British Agriculture post-Brexit: Crisis or Opportunity?

This is a scary time for British farmers and fishermen. There are huge question marks over the new post-Brexit dispensation. But there could also be huge opportunities for the food industry, writes Victor Hill.

New freedoms?

I was fascinated to read an article recently by the Dutch agronomist Herman Lelieveldt about agricultural policy^[i]which began with the statement that “The EU’s straitjacket of rules and subsidies…sustains a model which is unhealthy, polluting and not good for animal welfare”.

Mr Lelieveltd pointed out that leaving the EU means that the UK is now able to abolish extravagant agricultural subsidies that pay landowners in accordance with acreage, and to replace that with a system that rewards them for undertaking environmentally beneficial projects.

Moreover, we can now decide for ourselves which agricultural chemicals and herbicides to ban (or not) such as glyphosate (commonly branded as Roundup, manufactured by Monsanto (owned by Bayer (ETR:BAYN)). For that matter, we can now determine the maximum salt level in ready-to-eat meals without running afoul of Single Market regulations or EU competition law.

The National Food Strategy, pioneered by Henry Dimbleby, the prime mover behind Leon Restaurants, has picked up on this. Leon is a successful restaurant chain whose unique selling point is healthy, nutritious food served fast. According to Mr Dimbleby’s report, the greatest health risk in the UK is obesity. That, I would argue, arises as much from bad eating habits as from bad food – though the two are intimately connected. Many families in this country have lost the habit of sitting down and eating a meal together. The coronavirus pandemic has further highlighted the scandal of poor food – not least in the form of exorable school lunch boxes. (Ask Mr Rashford, the new de facto minister for child welfare.)

The Johnson government is considering putting traffic light labels on food packages – something the EU is proposing too. But would people who favour poor, cheap food be put off by a little red light on the packaging? Labelling tends to be effective for people who read the labels – and they tend to be people who favour healthier foods anyway.

The Agriculture Bill which went through the Commons in November upholds the principle of public money for public goods. Automatic payments to landowners will be phased out over a period of seven years, to be replaced by a programme of Environmental Land Management. This will reward farmers for keeping down their CO₂ emissions, maintaining a clean water table and encouraging biodiversity.

These measures are much desired by many farmers in Europe – but, as we know, the EU machine is incredibly difficult to reform. In March last year 3,600 scientists from 63 countries signed an open letter which branded the Common Agricultural Policy (CAP) as a failed policy which is destroying nature.

Outside the EU, British farming standards, animal welfare practices and the stewardship of our fisheries are likely to get better, not worse.

The green challenge

Farmers currently have to contend, not only with the impact of the coronavirus pandemic and the adjustment to the new dispensation post-Brexit, but to the climate challenge as well. The Johnson government has committed the country to more re-wilding whereby agricultural land is left for Mother Nature to do her work (possibly with the help of re-introduced species such as otters and bison) and greater re-forestation. That is all very worthy and will contribute to the reduction of Britain’s CO₂ emissions; but, given the bigger picture, it may not be the most environmentally friendly policy.

About 55 percent of total farmland in England is grassland – that is, it is used for rearing livestock. The fear is that if land dedicated to livestock rearing is given over to re-wilding or forestation, Britain will have to import more meat. According to the Sustainable Food Trust (SFT), the phase-out of direct payments to cattle farmers will lead to a 10 percent reduction in beef production within five years. Much of this shortfall is likely to be made up by imports from countries such as Brazil. The SFT reckons that for every hectare of grassland planted with trees in the UK, nearly two hectares of rainforest would have to be cleared in Brazil. At a global level, that is clearly carbon positive – and therefore a bad thing.

Meat reared in tropical countries is reckoned to have a much higher carbon footprint than beef, lamb, pork or chicken reared and finished in the UK. Research by the Food Climate Research Network (FCRN) at Oxford University suggests that the carbon footprint of beef or lamb per kilo in tropical countries is around double that of meat produced in the UK.

In the view of the SFT, many environmentalists don’t seem to have much practical knowledge of farming nor of issues around land management. What makes grassland in the UK so productive is that we have abundant rainfall and moderate temperatures (not too cold in winter and not too hot in summer). Our damp climate is perfect for grass-fed livestock production. In contrast, in hot countries livestock production puts a huge strain on water resources.

Tory vegans on the march

And yet the government’s Climate Change Committee (CCC) is proposing a 10 percent reduction in the number of cattle and sheep by 2050. It suggests that this should be accompanied by a 20 percent reduction in meat consumption per person. On average, each British citizen consumes 61 kilos of animal protein per year, up from 56 kilos a decade ago^[ii]. That is much less than that of some of our friends. Americans, Australians, New Zealanders and Argentinians all consume over 100 kilograms of meat per person per year^[iii].

Ten Tory MPs have started a new group called the Vegan Conservatives. Their spokesperson, Andrew Boff MP, is “thrilled that so many Conservative MPs are going vegan for January”. He added that “moving towards a plant-based food system is critical if we are to prevent serious climate change, reduce pandemic risk and protect animals”.

Jamie Blackett, a passionate advocate of British livestock farming, and author of Red Rag to a Bull, Rural Life in an Urban Age, hit back^[iv]. He maintains that livestock farming plays a critical role in planet Earth’s carbon cycle. Britain’s livestock farmers are protecting the planet by sequestering megatons of CO₂ in our soil every year. The soya burgers and almond milk lattes consumed by Mr Boff and friends are often sourced from Brazil – the largest producer, globally – where rainforest has been destroyed to grow it.

