Agribusiness post Brexit should be a concern to all of us not just the farming community…

The sands of the Brexit egg timer are running down on whether we have a hard or soft boiled outcome, either way, the industry which will be most scrambled by the outcome is agri food. Approximately half of the EU budget has historically been spent on subsidising this industry, almost every farm on every road from Aughnacloy to Athens has been in receipt of a cheque as well as tariff protections which have kept them in business for living memory.

This matters in NI as agri food is our biggest employer. Not everyone has a direct attachment to the land but when you take in food processing, packaging, transport and DAERA it is a huge part of our economy. The large number of trucks leaving NI each day laden with food exports means that there is a lot available to bring goods back in cheaply. The lorries taking out Moy Park’s turkeys at Christmas bring back chocolate eggs bulky and fragile and expensive to import at Easter. Agri food has a major impact on our transport logistics and the cost of goods here.

The processing companies are largely foreign owned and to a considerable degree foreign staffed, they have no reason to be loyal to NI plc post-Brexit and will be free to go where the euro or dollar takes them.

How this is managed post-Brexit should be of interest to us all not just the farming community. None of us is any more than a few miles from the countryside, all of us buy goods imported on returning food lorries. Many of us will have businesses and jobs linked in some way to the industry. If any subsidies continue we will all be paying them, shouldn’t we have  some input?

If we don’t all engage the only lobbying being done will be from big farm enterprises and possibly the bank’s committed to them. They would like a production based subsidy to encourage output. This might maintain the processing jobs but would it be a return to butter mountains and perhaps Baileys lakes if not wine lakes here.How would this work in a free trade situation can we afford to subsidise other countries food Do we want to encourage intensification and consolidation of our farms into ever larger units would this help the environment.  Do we want to maintain our rural patchwork landscape? Do we want to tie up our limited land area in food production or leave some room for diversification into amenities for all?

Would quality and safety of our food be better or worse off with production subsidies? Would small family farms be more or less likely to be swallowed up? We all need to be careful which basket we put these eggs in.

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  • John

    Agriculture is a business like any other, all business entities exist on the basis of making a profit. Some farmers pay significant tax bills each year and other farmers pay little or no tax each year. Tax is paid only on profit. Is it possible that some farmers have become addicted to farming for subsidies rather than profit.

  • CB

    One of the few possible upsides of the Brexit debacle is the reality check which is coming for the subsidy junkies in the farming sector.

  • Biomass

    BREXIT & Renewables.

    A very thoughtful article. Buried deep within “bad news” about BREXIT, last week was publication on the DfE website – but with no communication with the affected 1,000 small businesses – of the Department’s difficulty in negotiating with the EU Commission about a further change in RHI rebate administration. The Department says that it intends to run on the emergency 2017 Regulations beyond March 2018 when they expire until March 2019. Simples! No explaining to the EU why DfE messed up in 2015 with one set of regulatory changes and again in 2017 with the backgroud to another. The Renewable Heat Association first sought to have the 2017 Regulations (that included retrospective legislation) reviewed in March, 2017. The substantive hearing is scheduled for October.

    Similarities between the RHANI challenge and the much earlier Friends’ of the Earth and Breyer Group cases against DECC (involving retrospective legislation) , have already been drawn. That the 20 year projected overspend included schemes which DETI/DfE failed to discuss with the Commission in 2015 is a given. The rationale, purpose and fairness of the retrospective 2017 Regulations must now be in question.

    Industry experts from CAFRE have stated that without an incentive, renewable heating makes no sense. Only a brave man would explain that to the banks or to the small businesses who lent/borrowed hundreds of millions of pounds against a government guaranteed, 20-year, index-linked incentive scheme.

  • The worm!

    “Is it possible that some farmers have become addicted to farming for subsidies rather than profit.”

    It’s not “possible”, it is now policy!

    Greenmount Hill Farm now teaches it’s students how to manage a hill farm to maximise drawdown of subsidy. All management practices are prioritised towards this aim.

