back to article Brexit could further harm woeful rural payments system

Brexit could further exacerbate the woeful IT track record of farmers receiving rural payments from the UK government, the Public Accounts Committee (PAC) has warned. The Common Agricultural Policy (CAP) provides direct financial support to farmers primarily through the Basic Payment Scheme (BPS), which accounts for around 80 …

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  1. Bob Rocket

    Scrap it

    Scrap all subsidy payments to farmers and sack all the bureaucrats at the RPA. We don't subsidise the coal or steel industries anymore, so why should get a free ride ?

    1. AMBxx Silver badge

      Re: Scrap it

      Most farmers I speak to would love to see subsidies scrapped. You can't build a business on subsidies that may change at any time.

    2. Len Silver badge
      Headmaster

      Re: Scrap it

      There are typically a few arguments for subsidising farming:

      1) A strategic decision to protect the food supply. The UK is already not self-sufficient in food production and decimating local food production would make the country even more dependent on imports. Food imports which may see a 20% import duty after Brexit if we screw up the negotiations.

      2) These subsidies are often also used to steer behaviour. They can, for instance, force farmers to employ crop rotation techniques so the land isn't exhausted too quickly. Or they can pay for leaving certain plots of land uncultivated for conservation reasons. Through these mechanisms many countries have made farmers an integral part of environmental protection, flood prevention etc.

      3) They can be a good money making scheme for people in the right places. Paul Dacre, the editor of the UK's biggest Neo-Nazi broadsheet, receives over €400.000 a year in EU subsidies for his estates.

      In the current environment, arguments 1 and 3 will probably be enough to continue subsidising farming.

      1. AMBxx Silver badge
        Facepalm

        Food imports which may see a 20% import duty after Brexit

        Do what? You really think if we're short on food we'll tax the imports to make it more expensive?

        1. Len Silver badge

          Re: Food imports which may see a 20% import duty after Brexit

          If the UK wants to trade under WTO rules it will not be the UK that decides the level of import duties, it will be the WTO that decides. Or are you suggesting the UK should leave the WTO as well?

          1. Bob Rocket

            Re: Food imports which may see a 20% import duty after Brexit

            WTO sets the maximum import tariffs that can be applied (usually to protect domestic business).

            Under WTO you are not obliged to apply any import tariffs at all.

          2. cantankerous swineherd Silver badge

            Re: Food imports which may see a 20% import duty after Brexit

            the WTO will make us impose a 20% duty on imports of food? do you have a link for this?

            1. Tom 7 Silver badge

              Re: Food imports which may see a 20% import duty after Brexit

              Where else do you think the government will have any opportunities for raising taxes? Not increasing them - actually collecting something!

            2. Dan 55 Silver badge

              Re: Food imports which may see a 20% import duty after Brexit

              Worry not, DEFRA estimates that global commodities will cost 11% more when imported to the UK and that will translate into a rise for consumers of 2.9%.

              Apparently there's a lot of margin on those lettuces which food producers will be only too happy to soak up for us.

          3. James Anderson

            Re: Food imports which may see a 20% import duty after Brexit

            WTO has a set of rules for deciding the MAXIMUM tariff that can be applied to particular imports from a particular country.

            There is no obligation to charge the maximum value.

            Besides I seem to remember joining the Common Market resulted in an increase in food prices. Losing the EU restrictions on imports from outside the EU should result in cheaper food prices.

    3. Anonymous Coward
      Anonymous Coward

      Re: Scrap it

      This is actually one of the first case studies you come across in economics.

      The basic problem is that farmers have to predict the price of their crops up to a year before they are sold, and once the seeds are or are not sown, they are committed to their decisions. Furthermore, in an imperfect world they don't know what everyone else is doing.

      Human nature being what it is, this situation rapidly spirals into a boom/bust cycle, where a glut in a crop pushes prices down, making fewer farmers want/afford to grow next season, resulting in scarcity and high prices (see the current broccoli greens rationing because of Spain's problems), and the high prices prompt investment in the crop and then another glut, and so on. It's also pretty clear that in this process quite a few farmer will take a financial bath on each cycle.

