New Zealand model may be the way ahead for UK
With the demise of the common agricultural policy (CAP) moving closer – albeit glacially slowly – and no future plan for farming support, there has been a suggestion that the UK government might emulate their New Zealand counterparts who in 1984, in one drastic move removed all farm subsidies.
This week a leading economist with AHDB, James Webster, having looked at the possibility, has suggested that while a move in farm policy is on the cards for agriculture in this country and lessons can be learned from the major shift in policy in New Zealand, full comparisons are difficult to make.
Not only is there the difference between a sparsely populated rural country (just over three million people) and this country, of more than 65 million, but the New Zealanders depend almost totally on export markets for their meat and milk products, contrasting with the very mixed output from UK farms, the majority of which is consumed at home.
In 1984, thanks largely to market support, there were almost 70 million sheep in New Zealand but they were costing the government many millions of dollars. Support was also provided in subsidised fertilisers, sprays and infrastructure such as irrigation systems.
0 Farming in New Zealand changed overnight
The newly elected Labour government decided this was unsustainable and within months all public financial support had gone. Land prices fell – taking almost two decades to recover – and 10 per cent of all farms were reckoned to be in a “critical financial” state.
One result from this latter cut back was fertiliser usage dropped by more than 50 per cent in the following five years.
In terms of stock numbers, 20 million sheep went off farms in the following five years – a reduction in numbers which has continued to this day.
But as Webster points out, other sectors blossomed in the post-subsidy era after farmers learned to drive out costs and make do and mend. Additionally new enterprises such as wine production and fruit growing were started
The shift from support also sharpened up the New Zealander’s export market with items such as sales of butter doubling in the following two decades. But perhaps most significantly, the NZ government devalued its currency and this triggered export sales.
Webster points out that the UK has already experienced a significant devaluation of its currency since the Brexit vote and this should help export farm and other produce on to the world stage
But he believes that the transition to a new policy – whatever it is – will be “challenging”.
“In order for the UK agriculture industry to be successful post-brexit there will need to be a focus on efficiency and streamlining.
“Agriculture operates most efficiently when decisions are based on actual market returns.
“Fundamentally, success for UK agriculture postbrexit will come from the same school of thought as it did in New Zealand – efficient, market-led production.”