Britain is leaving the European Union. Nobody knew what the end result would be when the country voted Leave on the 23rd June 2016 and even now, almost a year on and Article 50 invoked; nobody really knows what the future will bring for a United Kingdom outside the EU. What we do know is that the relationship between us will drastically change, and that many of the rights and entitlements previously afforded to us will alter or disappear altogether.
One of those entitlements is the Single Farm Payment. This payment is an agricultural subsidy paid to farmers in the EU. The payment subsidises farmers on a ‘per-hectare’ basis and, as it stands, British farmers have been receiving £3 billion a year.
As the payments are made based on the number of hectares any one farmer owns, the more land you own, the higher the subsidy you are entitled too. This means that a farmer is rewarded for having accrued large quantities of land, with there being no incentive to make the land they own work for them for as long as the subsidy is in place. A post-Brexit Britain cannot afford to continue paying such eye-watering amounts to some of Britain’s most affluent individuals, let alone at a time when there is significant under-investment across the breadth of our public services.
Have you ever met a poor farmer? Nope, me neither. You only need to watch a few episodes of countryfile to see the evidence of how much wealth many farmers have, driving across their vast expanse of land in their £60k Range Rover to view their livestock where a well-bred animal can cost five figures, before returning to their large farmhouses and giving an interview with their partner, both wearing Hunters wellingtons, in which their emphasising ‘how much of a difficult time’ the farming industry is facing. Pass me the sick bucket.
When it comes to private business, we live in a capitalist society which dictates that if you own or operate a business which is not creating sufficient profit to survive, it closes. Whilst that has not always been the case as most evidently shown with the 2008 financial crisis, it is the general rule of thumb and if there are farms in the UK which would not survive if it was not for subsidies, then they should not be in business.
New Zealand is the obvious place to look for a nation that once paid subsidies to its farmer’s. In 1984, almost 30 different production subsidies and export incentives were ended. Did it cause a mass exodus from agriculture and an end to family farms? Not at all. It created a tough transition period for some farmers, but large numbers of them did not walk off their land as had been predicted. Just one percent of the country’s farmers could not adjust and were forced out.
The vast majority of New Zealand farmers proved to be skilled entrepreneurs — they restructured their operations, explored new markets, and returned to profitability. Today, New Zealand’s farming sector is more dynamic than ever, and the nation’s farmers are proud to be prospering without government hand-outs.
Prior to the changes and as it still is in the UK, subsidies stifled farm productivity by distorting market signals and blocking innovation. Many farmers were farming for the sake of the subsidies and when the subsidies were removed, it turned out to be a catalyst for productivity gains. New Zealand farmers cut costs, diversified their land use, sought non-farm income, and developed new products. Farmers became more focused on pursuing activities that made good business sense.
The removal of subsidies to Britain’s farming industry would mean agricultural practices being driven by the demands of consumers, rather than maximising the receipt of subsidies. Equally, the National Farmers Union argues that the subsidies paid to farmers are partly in exchange for the positive environmental impact farmers make on preserving the countryside. However, as was the case in New Zealand, more efficient agricultural production would spur positive environmental management it its own right. Cutting farm subsidies, for example, would reduce the overuse of fertiliser and broaden farm operations to encompass activities such as rural tourism that bring management of the rural environment to the fore.
The removal of farm subsidies in New Zealand gave birth to a vibrant, diversified, and growing rural economy and it debunked the myth that farming cannot prosper without subsidies. Thus rather than a post-Brexit Britain continuing with subsidies it can’t afford, the government should discontinue the payments and begin the proven alternative of free market farming.