The Farming Life/Danske Bank awards were an opportunity to celebrate farming excellence.
They underlined the successes of the industry, but no matter how successful any farming or food business is there is always a question mark about the future. This is because Brexit is such an unknown. It will sweep away the certainties that have been part of the industry for over 400 years, and only time will tell whether that is for the better. This is what many farmers hoped for when they voted to leave the EU, but indecision in both London and Brussels is frustrating.
This week we saw the government minister, Chris Grayling, suggesting farmers could gain if the UK walked away with no EU deal. This was very much targeted at an English audience, since elsewhere in the UK access to EU-27 for exports will be crucial. His suggestion was based on a claim that if less was imported from the EU-27 opportunities would be created for British farmers to produce more. However there are big things missing in that cause and effect equation. Top of the list is that there are big restrictions on land, labour and finance. This is followed by a lack of certainty about future support arrangements in the UK, which are essential for justifying any investment in farming. This is a superficially attractive claim, and one that farmers would like to be true – but it fails the economic reality test.
One of the problems at the moment is mixed messages. This is no surprise given the deep political divisions over Brexit. While Chris Grayling was suggesting a brighter future for agriculture after a no deal Brexit, other politicians say it will be a success for the opposite reason. They say Brexit will dramatically reduce food prices, because outside the EU the UK will open its market to imports of food from areas where production costs are lower. The government has said it wants to set an example of free trade, and this would be part of that process. It has said it wants standards for imports to match those of the UK, but that is not a very high bar to set. It will certainly not allow food prices to rise. Even if EU-27 food supplies fall after a no deal Brexit it would not be a bonanza for UK agriculture. Again the politics around promises of a new golden age fail the economic reality test.
With Brexit now the sole issue for debate when it comes to Europe and the EU it is easy to miss the wider picture. Brexit will change agriculture here, but CAP reform and politics will also change agriculture in the EU-27. We will no longer be part of the CAP, but it is not healthy for UK agriculture to become isolated from events elsewhere, from which we might be able to learn lessons. In France the pressure is from the very top, in the shape of the president Emmanuel Macron, for a radical change in how the food chain works. The changes he wants are something Farmers for Action have been seeking for a considerable time – although the economic reality test is the political gulf between what is possible in France and elsewhere.
Macron has told farmers he is prepared to introduce legislation to change completely how pricing works. Instead of it being driven by the power of the retailers to set a price and then squeeze suppliers, he wants it the other way around, with farmers’ cost of production the starting point. This has been welcomed by the major food processors, on grounds that they too lose out from a relentless squeeze on margins. This is about changing the balance of power in the food chain. But despite the promise of legislation, if necessary, it is still open to debate whether it is deliverable.
At one extreme consumers might reject the potential increase in prices, More positively, retailers might be reluctant to resist what seems to be popular thinking. There is also, as in the UK after Brexit, the problem of France not being a closed market. Retailers could simply turn to other suppliers from the rest of the EU. This is in many ways a game of bluff to see who blinks first. Will it be Macron, having to introduce legislation, or will the supermarkets accept a share of their profits moving towards farmers. French farmers will soon see that question answered.