    This is no way for any industry to move forward.

  • William Kinmont

    i think the term a bit unfair most would prefere to be subsidy free the system simply hasnt allowed them. It has stagnated the industry .

  • Fred Jensen

    Serious question, why don’t we just end all cross border agri-trade? Will cause way too much trouble to try to keep milk and beef moving back and forth across. I don’t see the point. I walk into my M&S in Dublin and what do i see, milk from NI? How did that get there? Build duplicate facilities each side of the border, then simply see what happens. Farmers in NI voted for BRexit, by and large, so let them focus only on their beloved GB homeland and compete with cheap imports. If the British want to buy our top quality Irish beef they’ll just have to pay the tariff.

  • lizmcneill

    Consolidation and industrialisation of small farms has been detrimental to the environment to date.

  • Reader

    Fred Jensen: If the British want to buy our top quality Irish beef they’ll just have to pay the tariff.
    Setting aside the rest of your post, if the British want to buy Irish beef they won’t put a tariff on it.

  • The worm!

    Sometimes so, sometimes not, it pretty much depends on the circumstances surrounding the takeover of the smallholding.

  • Oggins

    Beggars belief…

    Like teaching how to sign on and claim benefits at school

  • William Kinmont

    Not much good for innovation and progress. Hopefully some new ideas might occur once this stagnation is removed.

  • William Kinmont

    It is very difficult for anyone with new ideas or even a youthfull work ethic. Those that have inherited a huge historic subsidy entitlement can be slovenly and repeat the same mistakes anually and yet outcompete for resources.
    I would argue for NI farming is not just any other buisiness it is our main primary industry on which many others depend. Taking the view of natural selection and let the big guys take over will change our environment. We all should input on what future we want for it.

  • Skibo

    Where did you get that little pearl of information? Greenmount tries to maximise production rates and minimise inputs.
    Generally the subsidies you refer to are area based now and are in the process of equalising across the country. the only way of maximising the area based payments is through the Young Farmer process.

  • Skibo

    Did you believe the Worm without some actual facts?

  • Skibo

    I suspect you are not from an farming background. If you were, you would realise that even with subsidies, farming probably has the lowest payment per hour in the North, bar milk and a year or so ago it was costing more to produce it than the farmers were getting paid.

  • William Kinmont

    1st hand experience Im afraid

  • William Kinmont

    Have you seen the new sheep house at the hill farm. minmising inputs by building a million pound plus house for sheep carefully bred for extensive outdoor survival.
    Agree though re the area based payments being a step in the right direction though the ability of young farmer scheme to be used simply to boost payments complicates issue. As did the term active farmer which had little legal definition and left the interpretation as to what was considered farming in subjective hands.

  • William Kinmont

    This has generally been the case for some decades production costs being greater than finished product. Subsidies, building sites and asset appreciation has been what have carried farming through. All 3 are much less certain now. What do you prepose might replace them ? Should we replace them.?
    CB might not be from a farming background the view he takes should be a lesson as to how some currently view agriculture ,why should they subsidise us when EU is going to continue subsidising cheap food for us.

  • The worm!

    “Where did you get that little pearl of information?”

    Errrr, Greenmount Hill Farm!

  • The worm!

    That oul nonsense simply doesn’t wash any more. Wait until you see some of the youngsters coming out of McDonalds or Pizza Hut after a shift working in it and see if they hop in to as grand a vehicle as the young farmers sitting out in the car park!

  • William Kinmont

    It would make sense for the EU only to subsidise its own food needs and discourage exporting it at less than cost elsewhere.
    The reality is the opposite post brexit the EU will be sending food to us at less than production costs , why would we bother to subsidise our own.

  • The worm!

    Eight hundred and something thousand to be a bit more precise.

    It’s a grand house no doubt, but as you say, what’s been the point in breeding the Blackface for years to maximise hardiness only to stick them in a house!

