26 September 2022

Scrapping the post-Brexit farm scheme would be a big mistake


Reports that the Government is poised to scrap its Environmental Land Management Scheme (ELMS) are concerning for a number of reasons.

By way of background, ELMS essentially replaces the current system of paying farmers to produce food on their land with a system which would pay them to provide space for native species, such as birds and mice, and also to absorb carbon in order to help meet our Net Zero target. Instead of this, the Government now looks set to pay landowners a yearly sum for each acre of land they use.

Changing course now would be to squander the Brexit dividend of leaving the EU’s ghastly Common Agricultural Policy, which subsidised farmers to produce food. The CAP was a triple whammy: wasteful, inefficient and bad for the environment. The ELMS represented a chance to pursue a trailblazing, environmentally-friendly farming policy that ministers could sell as a Brexit dividend.

The mooted replacement, however, will simply mean paying landowners money regardless of what they do with their land. That strikes me as both inefficient and manifestly unfair, rewarding big landowners with taxpayer handouts at a time when the money could be far better spent elsewhere.

Unfortunately there is a great deal of political pressure to scrap ELMS, helped along by scare stories whipped up by the National Farmers Union (NFU) about food security. 

Rather than changing tack on a scheme that took years to put together, with careful input from farmers and environmental groups, the Government should stick to its ground and, if anything, go further.

A new approach

It would be entirely in keeping with Liz Truss’ pro-trade outlook to take a much less protectionist approach to farming, by abolishing subsidies, tariffs and quotas on our agricultural products. All of these measures protect our farmers from foreign competition, dampening incentives to innovate and become more productive. A more free market approach also means giving consumers more choice and lower prices, all of which would be particularly important when ordinary households are feeling the pinch.

Agricultural protectionism is far from a UK-only problem. Even relatively open economies still have very protectionist policies when it comes to farming. Rather than giving in to the subsidists, the Government should use its independent trade policy to push for global reforms at the WTO, while also encouraging greater liberalisation with countries with whom we negotiate trade deals.

Before our rural readers howl in protest, I’m not suggesting we simply abandon farmers. They should be helped to adapt to a more competitive environment with grants and allowances for productivity-boosting new equipment and tech. Bear in mind too that a more open international economy also means more markets for them to sell into, of course. The reforms to immigration rules to allow more seasonal workers to come here are also a welcome step – and worth remembering that this is not about permanent settlement, but time-limited visas for a specific sector.

For farmers who really can’t compete in a less subsidised, protected economy, there are plenty of other ways the Government can offer help: landowners can be paid to rewild their land, for instance, or sell it to help build important infrastructure such as railways, solar farms, wind turbines, nuclear power plants and, of course, homes.

As we’ve seen with the NFU’s opposition to ELMS, a less protectionist approach always leads to scare stories about food security. Those should be taken with a pinch of salt. Pro-competition reforms would be about making British farming more productive, efficient and environmentally friendly. What is more, the UK would be able to source food from all over the world while ensuring our supply chains are more resilient.

I am under no illusions as to the political difficulties of such an approach, given the strength of opposition we saw to a potential US trade deal, with hysterical stories about ‘chlorine chicken’ and so on. Truss has proven in her first two weeks that she is prepared to do things that are unpopular for the long term good of the country – keeping ELMS and embracing free market farming would be another step in the right direction.

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Ben Ramanauskas is a research economist at Oxford University.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.