      Clearly that's simplistic, but having a guaranteed minimum return on investment via subsidies prevents this cycle taking hold.

      Also, as others have said, keeping farms running is of vital strategic importance, not just due to wars etc but due to the ease with which an oil crisis (or French docker's strike) could leave us up sh*t creek.

  2. Anonymous Coward
    Anonymous Coward

    An MP spoke about talking with a farmer who voted BREXIT. His motive was that an EU body, DEFRA, was holding up his subsidy payments.

    He did not understand that DEFRA is a UK Government department - who the EU had fined for not distributing the farming subsidies in a timely fashion.

    He expects his subsidies to continue after BREXIT. Good luck with the same DEFRA in charge of their distribution - without any EU body to give them a kick.

  3. Redstone

    The alternative is that after Brexit, UK farmers go back to actually producing food efficiently, negating the need for subsidies.

    The whole system was set up to keep militant French farmers, with their unviably small farms, from going broke and jamming up Paris with their tractors. Then we got subsidies for farmers to NOT grow things on their land! The dumping of the EU’s CAP is just one of many things that will galvanise the UK economy once we orient ourselves to trading with the rest of the world.

    1. Len Silver badge

      UK farmers are already not very good at trading with the rest of the world compared to many other European farmers. Why do you think reducing the amount of trade agreements will suddenly make them better at it?

      1. AMBxx Silver badge
        Facepalm

        Why do you think reducing the amount of trade agreements

        Because we get to buy and sell from anyone we please rather than every trade agreement being limited by the interests of inefficient french farmers.

        1. Len Silver badge

          Re: Why do you think reducing the amount of trade agreements

          But if Dutch, German, Belgian, French, Italian and Spanish farmers can run globally successful production within the current trade agreements why wouldn't the British farmers be able to do it?

          This whole "we can finally trade with the whole world" mantra is a con. Many of the world's top trading nations are all in the EU and are already trading with the whole world. They don't seemed to be harmed by EU regulations. What is it that UK exporters can suddenly do once outside the EU that they can't do today?

          1. James 51 Silver badge

            Re: Why do you think reducing the amount of trade agreements

            @Len with the bonfire of regulations and worker/consumer rights I am sure there will be plenty of fat cats ready to pounce.

            1. CrazyOldCatMan Silver badge
              Coat

              Re: Why do you think reducing the amount of trade agreements

              plenty of fat cats ready to pounce

              In my experience, fat cats are not particularly good at pouncing - especially the one of mine who, at 6.5kg, is quite.. padded.

              No - for pouncing excellence, you need slim and wiry cats..

              1. Anonymous Coward
                Anonymous Coward

                Re: Why do you think reducing the amount of trade agreements

                Fat cats just crush their prey by sitting on them. Slim cats just don't have the same effect.

                Here's an analogy - not cats but a kids' game. Apologies for it being on Facebook

                https://www.facebook.com/HoustonBoychoir/videos/1435656619800724/

          2. Phil O'Sophical Silver badge

            Re: Why do you think reducing the amount of trade agreements

            But if Dutch, German, Belgian, French, Italian and Spanish farmers can run globally successful production within the current trade agreements

            Can they? The only reason French farmers manage to make a living at all is because they're paid huge subsidies by EU taxpayers. Their farms are far too small to actually be profitable.

            The CAP was set up to help such small farmers survive, and it crippled the abilities of big farms like those in the UK. Whatever else Brexit brings, the end of the CAP rules in the UK can only be good for farmers, who will have some incentive to make the UK self-sufficient, instead of being subsidised not to be and forcing us to import food.

            It all goes way beyond simple subsidies, of course. The main problem in France is that when a farmer dies the law requires that the estate (which in most cases means the farm) be equally divided among the children. Compare that to UK tradition where the farm is passed down whole to the eldest son/child. Over time that means UK farms can grow, but French ones remain small and fragmented.

            Of course, the EU politicians could try to fix that by mandating the same inheritance rules across the EU but they know fine well that it's an impossible task, there's far too much cultural difference for it ever to be acceptable. Note that they'll admit that, of course. Instead they just implement the usual fudge which only works for some people. For the others, well it's their own fault for not being ideal Europeans.

