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24 January 2018

Key points from the OFC 2018

Taking Mr Gove’s speech as a guide, the narrative for the conference might be expressed as follows:

  1. Lots of things are changing, some good, some bad. Most of them are largely uncontrollable or inevitable (e.g. climate change and population growth).
  2. Our reaction to change is either to resist it (and hit a brick wall of irrelevance) or embrace it.
  3. In embracing it, our guiding principle must be the pursuit of a sustainable future for farmers and for the country.
  4. Government policy must change to encourage this. The conference concentrated on food policy and environmental policy as the agents of change; the future of agriculture is to be determined by these two bigger concepts.
  5. The uniting factor between a food policy and an environmental policy is the measurement of quality. Good quality land management (deserving of a subsidy) will be recognised by its positive effect on natural capital – an environmental measure. Good quality food (the likely source of profit for food and farming businesses) will be recognised by labelling that confirms that its production has enhanced (or at least not harmed) natural capital, as well as by its recognised qualities of nutrition and integrity. Read more about natural capital.
  6. But there are two other aspects to our pursuit of a sustainable future:
    • The first is that we need to really understand these big changes in deciding how to adapt to them; we should not make assumptions or remain entrenched in prejudices.
    • The second is that in the end success will be achieved by adaptation at an individual business or a personal level. Without aspiration and determination, adaptation will not happen; without inspiration it will not succeed.

Implementing big ideas

The strength of a two day conference is not only in setting out the big ideas but also in showing how they should be understood and implemented. The ‘argument’ as above is a compelling one and it was supported by opinion pieces and personal stories on both days:

  • The pace of technological change was illustrated by the ‘digital revolution session’ featuring Harper Adams University’s ‘hands free hectare’, mass communication methods which do not require the internet, and a precision location finder employing only ‘three words’.
  • A real understanding of change was encouraged by Eve Turow Paul, explaining why Generation Y’s obsession with food is more than just a fad, and Mark Lynas seeking a truce between those supporting gene modification and those who strongly oppose it.
  • Adaptation at a personal level was demonstrated by the entrepreneurial spirit of a Scottish farmer’s son developing a tourism business in the Scottish lowlands, and James Wong’s recommendation that farmers should consider growing unusual but nutritious new crops, many of which have been grown and eaten in this country in the past but have fallen out of favour.

All of these talks are available on the OFC website.

The impact of Brexit

It is right to sound a note of caution at this point. Having decided, with some qualms, to settle down to 'making the best of Brexit', we find ourselves, slightly surprisingly, in a honeymoon period.

The big ideas are intoxicating; the support they are receiving from both ends of the political spectrum seems to offer the potential of achievements won through a sense of common purpose. But there are many issues which are rising to meet us.

  • What exact shape will Brexit take? We cannot properly understand this change at present and have to make working assumptions, which may turn out to be wrong.
  • What will trade deals bring, in the way of tariffs or, probably more importantly, in the way of regulation?
  • Will money actually be made available by the Treasury for the support of agriculture, either in the short term under whatever smooth transition Defra can design or in the longer run under the new agriculture policy? Read more about replacing CAP.
  • What scope is there for different paths to be taken by the devolved governments?
  • Is it realistic to think that natural capital assets like soil health can be measured in a transparent and reliable way so as to form the basis for an agricultural (i.e. a combined food and environment) policy?
  • How can we count on those who see change as an opportunity to take advantage of others, for example through food fraud?

With the exception of Professor Elliott’s lecture on the last issue, championing a new definition of 'food integrity' in explaining the challenges to food safety and security, and some acceptance that the metrics of natural capital still need to be worked through, these issues were largely ignored.

It is in the face of these challenges that the pursuit of a sustainable future will be tested. If British agriculture succeeds in the next 10 years, it will be largely down to the way that our many little ideas and decisions are worked through after the big ideas have become accepted.

Read more about food integrity.

What is natural capital?

By Simon Tilling

Rolling fields

Natural capital – putting a value on natural resources – is not a new concept. Burges Salmon’s environmental specialists have been dealing in natural capital in other sectors for a while. Many large corporates use natural capital accounting for measuring and reporting on their environmental performance. Natural capital is used as a tool following environmental damage to quantify the measures that a polluter must take to restore the environment as part of a compensation package. Using natural capital to measure environmental enhancements in agriculture has been on the cards for some time.