  • William Kinmont

    Experimenting to see what happens when you combine no inherent disease resistance with intensification.
    Possibly discovering how housing hill flocks will perturbate the generations of hefting process so essential to mountain husbandry.
    I have been told all be it unofficially that the 800k didnt include alot of non building costs.

  • Skibo

    There are no grants for building expensive housing now and any chance of it after Brexit is zero. Tories do not subsidise business.

  • Skibo

    I see the future of Irish farming to be extensification and minimising inputs. That way reducing any requirement to spend your single farm payment to actually farm.

  • CB

    I’m from a rural background with farmers in my family, but didn’t grow up on a farm myself. The dozens of farmers I know aren’t good adverts for the sector, and while you’re welcome to swallow their pleas of poverty I’ll pass, thanks.

    Farmers are conspicuous by their absence from voluntary and community activities in my area, and have been my entire lifetime. They’ve got away with this lack of social solidarity due to their subsidy cocoon, so the reality check might jolt them into being better citizens eventually.

    We live in hope.

  • The worm!

    That’s one area where we would agree surprisingly!

  • Skibo

    legislation requires four wheel drive to pull trailers. Some farmers seem to believe that it is better to pay monthly for vehicles rather than pay the tax man. I wouldn’t be in that category. i believe if you don’t need it , you don’t buy it!

  • William Kinmont

    it is hardly an example of Greenmount teaching the minimising of inputs.

  • The worm!

    But a lot of the hill men, certainly about the Glens, are cutting back on sheep numbers.

    There’s no doubt that there was a lot of good work done at Glenwherry a few decades ago but I get the impression they’re struggling to find a purpose at the minute.

  • William Kinmont

    i agree too . also has environmental and disease/antibiotic use benefits. The sheephouse seems to be the opposite of this.

  • Skibo

    That’s just it, the EU will not be subsidising your food. the tariffs on agricultural products are the highest in order to protect the internal agricultural economy of the country.
    What will happen is food prices will rise till the Government agrees trade deals with countries like USA, Brazil and Argentina. Then watch the decimation of the agricultural industry and the drop in standards of your food but sure as long as big business still make a profit, who cares!

  • Skibo

    That is the process that I believe the EU was in the process of. In changing payments from production to area based and heavily linked to greening, this would be the natural result. Can you see the UK doing the same?

  • William Kinmont

    Difficult to attract many young ones to a life on the hill at least until they have had a go at the rat race first. Though delivering a lamb in the lee of a stone dyke with the sleat on is hard to beat , perhaps i would benefit ftom therapy

  • William Kinmont

    EU do not tariff exports infact sometimes they further subsidise exportation costs. We will import their food that they have subsidised too below cost of production. increased imports from current third countries will also reduce prices. Price of the pound is unkonown factor.
    This will seriously decimate our agrifood industry my point is what way do we cope with this

  • The worm!

    Maybe it was their intention, if it was then they’re being pretty cack handed in the application of it.

    “Greening” is a sick joke and the degree of control being exerted over farm businesses would put the days of the USSR to shame.

  • Skibo

    No it doesn’t. It was simple, especially for all small farms who came under the 15 hectare level.
    Stop with the USSR comparisons, chalk and cheese!

  • Skibo

    If the UK does not have a trade deal, they will have to revert to WTO tariffs. They are set unless agreed at different levels which are then accepted by the WTO. The WTO is a vast organisation compared to the EU.

  • William Kinmont

    i dont swallow those pleas . The protests at prices a few years ago whilst blocking roads with 60k plus tractors was very odd PR.
    My personal beef has been as part of a lost generation unable to competitively farm against those inheriting historic subsidy entitlements.
    your community views interest me too. I also note that the divide in rural communities at least locally is as much more between established residents and incomers as sectarian.
    Im not sure that subsidies are too blame as much as other factors.

  • William Kinmont

    yes more suddenly.