            1. Anonymous Coward
              Anonymous Coward

              Re: Why do you think reducing the amount of trade agreements

              "The CAP was set up to help such small farmers survive, and it crippled the abilities of big farms like those in the UK. Whatever else Brexit brings, the end of the CAP rules in the UK can only be good for farmers, who will have some incentive to make the UK self-sufficient, instead of being subsidised not to be and forcing us to import food."

              UK trade agreements with countries like the USA and Australia will mean that British farmers will find their farms too small to compete with their competitors' industrial scales and often lower standards.

              1. maffski

                Re: Why do you think reducing the amount of trade agreements

                'UK trade agreements with countries like the USA and Australia will mean that British farmers will find their farms too small to compete with their competitors' industrial scales and often lower standards.'

                Sweet. Then we'll have cheaper food.

                And lower house prices with all that land available.

                And our now ex-farm workers can go and do jobs which are more productive making us all richer.

          3. Blotto Bronze badge
            WTF?

            Re: Why do you think reducing the amount of trade agreements

            @Len

            so whats to stop us from making deals with each of those top 15 nations or indeed the EU once we leave the EU. The EU makes deals with non EU nations all the time. there is nothing stopping us from making those types of deals too. If you think the EU is that spiteful it won't want to deal with us then we are simply better off not dealing with them.

            1. Harry Kay

              Re: Why do you think reducing the amount of trade agreements

              But making all these deals takes a lot of time. Remember that the people you are wanting a deal with have their own agenda too, and want the best terms for themselves. If only all these people saying we can do these marvelous deals with everybody that we can't do now would look at things from the other fellow's point of view.

              Minor point, but on a recent trip to India I looked to see how many UK products were in the shops, motor vehicles etc. Not exactly a rigorous examination, but I found just 2 - some rather tired packets of McVitie biscuits, and some HP sauce (made in the Netherlands).

              Also, we don't have that many trade negotiators, as has been pointed out several times.

              Btw - sine at least the 1950's (and probably before that) we have not been self-sufficient in food

      2. maffski

        'UK farmers are already not very good at trading with the rest of the world compared to many other European farmers. Why do you think reducing the amount of trade agreements will suddenly make them better at it?'

        Because trade agreements have relatively little impact on how much individual entities export. However subsidies generally ensure you lack the efficiency to compete.

    2. James 51 Silver badge

      The temptation might be to make a lot of money in the short term and when the soil has been robbed and wildlife eradicated it will take a long time to repair the ecosystem.

    3. cantankerous swineherd Silver badge

      UK had a system of subsidising farmers since the 2nd world war, and probably before that. joining the EU wasn't the start of agricultural subsidies, merely a change of system.

      motivation was, iirc, that farming being one of the few sectors of the economy subject to market discipline resulting in big swings in production. so if one year pigs were scarce and expensive, farmers would pile in, hence surplus of pigs, hence price crash hence scarcity of pigs. this was considered a bad thing and the subsidy system was a reasonably sensible way of damping market fluctuations. details elude me I'm afraid, did it in O level economics when de Gaulle was saying non.

      1. Anonymous Coward
        Anonymous Coward

        "However subsidies generally ensure you lack the efficiency to compete."

        Protective barriers were used in the 19th century to placate UK landowners who couldn't compete with cheaper imports from places like the prairies of North America.

        That wasn't a government subsidy. Both the government and the landowners raked in the money from everyone else in the UK having to pay the higher prices.

        The higher prices were particularly hard hitting on the working classes. Eventually that filtered through to the manufacturing industries having to raise wages and their own prices.

        Those protectionist tariffs went with the repeal of the Corn Laws.

      2. strum Silver badge

        UK had a system of subsidising farmers since the 2nd world war

        Indeed so - and it was considerably more authoritarian than the CAP ever was. There were regular announcements on the Home Service instructing farmers to apply a particular pesticide on a particular day. (The Archers was devised to give these instructions a more homely setting.)

