David Eyles: Is food security incompatible with a free a market?
This is the first part of a feature looking at food security by David Eyles, a Dorset livestock farmer.
Food security can be defined as:
“The ability of a nation to produce sufficient of its own food requirements such as to ensure the proper nutritional, economic, strategic, psychological and spiritual needs of its population. Where imports of food are necessary, they should not be so great that in the event of an alteration in political, economic or environmental conditions elsewhere in the world, that nation cannot feed or support itself properly.”
This is my definition and is subject to discussion, but will do for a start.
For most of Britain’s history, we have been self sufficient and/or exporters of food and food based products. The considerable wealth of medieval England was accumulated by the export of wool. This continued until the late 18th century, when we started to import food to support a burgeoning population. Throughout the 19th and early 20th centuries, we imported an increasing proportion of our food, until by 1940 we imported about 60% of our needs. This came mostly from the Empire, the USA and other countries like Argentina. A largely unhindered free market was in operation.
The weaknesses in this system became immediately apparent after the fall of France in 1940 and the unleashing of U-boats into the North Atlantic. From that moment onwards, UK agricultural production has been regulated by the government and supported by the taxpayer. By the early 1990’s, approaching 80% of our food requirements were being produced by UK farmers. This has now dropped to less than 70%. (It depends which figures you read, but these broadly speaking are in the right order of magnitude.) British farmers, as well as adopting the highest environmental and animal welfare standards in the world, are also about the most efficient. Despite this, agriculture contributes less than 2% of our GDP and there has been haemorrhaging of farmers from the land, particularly over the last decade. We export milk powder and other dairy produce, beef, lamb, wool, feed wheat and malting barley. These exports are an important part of the agricultural economy.
The economic advantages of producing most of our own food – accepting that we will never be able to produce rice, tea, coffee, citrus and tropical fruits – are as follows:
- Helps with the Balance of Trade, reduces the need for foreign exchange and enhances GDP.
- Reduces chances of economic inflationary shocks from disruptions in world food supplies.
- Agriculture supports large food processing and transportation industries which in turn contribute another 5% to 8% to our GDP.
- As such, agriculture contributes directly to a large amount of rural employment and prosperity.
- Agriculture contributes indirectly to tourism indirectly by recreation and landscape quality.
The first three points become more important as the world population rises to 9 billion or so by 2040, pressure on world food and water supplies increase and the world becomes more prosperous and demands a better diet.
It would be argued by many, that the protection provided by government support – in the last 30 years by the Common Agricultural Policy – has given British farmers the ability to build up their efficiency and so reach the position that we are now in. This is highly debatable. But the most important point is: How do we proceed from here - do we continue to adopt protectionist policies under CAP, or adopt free market principles whilst securing our food supplies?
I would argue that it is perfectly possible for British farmers to follow the New Zealand example and free up agriculture away from taxpayer support and government interference whilst maintaining or even enhancing food security. But there are big risks. In the case of New Zealand, its market in the tiger economies of the Far East, is huge. Its nearest neighbour, Australia, benefits likewise from the proximity of the same huge market which shows little sign of competing agriculturally with either of these two countries. By contrast, the UK has agricultural competitors on its very doorstep. Ireland exports beef to us. Denmark liquid milk and pigmeat products, France exports cheese, some vegetables and some liquid milk; The Netherlands exports pigmeat and vegetables and Spain exports vegetables to us. All are within a relatively short truck and sea ferry distance from us. All have agriculture which is supported by CAP.
In the UK, vegetable growing, the pigmeat sector, poultry and egg production are unsupported by the taxpayer. Currently, British pig producers are becoming a rare breed; poultry and egg production are having a hard time against imports from the Far East and dairy producers (who are supported) are declining in number and output. Whilst British agriculture remains in the CAP, there is the pretence of a level playing field for competition for many of our main sectors of beef, dairy, lamb and arable production. Once out of CAP, that support disappears and UK farmers would be competing against EU farmers who are still liberally supported by the EU taxpayer. At a time when a typical farm business shows net margins in low single figures and their CAP payments are 10% to 15% of their total turnover, it would be a chill wind that blows through many UK farmhouses when the brown envelopes from the Rural Payments Agency stop being delivered. Hill farms in particular will suffer.
Nevertheless, based upon the knowledge of the efficiency and dedication of my farming colleagues, my gut feeling is that it would be possible to have both a free market and good food security sufficient to withstand the economic knocks of a two thirds increase in world population over the next 30 years.