18 October 2018

European Union and the Departure

The United Kingdom became a member of the EU in 1973 during the time of Edward Heath’s Conservative government.  In June 2016 the Conservative government’s referendum concerning whether or not the UK should continue EU membership resulted in 52% of voters (17.4 million) choosing to leave.  Thus the term ‘Brexit’ was born

The main institutions responsible for designing EU law – to which we have commitment until we leave the EU – are: the European Commission, European Parliament, and Council of the European Union (normally called ‘the Council’)

Many of those who voted to leave the EU did so because they wanted changes to the economic, social and political status. Many farmers voted ‘out’ because they disagreed with much of the EU’s Common Agricultural Policy (CAP) and other stratagem.

Government farming policy post-Brexit is concentrated on ending the Basic Payment Scheme [BPS] although it has committed to maintaining a similar scheme until 2022. The replacement policy will be focused on ‘delivering public goods’ with ‘environmental enhancement’ taking the centre stage. BPS will be phased out during ’a transition period’. It is assumed – but not stated – that the latter will be undertaken in stages.

In August 2015 Defra devised ten-point plan ‘for boosting productivity in rural areas’.  Three years have since elapsed during which time implementation of the plan has, at best, been fragmentary. Arguably the following have not yet been achieved in many rural areas: fast and reliable broadband services; availability high quality mobile communications; modern transport connections; expanded apprenticeships; more housing in rural areas; increased availability of affordable childcare.  If Defra cannot get this right, what chance for policy post-Brexit?

Following the Second World War Winston Churchill commented “We see nothing but good and hope in a richer, freer, more contented European commonality. But we have our own dream and our own task. We are with Europe, but not of it. We are linked, but not comprised. We are interested and associated, but not absorbed.”

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We cannot plan for the future of farming and related rural industries post-Brexit without first taking a hard look at the status quo.

Farming is a business – a tough, hard, demanding vital industry on which every individual in the UK is dependent in a multiplicity of ways.

Popular perceptions undervalue farming.  Farming is not ‘a sinecure for the landed gentry’. Farming is not an industry for people looking for an easy option.  Farming is not for those not prepared to work to high standards. Farming is for the passionately motivated who recognise – and want to be part of – the invaluable contributions the industry makes regionally, nationally and internationally.

Over 70% of the UK’s land area is farmland. This designation includes farm meadows, woodlands, ponds and hedges that collectively benefit biodiversity and provide habitats for wildlife.

Farm sizes range from smallholdings of less than 2 hectares – mainly specialist horticultural businesses or ‘lifestyle-related’ – larger family farms of bewteen 50 and 2,000 hectares through to large companies, trusts and charities farming more than 3,000 hectares. Large farms above 100 hectares account for 22.4% of farm holdings and equate to three quarters of farm area.   

British farmers currently receive approximately £3 billion from the EU.  Farming output level is in the region of £9 billion or 0.7 per cent of GDP. 2015 figures indicate farmers also received £21 million related to animal disease compensations schemes, £91 million under the Less Favoured Areas support schemes and £26 million in other payments.

The UK’s contribution to the EU is estimated to be in the region of £9.8 billion – more than three times greater.

Between 2014 and 2020 the UK expected to receive €2.6 billion from the EU for the environment and rural development.  A large component is directed at agri-environment schemes whereby farmers receive additional payments for practices which especially protect and enhance the environment. The government has committed to maintain these figures.

Throughout 2014/5 rural businesses accounted for 25% of all businesses in England, 16% of which were based on agriculture, forestry and fishing.

During 2015 – last available composite figures – farming made a major contribution worth at least 7.4 times the support received via direct payments. During the same period, overall agriculture contributed around £24 billion revenues and around £8.5 billion of Gross Value Added to the UK economy.

Overall in 2015 the UK trade figure for agricultural and food products was about £20.5 billion (exports £18 billion, imports £38.5 billion). During 2016 the value of imports was greater than the value of exports in each of the broad categories of food, feed and drink except ‘beverages’ which recorded a trade surplus of £1.35 billion (largely due to exports of Scotch whisky).

The economic output (2015) from predominantly rural areas was estimated to be worth £237 billion – 16.5% of output in England. Many of the industries involved directly link/overlap the farming sector.

Farming is directly responsible for the provision of about 475,000 jobs and at least another 30,000 jobs linked to supply-chain purchases.

The Office of National Statistics indicates 20% of agricultural labour force are immigrants, many being seasonal workers.  The number of EU-born nationals employed in agriculture in 2015 was 22,517 (ONS, Labour Force Survey, 2015). Directly related:  for the same period, 14% of those employed in the food and drink manufacturing industry were foreign nationals.

Farming provides over 60% of the raw materials used in agri-food (the largest manufacturing sub-sector) which is estimated to contribute £108 billion to GVA and provide in excess of 3.7 million jobs.

The provision of goods and services supplied to farmers by British industry is significant: 2015 procurement figure cited at £15.3 billion, the estimated multiplier effects valued at £6.8 billion.

UK input-output tables indicate that some 30,000 UK jobs depend on supply chain purchases made by farm businesses.

Farming makes vast contributions towards protecting habitats and increasing biodiversity. Official estimates indicate these services are worth something in the region of £1 billion. This figure is likely to be underestimated and doesn’t take account of knock-on benefits.

Carbon emissions contributing to climate change continue to be a major concern.  Farmland plays as important role by acting as a carbon sink estimated to be worth many £millions per annum.  In 2017 50.4% of UK electricity supplies were derived from renewable energy. The UK has well over 1,000 solar farms: farmers host an estimated 60% of total solar power installations and are owners/landlords of considerable onshore wind power.  Currently 10% of the UK’s electricity is derived from renewables cited on agricultural land. Agriculture could become the source of more than a quarter of the UK’s renewable energy requirements.  The falling costs related to wind and solar projects is predicted to result in about £20 billion investment before 2030. Meanwhile greenhouse gas emissions from farming have reduced by 20% since 1990.

Farming, food and tourism are inextricably linked. Visit Britain estimate that 20% of international visitors make visits to ‘the countryside’ during their stay in the UK. Since 2010 tourism has been the fastest growing sector in employment terms. The UK’s tourism industry is forecast (Deloitte) to be worth over £257 billion by 2025.

Farming makes vast social and cultural contributions to the British way of life.  The estimated 3.7 billion day visits UK residents make to ‘the countryside’ each year contribute to the nation’s health and wellbeing. Additionally, a wide range of leisure-related activities – including fishing, walking, sightseeing, horse-riding, cycaling and camping – take place in the countryside.

On the other side of the balance sheet, farming is estimated to cost the UK economy (2015 Environment Agency figure) £2.603 billion in relation to the use of soil, water and air resources: implicit cost of greenhouse gas emissions £886 million.

Many rural businesses face similar problems and challenges and enjoy similar benefits to those in urban areas. The distinct division of ‘rural’ and ‘urban’ exacerbates misunderstandings.

Benefits overall estimated £46.496 billion, costs £6.292 billion. Ratio 7.4:1.0 (2015: source – Development Economics.)

In GDP terms, farming is small, nevertheless it is a crucially significant industry. Farming is responsible for growing and producing about 60% of our food, plays a major role in the UK’s wider food and drink industry, has a fundamental role in tourism and is directly linked to a raft of other rural industries. Farming is uniquely important in terms of the environment, the beauty of our countryside and the British way of life. It is impossible to over-value the cultural and social contributions made by the sector.