For those celebrating Brexit as a way to push for freer markets, be aware that there is going to be a fight over this. This is from a Financial Times piece arguing that the UK must ensure that its agriculture industry continues to receive subsidies:
Some free market thinkers believe Britain’s departure from the CAP [the EU’s Common Agricultural Policy] is a golden opportunity to scale back — and even end — agricultural subsidies altogether. They believe the CAP has been hugely distortive because farmers are granted funds according to how much they produce. British farming businesses have therefore been unwilling to innovate, leaving agricultural productivity in the UK lagging well behind that of the US, for example.
Proponents of deep cuts in subsidy also believe they are a sine qua non if Britain is to forge new trade deals with non-EU states. The EU is so heavily committed to agricultural protectionism — imposing tariff barriers on outsiders while subsidising its own farmers — that its ability to sign trade agreements with developing nations has long been restricted. If the UK adopts a different approach, opening up its markets to food exports from, say, Commonwealth nations, it could gain significant new access for UK companies looking to sell services.
Politicians should tread carefully, however. It is in Britain’s interest to maintain a strong farming industry at home and no government should take risks on food security. Farming is an uncertain profession and one that is increasingly exposed to the challenges posed by climate change. That is why most developed countries, whether inside the EU or not, maintain public funding for farming communities.
The right course for Britain is to replace the CAP with a smarter and more innovative system of public support. Instead of subsiding food production, the UK should look to adopt a system of highly specific direct transfers. Future UK governments should, for example, put far more emphasis on paying farmers to tackle specific environmental problems; or to boost training and skills in the workplace; or to invest in research and development projects that boost productivity.
It’s amazing how much effort goes into finding new and “innovative” ways for governments to take taxpayer money and give it to the agriculture industry. No doubt there are better and worse ways to provide that money, and the EU Common Agricultural Policy could be improved, but Brexit offers an opportunity to go beyond the incremental changes suggested above for farm subsidies. That’s why the next few months and years are such an important time for the future of UK policy: There’s a chance to move strongly in the direction of free markets, in agriculture and other sectors. But this article makes clear that there will be people pushing back, and making questionable arguments about “food security,” so it’s important to engage now, while policies are still being decided.