  • The worm!

    You seem to be under the impression that everyone plays by the rules, that’s far from the case.

    The system is much too complex, people who want to buck the system can do it, yet the decent man gets a pasting because he’s an easy target.

    I’ve seen too many instances of both first hand to have any respect for the current system or the instigators of it.

  • William Kinmont

    Some rules once applied locally had the opposite effect on the environment once applied locally. Closed period for slurry spreading . August open because thats a dry month , tell that to those in the north west.Accomidate this environmental protection by pouring millions of tonnes of concrete so we can all rush out and discharge on the same day??

  • The worm!

    The “active farmer” process is a nonsense.

    There are so many different dodges around it being pulled that other than an excuse for employing another pile of DAERA staff, it’s essentially pointless.

  • William Kinmont

    uk will sell out our agrifood industry in any trade deals , its a no brainer for Uk as a whole yet a disaster for NI. There will be trade deals what and who with? but we will certainly be sold off

  • Skibo

    had you spent more time on those family farms you would have realised that the reason they cannot volunteer is there is no 9 to 5 in farming.

  • The worm!

    Precisely!

    Farmers had to sit during one of the driest winters on record and let the tanks fill when the nutrients could have been slowly permeating in to the ground.

    And then it started lashing about three days before the ban ended and didn’t stop for a fortnight.

    Or as you say, look at this past month.

    Indefensible!!!

  • Skibo

    The issue with historical payments is some large farmers were able to build up large historical payments and base them on small amount of hectares. They had two the three times the level of are payment than most farmers while some new farmers were restricted to a minimal payment per hectare.

  • William Kinmont

    The issue was that it was historic activity that determined everyones future.

  • William Kinmont

    i dont know if the reasoning behind the active farmer clause was to maintain money in the main sectors beef, dairy etc because thats where the processing jobs and real value to the economy was or if it was political as these sectors were the only ones interested in lobbying.
    Either way active farmer was a cack handed way of getting round the EU rules on no state prioritising one sector over another. If they had legally defined what was active farming then those sectors in the definition would have been prioritised. By having no definition the whole system became farce.
    My whole debate is should we support certain sectors to maintain the processing jobs yet this means taking public money to produce food for export at a loss and to other countries benefit.

  • William Kinmont

    They still do volunteer and help the community increasingly in severe weather situations we see examples of farmers helping out, especially as state resources to these sorts of things are dwindling.
    Farming is not 9 to 5 little is nowadays serving in mcDonalds isnt , working in a bank isnt. Farmers can be flexible with their hours.
    They are and could be even more of a community resouce. They also as an aging and slightly lonely profession could gain from this also

  • The worm!

    The idea behind the “active farmer” clause, we were told, was that the EU only wanted financial assistance to go to those actively working the land.

    If this was true, well then it’s another abject failure of process as that certainly hasn’t been the outcome.

    As for moving forward, I would certainly like to see the entire support system as it is scrapped and replaced with something much more efficient, simple and flexible probably based around support of product prices. Unfortunately all indications so far are that the existing system will be retained in principle for a number of years yet which is disappointing.

  • The worm!

    True up to a point, but it misses the fact that the farm who built up the “huge historic subsidy entitlement” must have been a pretty well run productive farm in the first place to have done so, therefore unless a big change in management or such like has taken place, they are not likely to be slovenly.

    The counter to that is, if you base payment purely on area, the person who farms that area in a slovenly manner will lift as much money as the person who farms it well. so what incentive is there to be a good farmer?

    However, both these scenarios are in my opinion, proof that the current system of support is not fit for purpose no matter how you tweak it. There are many, many, different ways of running a decent farm, so to try and interfere and control to the degree that is being done at present is never going to be anything other than detrimental for the industry as a whole.

  • John

    The utter madness surrounding RHI is summed up in your last paragraph “without incentive renewable heating makes no sense”. Can we please stop wringing our hands about the plight of banks and borrowers involved in this exercise in raping the public purse.