Questions remain, however, over exactly how Defra’s ambitions will be delivered in practice. In December 2017, a report by the European Court of Auditors concluded that green incentives under the CAP to date had not achieved the anticipated environmental improvements and had only added increased complexity. Mr Gove addressed this when he spoke of reducing regulatory burdens, adopting a risk-based approach and moving towards an outcomes-focused regime, to replace the current prescriptive, one-size-fits-all rules under the CAP. However, how does this work in practice? Each farm holding is different and so it follows that each farm holding’s natural capital is unique.

Environmental enhancement will require bespoke management. Quantifying environmental enhancement requires measuring improvements against a baseline. This may be easier for some metrics than for others. If financial support is linked to those metrics, those metrics become very important for the sector.

There are already tools in place for natural capital accounting. We can learn lessons from other countries, such as the Scandinavian countries, who are ahead of the curve on natural capital accounting. It is already clear that Defra is proposing significant change. We await with interest the fine detail in the command paper promised by Mr Gove for this coming spring.

Replacing CAP – timing and effect

By Alastair Morrison

Combine harvester in corn field

If we understand Mr Gove correctly, it looks as if we could have the following stages in the move away from Common Agricultural Policy (CAP) to a new system of payments in the countryside.

  1. A period until the end of 2019 during which the Basic Payment System continues to apply.
  2. An “implementation period” of perhaps two years, during which a system very similar to the BPS will be maintained, but under which payments to individual recipients will be capped in some way.
  3. A further ‘transition period’ when we are definitely outside the EU but will be continuing with a system based upon BPS, although beginning to enforce through risk based inspections rather than through rigid insistence on cross compliance rules.
  4. A post transition period stretching into the future, which will feature the ‘public money for public goods’ system, primarily directed at those providing environmental benefits.

The timing of this phased approach is vague and the definitions are potentially (deliberately?) overlapping, so this is a vision rather than a reliable plan. What are its potential effects?

  • 'Capping' may well serve to reduce the overall pot of money available to farmers and landowners during this period of change, but its political aim is to penalise the biggest recipients. To protect their existing levels of support payments some may seek to restructure in anticipation.
  • Existing cross compliance rules are regarded by Mr Gove as unnecessarily bureaucratic and ineffective. The implication that those rules will be ignored during the transition period does not mean that there will be ‘open season’ for farmers to ignore regulations. Many of those regulations are already legal obligations and the promise of a move to a more risk based inspection technique indicates only that enforcement will follow a different path, not be abandoned.
  • Assuming that the overall policy is to avoid rather than to postpone a ‘cliff edge’ change of policy, it is possible that the UK land market will take this announcement as an encouraging sign – if not of certainty, then at least of a proper plan being prepared. Most valuers would disagree with Dieter Helm’s assertion that the removal of area-based payments inevitably means a reduction in land prices, bearing in mind all the other factors contributing to current values. 2018 may see increased interest in agricultural land as farmers and landowners begin to implement their plans for adapting to the changes highlighted at the conference.

The importance of food integrity

By Sian Edmunds

Supermarket shelves and trolley

Despite international recognition of the need to ensure ongoing global food security, Professor Chris Elliott OBE, founder of the Institute for Global Food Security and Pro-Vice Chancellor at Queen's University Belfast, has declared a need for a more comprehensive approach to be taken to meet a wider need for integrity in the food supply chain. Professor Elliott has outlined six principles of food integrity, which he believes food and farming businesses, and society as a whole, must engage with.

These are that:

  1. food produced is safe
  2. food produced is authentic
  3. food produced is nutritious
  4. systems used to produce food are sustainable
  5. food is produced to the highest ethical standards
  6. both the environment and those who work in food production are respected.

Professor Elliott has asked the UK food and agricultural sector to consider how many of these principles are already in place and has challenged businesses to work with government to deliver on all six principles. Brexit has opened a door for the sector, and wider society, to really think about what we as a country want our food and agri sector to deliver and how we want it delivered. Not only because it makes sense ethically and commercially, but because it makes sense from a health and sustainability perspective for all of us.

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