The Common Agricultural Policy (CAP) is the EU’s largest and oldest policy, absorbing nearly 40 per cent of its budget.
And, as even the most zealous Europhiles would admit, it is one of its most disastrous.
Over the last 40 years, CAP has focused on the interests of producers, raising food prices for consumers, distorting markets, and preventing the UK from doing advantageous trade deals.
While we are in the EU, 87 per cent of UK farming income comes from subsidies – a perverse and unsustainable state of affairs, which has significantly reduced the productivity of Britain’s farmers.
Leaving the EU allows us to think again about agricultural policy from first principles, and to ask what it is that government and the taxpayer should fund farmers to do.
In a report published today, Policy Exchange argues that the primary goal of a new British Agricultural Policy should be to support public goods and preserve high standards of environmental protection, food safety, and animal welfare.
The starting point for policy reform must be the consumer. The EU’s historic reluctance to open up trade in food products has repeatedly stymied trade deals and led to higher prices for consumers. Once the UK leaves, we should unilaterally phase out tariffs that increase consumer food prices.
Food prices are a key issue for 90 per cent of British shoppers, and when they are artificially high, they have the biggest impact on the poorest households. With no tariff barriers, we can also support producers in developing countries, who are unfairly locked out of the EU market at the moment.
Withdrawing from CAP offers a once in a generation chance to reform Britain’s environmental policy as well and ensure that we leave the environment better than we found it.
Subsidies for production should be phased out over five years from 2020, and replaced with a “Payments for Ecosystem” approach that rewards farmers and landowners for protecting public goods. This includes promoting biodiversity and helping to prevent floods.
One of the many nonsenses of CAP has been that the EU took responsibility for agriculture, while member states kept responsibility for forestry. This prevented us from having a truly joined-up land management strategy. Freed from CAP, we could – and should – reward farmers for things like tree planting, which will help mitigate our carbon emissions.
Who would have thought that one of the advantages of Brexit would be that we could plant more trees?
Some of the money formerly spent on subsidies should be invested in developing industrial strategies for rural areas. This might include supporting research and development that would help the UK to become a world leader in agritech. We could also improve the connectivity of rural workers and businesses with the wider economy, and encourage them to diversify into tourism or environmental protection.
Meanwhile, we should transpose key EU environmental directives on water quality and habitats into British law, to ensure that we retain these vital protections.
A British Agricultural Policy should therefore give proper emphasis on consumer interests, address the sector’s poor productivity, and transform wider economic and environmental outcomes. What’s not to like?