Forget how we got to this place, the consensus is that it’s not the best place possible and so Brexit gives the UK a better opportunity to come up with a better way of spending taxpayers’ money on land management.
Michael Gove has latched on to the mantra of ‘Public money for public goods’ as the guiding principle for reform of agricultural policy.
What are public goods? Well, they are quite like a common good or the public interest but for an economist (which I am not) the term public good means something that can’t be controlled by individuals for their own exclusive use and which isn’t used up if one individual uses it.
A lamb chop is not a public good because you can buy it and keep it for yourself, and once you’ve eaten it it doesn’t exist for anyone else to eat (btw I had some delicious lamb chops in Iceland). In contrast, a Skylark’s song is a public good because it is very difficult to control to one’s own adantage and if you listen to it that doesn’t stop me and my friends listening to it too.
If you believe in the power of the free market (and we all do to some extent) then you can see that a free market in lamb chops will tend to ensure that lamb chops are available (because people will buy them) and competition between suppliers will, in theory (and in practice often) bring the price down from what suppliers might like to charge because there are other suppliers available.
There is no market in Skylark song and although it is vaguely possible to think how one could create one in theory it is notable that no-one has bothered trying! And that’s because Skylark song is a public good.
The thing that makes agriculture special, and sets it apart from other industries (almost all of them) is that farming produces loads of public goods – such as wildlife, water quality, flood management, carbon storage and nice views which are very valuable. We could even put a value on them in theory, but this has proved difficult in practice. How much is it worth to you to hear a Skylark sing? And does that figure change if Skylarks are common or if there is only one male left in your neighbourhood? And does that figure change if the Skylark is too far away for you to travel to hear it but others can?
And not only does agriculture produce lots of public goods (sometimes well and sometimes badly) but there is sometimes (often) a conflict between producing the market goods and the public goods.
If you can produce more lamb chops by improving your pasture then you might well do that, because you get the money for more lamb chops even though you may have reduced Skylark numbers. And you may have reduced that natural beauty of the landscape by removing flower-rich meadows. You may also have increased flood risk downstream by reducing water retention of your fields. That may have a big cost to the public, but not to you – they get the floods, you get the increased income from lamb chops. The reason agriculture is special in these debates is that arguably no other industry shows the conflict between market and public goods so starkly.
And so, depending a bit on your political ideology, you may well think that farmers should live with the free market when flogging their lamb chops and that there is no room for market distorting, inefficiency-maintaining, income support and that the money should be spent on encouraging the delivery of public goods such as Skylark song and flood alleviation where there is currently a market failure.
That, in essence, is where Michael Gove is going with the Agriculture Bill. It’s actually where everyone has been going in their heads for years, but unshackled from the EU CAP, we now have the opportunity to move quickly in this direction without having to move at the speed of a group of 27 other countries with competing interests.
Next week I’ll talk more about the challenges of delivering public goods through public policy and I’ll give you a list of things that I don’t understand at the moment in the hope that others can fill in the gaps.
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Very simple analogy that anyone would understand.
Thank you once again.
Working on an article regarding the ‘NO Change’ in Forestry. Living in the Eden catchment and witnessing some amazing drainage of large areas [1000s of acres!] for replanting seems to suggest forestry has not done one thing since Carlisle flooded twice costing £billions. Aerial photographs show the 20 meter drains heading straight down hill with no real regard for soil erosion. Sure they want to break the iron pan but wind blow [nature’s way] has opened that up already. Again WE are paying for this work in FC or private with grants SO Why NO Change?
Hi Mark, I am interested in your comment. “farming produces loads of public goods – such as wildlife, water quality, flood management, carbon storage and nice views which are very valuable”. I could take issue with all of those to some extent (do they produce nice views? Matter of opinion I think), but I would be especially interested to understand how farmers are required to produce the public goods of water quality, carbon storage and flood alleviation. My understanding of the science is that all three of these public goods are produced whether farmers are there or not and almost certainly produced much better when farmers are absent.
“Almost certainly produced much better”
Spot on – it’s a mystery why payments are proffered for not polluting water, for not eroding soil, for not destroying soil organic matter, for not compacting soil. Next off we’ll be paying for them not to produce food, and a land grab will start all over again in a race to become the most successful non-producer of food in the non-farming land, so we may once again increase our dependence on imported food produced elsewhere by commodity producers who pollute, erode, plough and compact their foreign lands while we bask in a virtuous green glow of deluded satisfaction that we have regained our leadership of the neo-colonial world
It would perhaps be clearer to state that farming can potentially provide (or if you prefer, maintain) these public goods – or it can fail to do so. The point, surely, is that the manner in which the land is farmed has a strong influence on wildlife, carbon storage, soil loss (or retention), water quality and the rate of run-off of water into our river systems. The intensification of farming that has occurred since the second world war has meant that in at least some of these areas farming has performed very poorly – wildlife has declined dramatically, for example, as a consequence of the drive for bigger crop and livestock yields. The question we are now asking is can we re-direct farming so that it ‘produces’ more skylarks, turtle doves, hares, insects and wildflowers and performs better at protecting our water resources and so on? Broadly speaking there are three options – simply stop subsidising farmers (but that may result in ‘efficient’ intensive farmers elbowing aside those that still – by accident or design – do find a bit of space for nature on their land); carry on subsidising farming exactly as before (but we have seen where that has led) or pay the subsidy specifically and conditionally for maintaining/providing/enhancing the public goods we wish to promote. Whichever course of action we take in the end farming will continue to have a huge influence on wildlife, hydrology, carbon storage etc simply by virtue of the huge proportion of our land surface that is dedicated to it.
