Lessons learned from Climate Policy

Today, I was interested to learn from Sky News that the UK is under considerable threat from climate change and will need to evolve its policy towards the farming sector over the course of the next decade.

In my opinion, climate change is a broader issue which may, in some circumstances consist of a number of sub-challenges for agricultural policy, one faced by multiple governments around the world, not just the UK.

Over the past two years, I have researched and blogged about this topic and what I have discovered is that at the heart of the evolution that is required is the unrequited enthusiasm of the young farmer.

"It is urgent to change our view of agriculture and recognize that “the farmer is an entrepreneur like any other."

Now, the assessment of agriculture here, really resonated for one anecdotal reason in particular: because according to my mother, my grandfather on my father's side (my father's father) was a diligent farmer himself, who was able to support his son and was able to create wealth through entrepreneurial activity and opportunity.

Without a shadow of a doubt, I am aiming to apply recent knowledge that I have learned from the experience of Brexit, to, where possible, understand the circumstances which parts of Africa are facing, especially in countries where farming is the predominant undertaking, i.e. where over 70% of the rural economy is farmed land (those who live outside of the major cities).

What knowledge do I mean? Well, you might be aware of Michael Gove, who remains the key person in charge of negotiating the Common Agricultural Policy (CAP) for DEFRA as the department undergoes significant changes in light of the UK's Exit from the European Union. 

Gove had a significant issue on his hands.

The EU's CAP is widely believed to be inefficient and uncompetitive because it subsidises large landowners to the tune of some £3bn, an amount which is thought to be way to steep for DEFRA to fund annually.

This is one reason why CAP has been effectively disregarded as inefficient. The subsidy rewards land ownership and not efficient land use. But because land use on its own does not always translate to optimal product, there are barriers created. Younger farmers, who have incentives to be more productive, find it difficult to enter the industry for produce because land becomes scarce. Hence, the lack of competitiveness.

2) Now, the lesson I learned today is drawn from this example - according to the NEPAD report I referenced above:

“The absence of a policy for financing agriculture — aside from ad hoc fertiliser subsidies — combined with episodic development aid actions are the two main barriers to scaling up, i.e. building sustainable institutions and delivering technical and financial services adapted to suit the diversity of the agricultural sector as a whole. Two palliatives are proposed to remedy this situation: i) policies to provide subsidies for equipment, fertilisers and seed; states are often not prepared to provide the requisite financial backing even in the face of demonstrable impacts and profitability; ii) involvement by states acting as economic agents and the establishment of activities supported artificially by donors, thereby disrupting the construction of a true factor market based on the private sector.”

I couldn’t agree more with this view. It’s a very good prescription for what I perceive to be (with limited knowledge of the nuances) a similar circumstance. The NEPAD report highlights the need for barriers to be lifted, which is a circumstance that generally aligns with the reasons why CAP is out of favour.

To the naked eye, it seems CAP's policy prescription was indeed flawed.

Subsidising land ownership is just a bad idea anyway. It’s the equivalent of providing a car to an insuree when they don’t need the car.

Let’s hope DEFRA are taking notes from NEPAD to ensure policy is adequately aligned with the right sort of incentives in future. i.e. the removal of barriers to agricultural entrepreneurship.