Mr Blackett points out that one reason why the Covid-19 morbidity rate has been so high in the UK is that there are so many middle-aged adults suffering from both obesity and type-2 diabetes (with the BAME communities representing a disproportionate number of such people). He argues that obesity results from eating excessive amounts of carbohydrate and polyunsaturated vegetable oils – instead of saturated animal fats and green vegetables (as in the traditional English Sunday lunch). Interestingly, the Chinese authorities have advised their citizens to consume 300 grams of dairy products each day in order to boost their immune systems.

I fear that the dark green lobby, with a keenness for grand gestures, seems to have gained ascendancy within the Tory Party – partly no doubt thanks to the influence of the prime minister’s fiancée. The CCC’s sixth carbon budget, published in December, declared that the cost of Britain going carbon neutral by 2050 “had plummeted”. It is now onlygoing to cost £50 billion a year by 2030.

The CCC proposed the banning of all new oil boilers (relied upon by rural communities – including our farmers) by 2028 and all new gas boilers by 2033. Most old houses, as I shall explain shortly, cannot be converted to air or ground heat pumps, even at cost; and the result will be fuel poverty. The technology for heating homes with hydrogen is in its infancy.

I foresee huge green potholes in the road ahead.

Fisheries

British fishermen are in uproar – especially in Scotland. The issue seems to be that truck loads of perishable fish and shellfish have been unable to cross into Europe in a timely fashion thanks to the new rules. Some cargoes have had to be destroyed.

The Westminster government has put this down to teething problems. Mr Rees-Mogg unhelpfully opined that British fish are better and happier, post-Brexit. One issue is that mixed convoys – trucks containing several different types of fish – are subject to different certification. It may be that the fish exporters have not yet got their heads around the paperwork and that it can be resolved. In the meantime, the issue is sure to be exploited by the nationalists in Scotland who are already demanding compensation.

It would make sense for the National Food Strategy to advocate that British people eat more of the wonderful fish caught in our waters.

Agricultural land prices – update

According to figures out this week from Farming UK, the value of agricultural land rose by three percent in 2020, with record low supply of land coming to market and robust demand driving prices up. It seems that many farmers who wished to dispose of land held off until the dynamics of the UK-EU trade deal and the new farm subsidy regime became apparent. Less than 54,000 acres of agricultural land came to market in 2020, which is the lowest amount in memory. In contrast, 69,300 acres exchanged hands in 2019.

Strutt & Parker’s Farmland Database shows that the average price was £9,300 per acre for arable land and £7,200 per acre for pasture. About half of all arable land sold in 2020 made £8,000-10,000 per acre, with about 30 percent selling for £10,000 an acre or more.

There was a wide range in values between the best land and the least attractive, according to the Farmland Database. Prices ranged between £5,200 an acre at the bottom end to £17,500 an acre at the top. Soil quality is only one variable in the determination of land prices. In the second half of 2020, Strutt & Parker reported strong interest in residential farms and estates, particularly in the south and west of England, from buyers seeking to escape the pestilence-ridden cities. Clearly, many private investors continue to be active in land purchase across the UK, viewing farmland as a secure, long-term investment with significant tax advantages, not least in terms of capital gains tax and inheritance tax.

Strutt and Parker also reported an increased number of enquiries from overseas. That suggests that some international investors regard post-Brexit Britain as a land of opportunity.

***

I hope that many of my readers will have signed up for Jim Mellon’s digital book launch on 24 January, the book in question being Moo’s Law. Jim has been beating the drum for clean food and low carbon farming for a while. He foresaw both the rise of vegetable-based meat alternatives (NB Beyond Meat (NASDAQ:BYND)) and now of cellular technology that effectively creates meat tissue in laboratories (and soon factories) without killing animals. I’m quite sure that that will become a hugely important sector with lots of opportunities for investors very soon.

Where I may differ from Jim is that traditional agriculture – including livestock rearing – will be entirely displaced by this technological revolution. Hands up: I am a carnivore. But one who only eats the highest quality meat that has been reared in humane and open-air environments. I believe that many imported meat products found in British supermarkets are obnoxious – and I am not the only person to abjure them.

The rural environment – what the English call the countryside (Americans don’t quite get that word) – is the crucible of not just agro-industry, but of the national spirit which is rooted in nature. It is where both rural residents and townsfolk can re-connect with the natural world. If we designate former dairy farms to housing and more dreary, drab urbanisation we shall pay a terrible price, not least in terms of happiness and mental health. And the carbon emissions will only mount.

I’m sure that Jim is onto something big; but we need to consider how changes in food production will impact the environment – the countryside, the love of which runs so deep in our national psyche.

When strict lockdowns expire, as one day they will, I’m planning a very long walk in these islands to ruminate on these themes. One can but dream.

^[i] Brexit is a godsend if you care about food, by Herman Lelieveldt, The Daily Telegraph, 26 December 2020, available at: https://www.telegraph.co.uk/business/2020/12/26/brexit-godsend-care-food/

^[ii] See: https://www.savills.co.uk/research_articles/229130/298951-0

^[iii] See: https://www.bbc.co.uk/news/health-47057341

^[iv] See: https://www.telegraph.co.uk/news/2021/01/02/tories-new-vegan-caucus-puts-pandering-trendy-cause-good-sense/