    This scheme had nothing to do with decreasing operating costs in the business or increasing sales in the business. Effective or efficient utilisation of energy released was simply ignored. This was an exercise in robbing Peter to pay Paul as everybody else in the country paid for this madness through green taxes on their energy purchases through “green taxes”..

    In the context of energy costs being up to 30% of total production cost at farm level RHI was simply an obscenity. Given the fact that our great leaders choose to enrich foreign machinery manufacturers, bankers and a small number of individuals is
    A) Stupid,
    B) Incompetent,
    C) Corrupt

  • William Kinmont

    Some times the historic payment was established by prev generation sometimes investments made to achieve the large historic payment were not sustainible eg sales of assets or inheritance.
    yes any interferance perverts the system

  • John

    You are right, agriculture has the potential to be a significant contributor to the NI economy. However it has to be a real business based around PROFIT. By that I mean that less money has to be spent producing farm output than the cost of farm inputs. This may mean that the volume of farm output may have to fall. Experience has proved that the best way to teach a buyer manners is for supply to be slightly less than demand resulting in slightly higher prices for farm output. The problem with intensification is that output goes up along with rising inputs sucked In by intensification, effectively the buyer is in control.

  • William Kinmont

    here we disagree i can see how you can support prices and not cause major distortion that is not sustainible . our asssets is the land and climate we have plus an abundance of processing capacity built up over the years. Moy park, abp etcs investment in infrastructure will hopefully keep them here for some time.
    Any money should be directed at keeping processing viable,promoting sales . My feeling is that money going directly to farms should be for diversification start up so they can subsidise themselves through downturns.

  • William Kinmont

    Agriculture is the significant contributer already, not at farmgate level but in processing. If we want to keep this significant part going then we have to provide some form of policy as to how. Extensification seems to be part of the answer , it will drop productionand cause some loss of processing jobs. The effect of these job cuts may be diluted by the effect of the large number of migrants in this sector
    Farms need to be incourged to develope low cost systems which are not glamourous but effective. This should.also free.up spare capacity and time for diversification which will help sustain farms through the bad years.

  • William Kinmont

    I have a few elderly clients who had to build large concrete slurry stores to meet the rules . They remain unused the clients have and continue to manage the land and animals in a way that dosent require them. They are not breaking the slurry spreading rules and their old fashioned systems are profitible and sustainible . Meanwhile they have the benefit of a 50 thousand pound monument to stupidity filling one corner of their yard. Perhaps these educational farm walks that cafre organise should visit one of these people. Instead locally they prefere to turn repeatidly at the local farm which sold off a big chunck of developement land and marvel at what a 7 million pound windfall can buy you.
    Rant over.

  • The worm!

    You are correct in what you say.

    But, this then soon brings you to a conflict of interest. Bear in mind that the farmers end product is the processors raw material. So if farmers reduce production then indeed the price rises, this then starts to impact on the processing sector as they have to pay more for that raw material and there will be less of it.

    Be in no doubt that the overall intensification of the farming industry may have started off post war as a need for increased food production but for the past forty years or so it has been driven by the wishes of the food processing industry to have as much raw material as possible, as cheaply as possible. And farmers have been quick to buy in to that on the basis that doing so made them a “good” farmer.

    Farmers need to be much more aware of the supply/demand relation to prices, yet ironically processors have benefitted most from their previous ignorance of it.

  • The worm!

    Why do you make the assumption that “price support” would only benefit the farmer and not the processing sector also.

    The old intervention system done both. Now I would not advocate a return to those shameful years but if it had been administered properly it had a lot of merit. It SHOULD have smoothed supply and been of benefit to the farmer, processor, and consumer, all of which it had potential to do. Yet due to a mixture of corruption and sheer incompetence you had processors pushing farmers for milk just to process and put in to intervention stores.

