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WMN OPINION: Cut farm subsidy and the price of food must rise

By Western Morning News  |  Posted: March 31, 2014


George Eustice

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Farming Minister George Eustice’s assessment that EU subsidies prop up bad farmers and discourage young blood from getting into agriculture are both true – as far as they go. It is a serious shortcoming in the direct subsidy system that payments on land holdings do nothing to improve efficiency or encourage those who can longer make farming pay to sell-up or hand over the farm to the next generation. But it is not the whole story. And in Mr Eustice’s comments to an inquiry into future food shortages, there is an aspect of the issue he barely touches upon. For subsidies to go down dramatically food prices would have to rise. Economically and politically that would be an extremely unpopular and quite probably damaging move right now, but in the end it is the only way.

As Mr Eustice acknowledges, the task of weaning European agriculture off subsidies is a long and slow process. It is also why the National Farmers Union and others were right to argue, during last year’s discussions on Common Agriculture Policy reform, that the UK Government should scale back proposals to switch a significant proportion of the subsidy from direct payments to those linked to environmental and rural development measures.

However efficient farmers become and, whatever economies of scale are brought into play as farms become ever larger, producing food to the standards we all require has a cost. Unless that cost is met by the processors, the wholesales, the supermarkets and, ultimately us – the consumers – farmers cannot exist without subsidy support. Not so long ago dairy farmers were being asked to sell milk at below the cost of production. There are fears, with the four-pints-of-milk for a pound offer in most supermarkets, that could happen again. If it does, the Single Farm Payment will once again be a lifeline for even more dairy farmers.

Fortunately, in Britain, we do not look to farmers to churn out food as cheaply as possible. We also demand high levels of animal welfare, above those in many competitor countries. We restrict the pesticides and herbicides they can use and we ask them to care for the land. Some of these issues are dealt with through environmental payments, but not all. Farming free from direct land-based subsidies is a worthy goal. But it won’t be possible without consequences at the supermarket check-out and the village shop till.

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