Index

9:   Subsidies the root of the problem

HUMPHREY PHELPS

The 1947 Agriculture Act gave farmers guaranteed prices and assured markets for their produce when they had an assured market and could have obtained very good prices because there was a worldwide food shortage. Nevertheless, the Act gave agriculture a stability that lasted for many years. And Tom Williams was a popular Minister of Agriculture, most probably the only popular minister farmers have ever had. Even today old farmers will say 'Tom Williams, the best minister there's ever been'.

Those were the days; the minister was popular, farmers were popular (well more or less), the primary purpose of land was for growing food. Of course, the Act included a system of subsidies and this, despite what I said above, attracted a certain amount of criticism.

One under-minister said farmers were 'being featherbedded' and for this remark he was forced to resign. Today, such a remark would be more likely to earn promotion.

However, then as now, not all the subsidy and grant money went into the farmer's pocket. For instance, 40 or more years ago when a subsidy was given on artificial fertilisers, the price of the fertilisers went up following an increase in the subsidy, but in southern Ireland where there was no subsidy fertiliser was sold at a much lower price. And I dare say some other manufacturers profited as much or even more by some subsidies and grants as the farmer.

In more recent years I doubt if grants and subsidies have been an unmitigated blessing to many farmers. They haven't helped small farmers much. Indeed it could be argued they have been instrumental in the demise of small farms.

Small farms failed to qualify for subsidies because they were considered too small or their way of farming was unfashionable. They have been driven from the land, not because they were 'inefficient' or 'not viable' but because the support system has made them unprofitable. They could not 'farm for subsidies' as some farmers did.

Subsidies and grants have been hugely in favour of the large farmer, especially agribusiness. Subsidies have been linked to the volume of output and large and intensive farming has got the bulk of them.

Farmers have been cajoled and bribed into intensification, specialisation to increase 'efficiency and production'. Specialisation and modernisation have cost money and a lot of the subsidies given to this end have benefited manufacturers as much as farmers. Production has produced subsidy money (as a large farmer admitted some years ago: 'Farming is about the production of money, not food'.)

But agriculture productivity, as Sir Richard Body has said, is based upon a fallacy. Once farms were virtually self-sufficient and what was produced came from the farm. Now farming has become processing; where would this production be without vast quantities of artificial fertilisers, herbicides, pesticides, fungicides, purchased feeding stuffs, drugs, power and heaven knows what else?

But look at how many acres one man can farm, compared to all those farmworkers of yesteryear. What about that for productivity? Here is another fallacy. True, the number of people directly employed on the land farmers and farmworkers has fallen drastically. However, the number indirectly employed - in the agrichemical, equipment, machinery and other industries - has correspondingly increased, resulting in a rural depopulation of country people.

The age of the hanger-on

There is also a vast number of people who live on agriculture. It used to be said that for every man holding the plough there were six riding on his back. Now there must be 26 or even more: advisers, consultants, bankers, supermarket directors, middlemen, salesmen, 'agriculture experts', politicians, officials, inspectors, civil servants there are more DEFRA bureaucrats than there are daily fanners in England. If subsidies have done nothing else, they have bred a vast number of hangers-on.

It has never seemed logical to me that the larger a farmer becomes, the more he becomes 'efficient' and increases his production the more subsidies he gets, thus enabling him to acquire more land, often at the expense of those farmers who have not been big tax-eaters. I can only suspect that gullible politicians have been influenced by agribusiness and their friends who run the NFU.

We receive subsidies too. Years ago it was only very moderate amounts which were, for want of a better description, the icing on the cake. For some years now we have received larger amounts and now, because of the depressed prices for agricultural produce, they have become the cake itself and without them we could not continue. It is a humiliating position to be in and many farmers would rather be without subsidies if only they could be paid the proper price for their produce.

Someone is benefiting by the low returns the farmer is getting and it is not necessarily the consumer. For instance, over the last few years the price the farmer gets for a litre of milk has fallen by 6p but risen to the consumer by 6p. Where has the 12p gone?

A House of Commons committee, set up to investigate milk pricing, came to the conclusion that somewhere along the line 18p per litre was going missing. Of the share of the total margin, the retailer gets 66 per cent, the processor 24 per cent, and the producer only 10 per cent. It is obvious the consumer is not the one who gains from the squeezing of the dairy fanner.

The increased production of milk and other agricultural produce, to the cost of both fanning and the environment, really began, I suppose, during the 1980s. Money was flung at farmers to drain wetlands, turn meadowland into arable, install larger milking premises, increase the size of herds and so forth.

There were big subsidies on breeding ewes; farms that already had a flock increased its size fourfold, tenfold and farms without sheep soon had a sizeable flock. The method of payment was indirectly responsible for the spread of Foot and Mouth Disease in 2001. Hill farmers received large amounts of grants and subsidies which led to serious overstocking of sheep and cattle to the detriment of the environment.

Over-production, encouraged by subsidies, has not benefited farming, consumers, the environment and still less the Third World. That precious six inches of topsoil all over the world and upon which everyone depends is being put in jeopardy. The main beneficiaries seem to be supermarkets who have been able, and allowed, to squeeze producers all over the world.

The supermarkets want bulk and cheapness. They wanted thousands of beef animals, uniform and as cheaply as possible. They got the Meat and Livestock Commission to standardise grades, to be judged by their shape and fat, which took no account of the quality of the meat or how it was produced. So farmers started keeping Continental breeds which are big, grow quickly and are lean.

As Joanna Biythman says in Shopped, the shocking power of British supermarkets (Fourth Estate, 12.99): 'The super-markets broke up two millennia of cattle breeding because of their need to buy huge quantities of meat at the lowest price and farmers have been forced to dance to their tune. It's a national disaster'.

Four years ago the Competition Commission recommended that action be taken to correct the worst abuses of 'buyer power'. It recommended a code of practice but did not think a voluntary code would be effective and that larger supermarkets should be required by law to comply with a code.

The code that came into being was not effective, mainly because no supplier dared publicly to complain about the powerful supermarkets.

Now the NFU suggests a voluntary code. Is the NFU just naive, foolish or something worse?

It seems that at last the crazy production subsidy system is going to end. Some farmers think the new system will only mean more regulations and red tape. I hope for the best, but fear DEFRA will make a botch of it.

If only we still had dear old Tom Williams, but in his day things were different farming was regarded as important and farmers were still farmers.

Farmers have been forced to dance to the supermarkets' tune ...it's a national disaster' says author Joanna Biythman

from THE COUNTRYMAN, SEPTEMBER 2004

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