  4. calmeilles

    Agricultural subsidies are ultimately limited by World Trade Organisation rules.

    For the European Union the permitted quota is held by the European Commission. When the UK exits the EU it will have no WTO approved subsidy quota in its own right.

    Post Brexit the UK will have to negotiate its own WTO agreements. However long that takes in the interim it will have two choices: either cease paying farm support or continue paying illegally and consequently creating a block to the necessary negotiations.

    Frankly DEFRA's inefficiencies are going to be the least of the problems facing farmers who rely on CAP payments for significant parts of their incomes.

    1. cantankerous swineherd Silver badge

      fail to see how the WTO will stop a country subsidising any industry it sees fit to subsidise. esp. if we're no longer signed up to them.

      1. James 51 Silver badge

        Because if the WTO said that the subsides amounted to illegal state aid then other countries would be free to give UK trade a swift kicking on a number of fronts, not just said industry. Unless you're talking about coming out of the WTO entirely and I haven't heard even the most rabidly rabid brexiteer indulge that notion.

        1. Tom 7 Silver badge

          Lots of assumptions that we will even get WTO membership

          I think Argentina will be able to swing a non-consensus without to much difficulty - they just need to point to how cooperative we were as part of the EU. A reverse Groucho Marx comes into play here.

          1. LHGFLICOD

            Re: Lots of assumptions that we will even get WTO membership

            The UK already a WTO member see https://www.wto.org/english/thewto_e/countries_e/united_kingdom_e.htm

            So at least that's one thing less for or genius leaders to sort out.

            1. ragnar

              Re: Lots of assumptions that we will even get WTO membership

              Sadly not - the FT has an article here - we still need to do a ton of negotiating to benefit from WTO terms. Here's a google cache link to get round the paywall:

              https://webcache.googleusercontent.com/search?q=cache:TkyWmTaXtyoJ:https://www.ft.com/content/5741129a-4510-11e6-b22f-79eb4891c97d+&cd=1&hl=en&ct=clnk&gl=uk&client=firefox-b

  5. Anonymous Coward
    Anonymous Coward

    I used to work in a small public sector organisation that paid grants to farmers. Central government got very upset because our little organisation could pay farmers the correct amount and on time (with full audit trails to verify the payments were for farms and not parts of the North Sea), yet central government couldn't do any of that. They found it very embarrassing.

  6. Bob Rocket

    Farm subsidy

    Who's getting all that farm subsidy money ?

    This is where your money went

    TATE & LYLE EUROPE (031583) €594,270,084

    TATE & LYLE EUROPE €170,957,385

    MEADOW FOODS LTD €127,223,714

    C CZARNIKOW SUGAR LTD €99,316,783

    NIDCO FOODS 1992 DIV OF FAYREFIELD €96,771,940

    NESTLE UK LTD (771234) €93,126,292

    PHILPOT DAIRY PRODUCTS LTD €82,273,175

    SIMPSON, D €69,516,054

    TATE & LYLE CITRIC ACID (A DIV OF T & L INDUSTRY) €62,807,599

    MILK SUPPLIES LTD €45,462,341

    DAIRY INGREDIENTS (UK) LTD €34,415,026

    NATIONAL TRUST €29,370,027

    DAIRY CREST INGREDIENTS €23,896,191

    BRITISH SUGAR PLC €23,569,028

    Syral UK Ltd €21,815,720

    Czarnikow Group Limited €21,621,843

    G'S GROWERS LTD €20,214,730

    Berry Gardens Growers Ltd €19,665,534

    European Commission (M) €19,380,040

    HOOGWEGT INTERNATIONAL BV €19,181,434

    PARKE DAVIS & CO LTD T/A ADAMS €17,869,221

    FARMCARE LIMITED €17,206,098

    source:- http://farmsubsidy.openspending.org/GB/browse/

    1. Philip Storry

      Re: Farm subsidy

      For clarity - this is an "All Years" view, which appears to have data back to 2013.

      For opinion - it's no surprise that many big companies are getting subsidies. Same in fishing, IIRC - the majority of the "British fishing fleet" is in the hands of large companies.

