Private Eye’s Bio-Waste Spreader column contrasts the rhetoric of the Environment Secretary Andrea Leadsom saying farm subsidies must be abolished post-Brexit with a report by her own ministry, the Department of Environment, Food and Rural Affairs (Defra), which found British farmers would be unable to keep going without them.
In the 2014-15 year dairy farms were the most profitable averaging £12,700, whereas cropping farms made £100, lowland livestock farms (most like our sheep and beef) lost £10,900 and grain growers did even worse.
Those profits or losses came before farmers paid themselves any wages or drawings.
The only thing keeping them afloat is the average European Union subsidy of £25,000 which Leadsom would like to get rid of.
Apparently, one solution suggested by Farms Minister George Eustace would be to pay something that looks remarkably like the Single Farm Payment, which applies across the EU and which anti-EU Tories like Leadsom and Eustace have been rubbishing for years.
Subsidies make up an average of 25% of farm revenue across the EU while in Norway and Switzerland farmers receive government assistance of more than twice that amount.
In Canada farmers receive almost 20% of their revenue from subsidies and even in the United States they make up 10%.
In contrast it appears New Zealand farmers going cold turkey over 30 years ago have done something all other agricultural producing nations have found impossible.
That might be cold comfort for sheep and beef farmers tired of seeing their profits decline year on year but the fact remains they have been profitable every year, even marginally in 2007-08, which was at a 50-year low.
Conversely in 2011-12 average farm profit was $131,100, similar to 2001-02 but 10 years between such highs is clearly unsatisfactory.
This sort of trend produces land use changes as landowners try to find the option producing the best returns.
But there don’t seem to be any clues in the rest of the world about how to avoid the commodity trap and achieve consistently high returns.
London market intelligence firm Euromonitor International reports global meat consumption rose 2% in 2015 because of increased consumption in emerging markets but the main area of growth was in chicken and pork with the Middle East and Africa and Asia Pacific being the only regions to post an increase in beef and veal consumption.
Consumption in North America declined 3.1% and in Latin America by 3.7%.
All meat consumption in Western Europe declined with beef and veal coming down by 1% while in the US pork rose by 8% and chicken by 5% as consumers driven by dietary concerns chased leaner meats.
It is difficult to fathom how NZ agricultural producers in general and, more specifically, red meat producers will be able to buck global trends driven by many factors including regional population growth, health and diet, growth of convenience foods, relative economic prosperity and future technological developments in protein production.
As an exporting country NZ needs to be acutely aware of what global consumers actually want their food to deliver, how that is changing and how quickly.
What is certain is the increasing importance of maintaining or improving our environmental performance as a means of underpinning our brand reputation.
Food provenance has become a critical success factor, particularly in traditional, developed markets.
It is no longer enough to rely on NZ’s slightly ragged claim to be 100% pure but we must actually demonstrate the truth of such a claim and build a brand story around it.
In a world that might be retreating from the removal of trade barriers, it will be essential to improve our reputation for product quality at every stage of the value chain.
With all due respect to the dairy industry’s efforts to introduce stringent environmental standards, it doesn’t appear to be winning the public relations battle with some commentators increasingly gaining air time to criticise water quality.
This battle must be won, if NZ is to build a brand story based on quality of production, environmental performance and provenance.
In a world where synthetic proteins will be able to simulate the taste and texture of meat, it won’t be enough to supply undifferentiated beef and lamb and expect to receive a premium price for it.
To satisfy the demands of the wealthiest 1% of the world’s population it will be essential to provide a differentiated food experience targeted at the precise needs of particular market segments.
However, these markets must be carefully developed before farmers can expect to be rewarded with a premium for what they produce, unless they meet a tightly defined specification for a product that can be marketed directly to an end consumer willing to pay more than usual for it.
As is evident from the incomes earned by United Kingdom farmers before subsidies, there is no easy route to higher levels of profitability.
