‘Powerful message’ for farming

LOOKING AT the implications of CAP reform, Richard King said that the although the new Basic Payment Scheme was much more complex than the current Single Farm Payment Scheme, farmers would learn to cope with it, writes Ewan Pate

The reform was not radical in the same way as the MacSharry reforms of the 1990s and the Fischler reforms of the early 2000s had been.

“The level of support, or lack of it, will however accelerate business change, especially on hill and livestock farms in Scotland and Wales.

“Adopting low- cost production systems would mean changes in purchasing habits which would have a knock-on effect on the supply trade.

“The new BPS has been described as a ‘dog’s breakfast’ because so many different bodies have been involved in setting farm policy,” said Mr King.

“Remember, funding for the BPS lasts only until 2019. It might be rolled on for a year or two after that, but that can’t be guaranteed.

“There is a review of CAP scheduled for 2018, with negotiations likely to start in 2017.

“Also there will be a new EU Commission in place from November this year, and possibly a new Farm Commissioner with different ideas.”

The best guess was that there would be direct payments after 2019, but with funds trimmed and the concept of “greening measures” likely to be reinforced.

“But we also have to ask if the UK will still be in the EU, or will we be discussing a British Agricultural Policy?

“Scotland’s relationship with the EU and the UK will also be very relevant,” added Mr King.

Whatever the support structure, there would be a need for the UK to improve its competitiveness globally and within Europe. Currently it was a “sorry picture” when a measure known as Total Factor Productivity (TFP) was used.

“Essentially this represented the proportion of growth which could be accounted for by technological change, economies of scale, switching to more productive activities and policy changes.

“Since 1992 the UK had virtually flatlined, while countries such as Russia, China, Brazil and India had shot ahead — improving their TFP by around 80%.

“To an extent that is understandable because farming in these countries was relatively underdeveloped — but that is hardly the case with the US, with a near 40% increase,” said Mr King.

Even with more comparable countries within the EU, the UK really appears to be struggling to keep up.

“Italy and Spain have shown 80% increases, largely by moving to high value wine and vegetable production.

“France and Germany have made impressive progress too, mostly by farm restructuring and more efficient use of inputs.

“According to research conducted by the United States Department of Agriculture , the key driver of TFP is a country’s capacity for agricultural research and development.

“Countries capable of producing a steady stream of new technologies or capturing technologies developed abroad and adapting them for local farming systems generally achieve higher growth rates in agricultural TFP.

“There is a powerful message there,” Mr King concluded.