      Of course, there are the plucky small independents. I'm not denying that. But the Brexiteers like to pretend that they're the only story, because that pulls on heart-strings. The fact is that the vast majority of the problems for both farmers and fishermen are down to a combination of corporate competition and government cockups. Europe is either neutral in events, or on their side trying to improve things.

      Sadly, that makes for a complicated story. Much easier to just bend the truth and go back to that narrative of the plucky independent...

      1. Bob Rocket

        Re: Farm subsidy

        Yes this is 'All Years', in the last 5 years we have given well over a beellion pounds to sugar companies and now we have to pay many more beellions fixing the resulting obesity crisis, subsidies work really well.

        1. Tom 38 Silver badge
          Stop

          Re: Farm subsidy

          Fact check: Those stats are a bit misleading, it shows the amount of money paid to entities in the UK, but it doesn't break it down to show how much was paid for land in the UK.

          For instance, Tate & Lyle Europe is the EU subsidiary of American Sugar Refining, and has sugar growing farms all across the EU; all the subsidies for those farms are paid to the company in the UK.

  7. Anonymous Coward
    Anonymous Coward

    Get orff moi laaaaand

    A farmer told me that he'd voted for Brexit, and when I asked about his reliance upon CAP subsidy money, his response was revealing. We want the subsidies to go, he said, because as long as they exist those bastard multinationals can pay us less than the cost of production, as they know we'll still survive because of the EU handouts, and no-one will support us to stand up against them.

    So the EU subsidy (from taxes - did somebody mention £350m a week?) that comes out of our own pockets is being used as a lever so that the supermarkets are able to offer cheap food over the shop counter so that we don't spend so much - out of our own pockets - on our grub and booze?

    Yup, says he, that's why I'm voting Brexit.

    1. Philip Storry

      Re: Get orff moi laaaaand

      Why do I have this image of a man sitting on a tree limb, desperately sawing away at the bit between him and the tree so that he can reward himself with a fine bit of free wood?

    2. A Non e-mouse Silver badge

      Re: Get orff moi laaaaand

      So the EU subsidy (from taxes - did somebody mention £350m a week

      Someone did a couple of times. Then they went quiet as everyone else took this number and ran with it. Then they admitted (way after the fact) that the figure was actually a load of bollocks.

      The BBC has a break down of the magic £350m amount.

  8. Hans 1 Silver badge
    Trollface

    Ugly Betty

    I don't know why, but I am dead sure CAP payments to the Queen ALWAYS make it on time .... feel sad for the hard working ... as is customary, fellow Brits, if you are a patriot, you should click the arrow pointing downwards, merci!

  9. Anonymous Coward
    Anonymous Coward

    £180m in EU fines

    It's good to know that in future, our sovereign British government will be able to fuck up their jobs without being fined by the EU for it.

    1. Anonymous Coward
      Anonymous Coward

      Re: £180m in EU fines

      My memory may be a little hazy, but I'm sure there was a case where the chief exec of a public body once took themselves to court for not doing their job. The aim was to embarrass the government into giving the public body the money it needed to do its job.

  10. Anonymous Coward
    Anonymous Coward

    Scottish version

    Ah, if you think that's bad you should read up on the ongoing farce that is the Scottish version of agricultural subsidies (because devolution).

    1. Anonymous Coward
      Anonymous Coward

      Re: Scottish version

      Devolution is not the source of the problem here. The SAF is one of the few things northern Ireland has managed to do well... We have a well received fully functioning system that has met and exceeded all of its targets and managed to make advanced payments in October 2016

  11. Yugguy

    The Reg really is a remain mouthpiece

    How many of these "Brexit COULD cause the sky to fall in" articles will you do, segueing in some distantly connected IT angle?

    1. Anonymous Coward
      Anonymous Coward

      Re: The Reg really is a remain mouthpiece

      Perhaps then, you could stay on topic and argue why the sky won't fall in when we adopt WTO rules.

      You know, like how wonderful it will be for our farmers to be able to freely trade with Argentina, Iran, Zimbabwe, Yemen and all those other countries that just can't manage without our products.

      Or perhaps you can't...

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