Except, of course, that markets don’t always work – and food is an area where the idea of a free and open market is frankly laughable.
First, both Europe and North America massively subsidise food production – so removing subsidy doesn’t produce a level playing field.
Second, there is an extreme imbalance between seller and buyer – many small units on the one hand, huge aggressive stock-market driven combines on the other. And it isn’t just us – more seriously, the developed users of products like coffee and cocoa have ensured there is always oversuply , depressing prices to some of the poorest farmers in the world.
And finally, and the real killer, things grow faster further south – as long as you have water – so northern countries are never going to compete with countries like Morocco despite transport costs.
So we need to think long and hard what we want to produce in this country – because at one level, ensuring we don’t starve, there is an element of public goods even in the directly marketable part of agriculture.
Having said that, the ‘we own the countryside and food production is its prime objective’ must be challenged far more vigorously – not least because public goods can be negative not just positive – and the collateral damage to public goods at the moment probably actually equals the subsidies – we are playing with £7 billion not £.32 billion, with savings to be made equal to the subsidy bill.
Well you’ve whetted the appetite with talk of nice lamb chops, which I like, but I still await whether you think this Bill will sufficiently oriented public money towards public goods. We’e all become so intoxicated with the removal of area based payments (though the transition period can be extend not once, but many times) which is a very big hurrah and duty to the public purse, that actually how to ensure the Bill lays foundations for more fit for purpose and well funded agri-environment schemes seems to have become a side show. Are we really looking at a big fat greening fund? Bill makes no provision for that. Will new schemes deliver proper integrated farming and environment outcomes? Bill makes no provision for that. What other environmental perversities will pervade the countryside when farmers fall back on the markets and ditch schemes?
Oh absolutely, if there is one success of production subsidies, where farmers were paid to produce food no one wanted, it was the huge protection this system provided for the wildlife and environment of other countries.
“It would perhaps be clearer to state that farming can potentially provide (or if you prefer, maintain)”. With respect, I am not sure that is clearer. What exactly is it that farmers do to ‘maintain’ carbon storage, water quality or flood alleviation? As far as I can tell, all those public goods are delivered far better without them. I think it is quite a dangerous tactic to pretend that we need farmers to provide these public goods. You can fool some of the public some of the time….etc. When the penny drops with the public that they could get all these public goods for nothing and instead spend the money on the NHS, you could damage any chance of continuing public subsidies for the environment in the long term.
Neil – have you read my uplands essay in Chris Packham’s Manifesto for Wildlife? http://www.chrispackham.co.uk/a-peoples-manifesto-for-wildlife
Nobody is pretending what you seem to think someone is pretending – or at least no-one here is.
The point of the post on which you are commenting is that farming is very unusual as an industry in that it produces public goods such as the view unlike the steel industry, or the fashion industry. Sometimes it produces lots of public goods, sometimes it does far less well – it should do better. Did you notice the bit where I wrote ‘sometimes well and sometimes badly’? But the point is, that the farmer doesn’t get paid for public goods and so they are likely to be diminished unless the state steps in to ensure that they are maintained. Do you want to argue with that?
My principal fear is that this takes place in an economic/political context of ea Brexit-induced squeeze on public spending on top of the existing ‘austerity’ mindset. Not only is it likely that subsidies for food production will be cut, but there is little prospect of a real increase in incentives for genuinely eco-friendly farming practices.
The result will be a move towards more marketisation of the farming sector, with the sort of results that New Zealand experienced following the unleashing of the ‘free market’ there in the late 80s-early 90s. This caused a major re-orientation of their farm sector towards diary production, such that NZ is now the largest diary exporter in the world. It also meant the elimination of many hundreds of small family farms in favour of agro-business combines. This in itself is a move in the wrong direction for natuire, in that what we desperately need is a greater connection of people and land, not further enclosures, dispossession and alienation.
The more direct ecological impacts have been ameliorated by environmental protection legislation,but a peer-reviewed paper of 2005 concluded that the reforms had resulted in increased grazing pressure and waterway pollution. A recent (2018) paper confirms that this has continued, with intensification leading to habitat loss, silting of waterways and increased pesticide and nitrate/nitrite pollution.
We are going to have to be vigilant to avoid this kind of scenario and very active in pressing government not to confuse intensive food production with true ‘public goods’.
Michael – true. And you are getting to where I will be getting in further posts in this series.
Be careful what you ask for so righteously less subsidies might well mean even bigger drive to intensification get away from thinking farmers just splash chemicals on for fun,they are actually quite expensive.Probably previous generations spent 50% of salary on food,today’s family’s probably only spend 20% and have a much more varied diet in the bargain.
It is obviously not all loss.
How ironic to have a wildlife demonstration on the biggest barren area for wildlife created in the UK.Much less wildlife there than even on farms.
At the end of it all even conservationists if starving because as the UK is about 60% self sufficient and should not rely on imports forever those high principles would soon disappear.
How strange even if is to hear praise about the levels after all the awful criticism there has been in the past.
Dennis – there are going to be no subsidies. Please write to Mr Gove if you want them to continue – good luck with that.
No profitable Uk agriculture, more intensification less wildlife management; good luck with that one.