As the Agriculture Bill makes its way through the Parliamentary process, the long term consequences of the proposed legislation remain unclear and there is considerable detail that is missing. The Bill is currently at Committee Stage and this article was written before the series of debates held at that particular stage. Is the Agriculture Bill going to be the biggest missed-opportunity to reform the industry in a century? And what does it really say about those common themes that keep being raised by industry and during Parliamentary debates? Read on to find out more
So, what does the Agriculture Bill say about…
Once the Bill is enacted into law, it will give the Secretary of State the power to give financial assistance for “productivity outcomes”. The policy paper updated on 14 September 2018 states that the intention is to provide support to boost innovation and improve investment in agricultural equipment, technology and associated infrastructure (together widely recognised as key to increasing productivity). The availability of suitable infrastructure is identified by the latest report from the Institute of Economic Affairs as being one of the blocks to increased (or even full) automation. Michael Gove further stated during the Second Reading that the Bill would provide a platform for increased productivity. This new technology is, of course, particularly necessary in the fruit and vegetable sectors, which have been battling against the availability of seasonal and migrant workers since before the Brexit referendum. It is difficult to see how these boosts to productivity would otherwise come to fruition without direct support and commitment from the Government.
We have commented before that there have been numerous warnings in relation to the UK’s productivity levels in the agriculture sector and how a revolution is needed to capitalise on the changes necessitated by Brexit. The Agriculture Bill is a real opportunity to focus on new technologies and innovation; to make the UK a leader in this would result in the UK, as early adopters, reaping the economic and environmental benefits (IEA Report: The Effect of Innovation in Agriculture on the Environment).
The Bill also includes powers to collect and share data from “Farm to Fork” producers and it is suggested by the government that this will cause an increase in productivity by helping to manage risk and volatility of markets. Again, more detail is needed to see how this will work in practice (and to see how it fits together with the current GDPR regime!).
It is clear that the government’s focus is on rewarding so-called “public good” and rewarding producers better for environmental measures. This in turn, so says Mr Gove, will allow farmers to change their business models to take advantage of the changes brought about by the Bill. How this will work in practice is unclear, but the measures mentioned as being “rewarded” include public access to the countryside and measures to reduce flood risks.
However, the Environmental Audit Committee’s government response to its report “The Government’s 25 Year Plan for the Environment” (published on 6 November 2018) raised concerns that there was no formal commitment to many environmental provisions in the UK Withdrawal Bill from the EU. Mary Creagh MP commented that the “Governments woolly response makes no firm commitments on the future governance of the environment after Brexit, which is of great concern, given that the Agriculture Bill is making its way through Parliament”. This indicates that there may be matters not covered by the Agriculture Bill that the committee thinks should be, and also shows that there is a lack of detail as to the environmental measures that farmers will be encouraged to put in place or maintain post-Brexit.
Moreover, it is not clear how the conflicting objectives of increasing productivity whilst also increasing environmental protection can be achieved. One possible consequence is that this will accelerate a trend towards two types of farming: that which is most sympathetic to the environment and that where production is maximised.
This is a theme of common concern from all angles of the industry, particularly since the NFU estimated that the UK’s own produce would run out within nine months if the nation was only fed from home-grown food, based on seasonal growth. Whilst Mr Gove confirmed during the Second Reading that food production and productivity were at the heart of the Bill, little is mentioned about food security and securing production of food in the UK. Instead, Mr Gove focussed on trading relationships that could be forged following the UK’s departure from the EU. This should be an area of significant concern for the country as a whole, not just the industry itself.
One interesting point to come out of the Bill is the introduction of powers of the Secretary of State to tackle unfair trading practices (i.e. contractual provisions and pricing) in relation to the first purchase of any product directly from a farmer. The Grocery Code Adjudicator will remain in place and will regulate any unfair practices of the large supermarkets, but how these new powers will be exercised is again as yet unclear. Whether it will help the dairy industry, for example, remains to be seen.
The Bill makes provision for the payment of lump sums in lieu of direct payments for two or more years of the agricultural transition period. It is suggested that this will encourage aging farmers to retire to make way for the next generation and to release land for new entrants. However, it is arguable that this provision alone will not facilitate this necessary change – will it not just lead to more contract farming agreements with the aging farmers retaining their land to secure tax benefits on death and the lifestyle that they enjoy? If so, many of these contracting agreements will need to focus on productivity rather than environmental protection and therefore this may have the opposite effect to what Mr Gove is intending.
The MP’s debate at the Second Reading highlighted concerns specifically in relation to the key areas mentioned above. We will have to wait and see whether the result of this Agriculture Bill causes the UK to fall further behind in productivity levels compared to major competitor countries (such as the USA and the Netherlands), the impact on food security and whether a two-tier system of agriculture is created.
If you have any queries on this or any related agricultural matter please contact Louisa Butcher on Louisa.Butcher@mills-reeve.com or Tel: +(44)(0)1603 693453 (Ext 3453).