The Economist "Dig for victory!"

February 9, 2015

Why British farmers are less productive than their international competitors

“HEAR that?” asks Stephen Briggs. “That’s the trees whistling.” The branches in his young orchard have caught the wind that races across the open fenland, creating a strange vibrato. Growing apples in this wheat field makes efficient use of the nutrients in the ground—the tree roots keep burrowing below those of the crops. The trees also provide homes for pollinating insects and extend the harvesting season deep into autumn. By interrupting the wind they hold the nitrogen-rich soil in place. Mr Briggs credits the innovation with turning this once unremarkable patch of eastern England into one of the most productive farms in the country. Sadly, he is a rarity.

In the post-war decades British farms were among the world’s best. But that appears to have changed. Though it is hard to compare agricultural productivity across countries, attempts to do so by the United States Department of Agriculture (USDA) and the OECD, a think-tank, suggest that England is now less efficient than its competitors (see chart 1). The World Bank calculates that the country produces less cereal per hectare of harvested land than Belgium, France, Germany or the Netherlands. “British farming may no longer be the world leader it thinks it is,” concluded Andersons, a consultancy, in a report in January. British officials agree. 
What is more certain is that British farms are hardly improving. Productivity rose in the late 1990s as farmers managed to produce the same with fewer inputs—that is, costs such as labour, fertiliser and fuel. But the government calculates that farming has improved only slightly since then. Other countries are doing much better (see chart 2).

Why so? The long stagnation rules out recent shocks such as supermarket price wars (which have put pressure on farm revenues), dismal weather in 2012 and high energy prices—though none of these things has helped.

The country’s participation in the EU’s Common Agricultural Policy might explain some of it. Subsidies from Brussels—now falling, but achingly slowly—help to keep unproductive farms alive. By contrast, the sudden withdrawal of handouts in New Zealand in 1984 forced farmers there to invest in their businesses and club together to buy and sell. They are now among the most efficient in the world.

But subsidy cannot account for why Britain trails its EU competitors. A better explanation is that, although its top farms are among the most productive in the world, many others just trundle along. In parts of America drones herd cattle and spray crops; in the Netherlands robots tend livestock and weed fields. Meanwhile some British farms struggle with basic tasks such as benchmarking. They are often run by old, generalist farmers whose children have been lured away by good jobs in the cities. A Eurostat study of 27 EU member states in 2007 found that 62% of British farmers were over 55. Only in Italy, Portugal, Bulgaria and Romania was the proportion higher.

Another factor is a shortage of R&D investment. Britain’s public research institutes were wound up in the 1980s. Over the past two decades the country’s spending on agricultural R&D has fallen by an average of 6% per year in real terms. The current government is investing £160m ($244m) in a farming-technology strategy, but this “may be insufficient”, concluded a delicately worded report published last June by Parliament’s rural-affairs committee.

Britain’s hot market in agricultural land—a popular, lightly taxed investment asset—is another problem. Although land is not always counted as an input in measurements of productivity, its steep rise in value (by 12% year-on-year, according to the latest figures) can gobble up cash that farmers might otherwise invest. Mr Briggs’s rent went up by 38% in its latest triennial review, curbing the number of fields he could afford to convert to a combination of trees and crops. Short tenures further limit investment. “Just not long enough,” he sighs, shaking his head and pointing to a five-year rent advertised in the classified pages of Farmers Weekly.

Finally, Britons may be more sentimental about their countryside than others. Farmers whose ancestors have tilled or herded on a property for centuries are reluctant to move or consolidate. One delegate at a farming conference in Oxford in January spoke of a friend who sold his family farm in Northern Ireland to buy and develop a more productive one in Scotland: “There was shock! It was unheard of!” Another suggested that Britain’s early industrialisation distanced farming from business and technology in the national imagination; for policymakers, farms became things to conserve, not reform.

Farmers may be custodians of Britain’s beloved landscape, but more of them also need to be entrepreneurs. The government could help by reforming subsidies, creating a clearer path into agriculture for go-getters with commercial acumen and underwriting long-term investment in skills, research and technology. But it is also up to farmers to take the initiative. Mr Briggs persuaded his landowner to lengthen his tenancy, studied agroforestry practices in China and, implementing them in Britain, ploughed his own money into the rented ground. In short, he is an optimist. “Farming”, he says modestly, “is simply turning sunshine into carbon.” With that he glances up from his whistling trees to the grey sky above.



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