    There is wayyyyy to much regulation and control, it’s doing little (if any) good, and doing much harm. Everyone from producer to consumer will benefit most from a system which will ensure food security but still allowing scope for market forces within that at national level.

  • The worm!

    Says the man who plainly isn’t an Irish beef farmer!

  • The worm!

    Sadly the Greenmount “study tours” for their own students are generally no better!

  • William Kinmont

    This is the debate i wanted . Dont disagree with much if your ethos here . Cant see uk protecting its own agri industry as its not significant other areas will take pecedence in Trade talks for other third contries their agri food access will be much more significant

  • The worm!

    Now this is where I start to struggle a bit if I’m honest.

    On one hand I can see the value of agriculture if only as a necessity to supply raw material for the “food industry” as a whole.

    Yet on the other hand, I think that is agriculture badly selling itself short if it allows itself to be relegated to that level. Surely the agricultural industry is worth more credit than that? It is after all the “primary producer” and should be respected for being such.

    If you want to see a “joined up” approach from production right through to end product you just look at the poultry industry where production goes hand in hand with processing and ultimately supply to the consumer. Now I know they are very different aspects of agriculture, in fact the poultry industry is arguably more industry than agriculture. But it does show the benefits of everyone working together rather than competing, so I suppose the trick would be taking the principles there and seeing how they could be applied to the other branches of agricultural production.

  • Conor

    CAP primary objectives when initiated were European food security/self sufficiency and price levelling/support to eleviate price fluctuations for both consumers and farmers. This has evolved overtime to also manage the environment and support/preserve historic agricultural based ecosystems.

    UK is never going to be self sufficient in terms of food production and as prior to entry to the EEC cheap food is likely to be government policy. This will keep price inflation low.
    Australian,NZ, Argentine, Brazil etc will compete with domestic suppliers and EU suppliers. UK Commercial comodidity suppliers will be under significant pressure as a result.
    I am not sure environmental maintenance is going to be same priority as EU cap has been.
    Likewise unsustainable farming communities are low down in priority for a larger urbane UK.
    What happens NI producers with so much cross border trade? 800 million litres of NI milk goes south for processing annually. This production will need to cease or the capital investment made in NI to support its processing duplicating investments already made south of the border.

  • Timothyhound

    Because economies of scale mean that dairy processing is by and large an all Ireland market. Nobody will lend the funds to build new but small plant. That’s part of the mess of Brexit. The dairy sector needs to be able to compete globally hence the Glanbias and Kerry Groups of this world.

  • John

    It is probably fair comment to say that at farm level the perception is that getting bigger and producing more is good. The real issue is cost of production, very few farmers know exactly how much it is costing them to produce a litre of milk, a kg of beef etc. There is simply presumption that more output will bring in more money and more profit. Unfortunately the cost of production on day one is probably too high and the costs involved in increasing output simply add to an already high cost of production. A “good farmer” asks two questions,

    1) Will this decrease my cost?
    2) Will this increase my sales?

    It is interesting to note that survivors in the intensive sectors (pig and poultry) live by this mantra. Also these people know exactly what their costs are, where their costs are and most important WHY their costs are what they are.

  • John

    Food processing is very profitable, food retailing is very profitable, food distribution is extremely profitable, and food production is not profitable. There is very little wrong with food prices for the consumer. The issue is how to carve up the spoils. Ultimately the buyer will only pay what he has to.

  • jporter

    Land should be taxed, not subsidised, as it cannot claim to be ‘owned’ in the same way as other property. Adam Smith and Winston Churchill, those famous lefties, recognised this.
    Payments have their place where land can be managed for environmental and therefore wider community benefits. Payment for environmental services – e.g. bog restoration or flood plain creation for flood mitigation, clean water etc.
    Obviously this would exclude the scam of paying rich landowners for grouse management etc.
    It would also involve re-imagining most of our existing ideas of tax and public accounting, so admittedly unlikely with the current vogue of looking backwards.