also gives younger farmers more of a
chance; if larger farms were split up, the volume of people on the land
would be multiplied and community spirit would improve.’
Quotations courtesy of Exmoor Society & Exmoor Hill Farm Network, 2016

23. Strategies for resilience
• Significant growth in scale and cost-cutting
strategies threaten the long-term survival of
many systems, environmentally and socially
• Alternative routes can enhance business
success -
– doing less/the same, better
– doing something complementary
– capturing more of the value-chain
• Most impressive farms manage to combine
elements of all of these, providing
employment and/or enterprise for several
family members, innovating economically
and environmentally
• Those who control land can play a key role –
owners, planners, agents

24. Concluding remarks
The policy and trading future will be more uncertain
• Future farmers should aim to become multiple asset managers,
engaged in diverse markets and enterprises, building strong connections
with wider public interest in environment, community, food and energy
• New forms of collaboration and partnership are needed between
farmers, also with communities and other stakeholders, to foster better
conditions – e.g. building upon Agriscôp, Hill farmer groups, marketing co-
ops, landscape partnerships, novel processor / retailer contracts …..
• There is a younger generation (more?) aware and willing to grasp
these opportunities – one key challenge for current sector leaders is to
create space and support for them to do so
• Structural and institutional help could be as important as financial
support (e.g. brokering better supply chain relations, loan guarantors, a
strengthened CPD, wages & welfare approach)

25. Think through (and monitor) the process – timing and geography - of impacts
and how best to manage them, if / as future support is reduced
Need to strengthen sector resilience and environmental sustainability
throughout, thus better to withstand market and environmental shocks and
uncertainties
Interdependence between environmental, human and social values and
processes in agriculture means a need to seek multiple goals through a
common process, avoiding ‘silo’ designs and strategies
The same applies to market and public policy spheres – government working
with up and downstream industry partners to recognise responsibilities and
address needs and trends together
Principles for
policy

26. Thank you
jdwyer@glos.ac.uk