UK farming: A new market for public goods?

From new trade arrangements to the end of Europe’s Common Agricultural Policy, UK farming is set to face a transformed environment post 2020.

Last week, Environment Secretary Michael Gove proposed swapping the current subsidy regime – based on the amount of land farmers own – against a system that would reward them for taking actions geared towards improving the environment, such as planting woods or creating habitat for wildlife.

The initiative was welcomed by environmentalists, but the announcement did not contain much detail as to how the scheme would work in practice.

Sustain, a charity advocating better food and farming, is not waiting to find out. In an interview with Agri Investor, Vicki Hird, the organization’s policy expert, suggested the government’s efforts to reshape UK agriculture should aim to create “a new market for public goods.”

Public support, private role

While arguing that much of the funding would have to come from the public purse, she contended that the government should encourage other types of investors interested in the outcome to chip in.

She cited the example of water companies, which could be incentivized to complement or match public support to help farmers look after water quality, for example through removing contaminants from the water at source.

Similar incentives could be put in place to advance other public health priorities, such as nurturing low-antibiotics food systems. Hird said her organization is pushing for details on such initiatives to be included in an upcoming white paper on UK agriculture and the 25-year plan on the environment, both expected in the coming months.

She was cautious about the role of the private sector at large in creating this new public-good market. “There’s potentially a role for private investors, but it shouldn’t be at the heart. We need that contract between the public, farmers and the land manager, driven through proper payments for these public goods.

“When you bring in the private sector, there’s a whole new set of expectations. Private entities have been great at driving down costs of production but when it comes to the wider scheme and objectives like flood alleviation, biodiversity and the like, the jury is still out on whether there is a market for these goods other than the general public.”

Procurement drive

Hird suggested public procurement for food could be rethought to help deliver such goods. “You can deliver outcomes useful to farming and public health, and the environment, by purchasing the right stuff. It can drive good practice.”

For instance, she advocated for a revision of current supply chains, which she reckons emphasize cheaper produce. She also thought schools and hospitals could be encouraged to use produce that would otherwise be rejected because of “cosmetic criteria,” especially when such goods are then processed to produce meals.

Reshaping procurement also provided an opportunity to bolster diversity in what farmers can deliver, she noted, starting with moving their focus away from just producing cereals. Hird welcomed Gove’s idea that a cap should be put on subsidies, so that the extra money can be used to fund pilot schemes that help farmers deliver those public goods.

Rejigging the procurement process, in practice, would involve tackling challenges at multiple levels, starting with entangling a complex web of regulations. As such, Sustain is pushing for the UK’s Department for Environment, Food & Rural Affairs to take the lead and treat the revamp of public procurement as a “project,” Hird explained.

“It’s so scattered right now. Making it more focused would deliver significant benefits to the rural economy.”