Nearly everyone agrees that agricultural subsidies are in desperate need of reform, including, it turns out, the Secretary of State. Yesterday Michael Gove announced that following an extension to 2022 (and possibly further to 2024), the government will be doing away with the system that distributes subsidies based on land area. The current system, with billionaire landowners among its greatest recipients, will be replaced by a new system which distributes “public money for public goods”. Again, there is near consensus that this is a step in the right direction, but what exactly do we mean by ‘public goods’?
To an economist, a ‘public good’ is something that it is difficult to prevent others from using, and where one person’s use does not diminish the amount available for others. Think clean air, street lighting, or national security.
This technical definition is loaded with implied principles about when the government should ‘intervene’ that does not match the reality of the food system. In the context of agricultural subsidies (and most other government programmes), the term ‘public good’ simply refers to non-commercial benefits that are determined through democratic processes to be in the public interest.
Examples of public goods that have been suggested for a new agricultural subsidy scheme include: biodiversity, resilience to floods or other disasters, improvements to farm practices like animal welfare, public access to nature, and public investment into agricultural research and development.
Of the few groups opposed to prioritising funding for these schemes, the National Farmers’ Union (NFU) is a particularly powerful one. Originally opposed to the entire public good framework, the NFU now argues that food itself is a public good as it is enjoyed by many people. They also argue that ‘food security’ and ‘self-sufficiency’ are public goods, meaning subsidies should be directed towards food production.
But food is not the only product that is enjoyed by people. Every industry in the country would make the argument that they produced ‘public goods’ if it were the ticket to greater funds. As for food security, it is much more related to incomes and access than food production.‘Self-sufficiency’ is a nice phrase for a concept that amounts to nothing more than producing greater quantities of any product. The greatest actions to increase UK food self-sufficiency would be to ensure all agricultural inputs – from fuel oil to agrichemicals – are produced in the UK. Food security would also require strong trade relationships to protect against disease, food waste reduction, and a conversion from animal agriculture to cereals and vegetables. The NFU is notably silent on these points.
What we need instead is a resilient food system, and subsidising production is a poor way to achieve this.
What we need instead is a resilient food system, and subsidising production is a poor way to achieve this. A resilient food system requires strong local economies and farmers that can see a future for their business.
Across England, farms are becoming increasingly concentrated in the hands of fewer people, at one of the fastest rates in Europe. Many small farming communities are struggling to halt the flow of young people away from rural life. At the same time, young people who are interested in farming can largely only enter the industry if their family already owns land. When land changes hands it is often through farmers selling upwards rather than outwards. Our broken land system means gaining entry into agriculture is extremely difficult, but this change to farming subsidies is our opportunity to get it right – the Scottish Government is already showing promising ambition here and bucks the trend towards farm concentration.
Reforming the subsidy system is an important first step, but we can also show ambition through a new agricultural strategy. Plant-based protein (beans, peas, lentils, quinoa) is a booming market that could improve soil quality while lessening the environmental footprint of our diets. Our recent report details how subsidy changes, research and development, and new entry programmes could make the UK a leading agricultural producer in Europe.
The language used around agriculture subsidies is needlessly (perhaps intentionally) confusing. At its heart, defining public goods means imagining what we want our farming system to look like: resilient, sustainable, and supportive of local economies. While this conversation is a belated one, this subsidy announcement should be the first step in empowering farmers to contribute to a resilient agricultural system.
This blog was originally published by the New Economics Foundation here.