Farming has a fertile future

Chris Haskins, rural recovery co-ordinator, argues that the countryside can prosper, but we should n

Farming is in crisis in Britain. Incomes have collapsed because of the strong pound and depressed world prices. And the fallout from the BSE tragedy and the traumas of the foot-and-mouth disease outbreak - the largest and longest the world has known - has created general concern about the future for our rural communities. But how serious is the situation, and what can be done about it?

The rural population of Britain has been declining for the past century and a half, and with depopulation has come a decline in rural economic and social activity. There have been three main causes. First, the industrial revolution offered poverty-stricken rural inhabitants the chance to escape to something better (though still, by modern-day standards, pretty miserable). Second, engineering and scientific developments increased the productivity of most farms dramatically. My father's County Wicklow farm created work for seven or eight men half a century ago. Today, my son employs one full-time person on that same farm and its output has trebled. Third, the arrival of the car and television, coupled with the growth of supermarkets and other services in big towns and cities, has undermined much economic and social activity in the countryside.

For the best part of 100 years after the repeal of the Corn Laws in 1846, British agriculture was severely depressed. Poverty was endemic in the countryside until the Second World War, but generous farm subsidies, and scientific and technological innovation, transformed the postwar rural economy. Farm numbers reduced as the smaller farmers were bought out by their larger neighbours, who found it possible to manage greater acreages with the same manpower. For those - mainly smaller farmers working difficult hilly land in remote areas - who continued to struggle, postwar governments set in place heavy subsidies. The second half of the 20th century was characterised by farming prosperity amid continued rural depopulation.

Over the past five years, however, British farming, like the rest of manufacturing industry, has been badly damaged by the high value of sterling against the main European currencies. For many years, European farmers were protected from the vagaries of the currency market through a complex system of financial adjustments. These adjustments became irrelevant for those countries that joined the single European currency. But British farmers, outside euroland and lumbered with a strong pound, find themselves at a serious competitive disadvantage. The most significant steps towards rural renewal in Britain would be for the pound to weaken by between 10 and 20 per cent against the euro, followed by Britain joining the single currency, thereby eliminating the uncertainty of exchange rates for ever.

In general, the re-emergence of rural poverty has been concentrated on small farms. Two very different types of farming practice are emerging in Britain. The notorious European Union subsidy system favours the larger farm. These larger "competitive" farmers working on fertile soil with a beneficial climate and with easy access to urban markets, such as fresh milk, can continue to pursue greater productivity while complying with rigorous environmental (and welfare) regulations. But the smaller, less competitive farmers, frequently working on land that is not very productive, and living some distance from big cities, are in real difficulties. The disasters of BSE and foot-and-mouth have had a particularly severe impact on small livestock farms. In the affected areas, many farmers, tourist operators and service industries will struggle to survive this coming winter without further help.

British perceptions of and aspirations for the countryside differ significantly from those of the French. The latter still have close family connections with farmers because, until a generation ago, a large proportion of the population was rural and peasant. One needs to go back a century to find that situation in Britain. This means that French public opinion is more committed to its small farmers. The success of farmers' markets in every French town and village illustrates this commitment, as does the continued capacity of French farmers to mobilise public support for their position, even when their behaviour is outrageous. The political clout of French farmers is the greatest obstacle to agricultural reform in Europe.

Most Britons, by contrast, are uninterested in countryside matters, unless they are threatened by them (as with BSE) or upset by them (as with live exports of calves, or foot-and-mouth funeral pyres). The rural agenda here has traditionally been dominated by the country gentry: the large, mainly Conservative landowners, whose vision of the countryside was essentially as a place for hunting, shooting and having a good time. In recent years, however, many of them have become environmental evangelists. One of the more quaint aspects of the "green" movement in Britain is the aristocratic, well-bred background of so many of its leaders.

Yet it is small farmers, because of their numbers and their commitment, who are the cornerstone of rural society, and many feel they cannot survive the present crisis. They may be right, unless they are prepared to innovate and diversify.

About half of British farmers already rely on some level of non-agricultural income, whether it be a family member working in a nearby town or farmers finding part-time work to supplement their income. This trend will continue, especially in those regions where tourism can be exploited. Farmers are foolish to resist the opening up of the countryside to city visitors - instead, they should set out to develop the opportunities such visits create.

British farmers have been less innovative than many of their European and American counterparts in their approach to co-operation and marketing. Through co-operation, small farmers in particular can reduce their costs by jointly buying and selling their products and sharing machinery. In the past, farmers' co-operatives in Britain have been spectacularly unsuccessful, but there are signs that lessons are being learnt from elsewhere.

The local marketing of farm produce has been an essential part of French rural life for centuries, and appears to compete successfully against the nearby supermarkets. Various initiatives are under way to revive similar markets in Britain; if they are to succeed, the goods on offer will need to be distinguishable from supermarket products in terms of flavour and freshness. With a bit of flair and enterprise, small (and large) farmers can expand into this sector, but not on the same scale as in France.

For small farmers in particular, organic farming is a more practical proposition. Organic food also enjoys a local marketing advantage: supermarkets will find it hard to persuade people that their organic produce has the same degree of authenticity.

While there is a clear opportunity for a niche market in organic food, an entirely organic global agriculture would quickly lead to mass starvation because of collapsing farm yields and soaring prices. Britain cannot, and should not, consider a totally organic system on its own. This would not only lead to unacceptable price increases but, by introducing protectionist barriers, would mean breaking EU treaty obligations.

Many environmentalists want to deny scientific development, including genetic modification. In my view, they are wrong. Scientific innovation must be rigorously tested and monitored, and there could be environmental (though not food safety) problems with genetic modification. But the science is here to stay - other countries are taking it up on the assumption that the benefits will far outweigh the risks. A luddite rejection by Britain will not stop the development, but merely ensure that our scientists and our farmers are denied the benefit of it.

Too frequently, rural planning decisions have appeared to protect twee communities for the benefit of the landed gentry and the urban commuter. If rural society is to be preserved, it must be allowed to revitalise and diversify its economy, and must not be obstructed by unreasonable sentimentalists clinging to a romantic vision of the past that never existed. There is plenty of scope to generate and develop non- agricultural economic activity in the countryside, provided planners can be more flexible in allowing redundant farm buildings to be transformed.

The system of subsidies for European farmers is producing perverse and costly outcomes, which threaten to undermine rather than sustain rural communities. Incentives that stimulate the production of agricultural commodities in excess of market demand result in farmers producing food in an over-intensive way on land that is not suited for the purpose, thereby damaging the environment.

Much of the subsidy ends up in the pockets of non-farming middlemen, and the system is riddled with fraudulent practices. Furthermore, subsidies remain a barrier to fair global trade in food, and are a costly obstacle to the enlargement of the European Union.

Reform of the Common Agricultural Policy should redirect support for farmers towards the promotion of good environmental practices, including organic farming. But it should also recognise the need to maintain viable, commercial agriculture. Such an approach could be designed to favour the smaller farmer, in contrast to the present system. Farmers would have to earn taxpayers' support as opposed to receiving it by right. Urban dwellers would be more prepared to support farmers if, as a result, they could enjoy the benefits of a more attractive countryside. These reforms would also be compatible with EU enlargement and trade liberalisation.

But while reform of the countryside should be radical, it should also reflect continuing realities. Despite the widespread criticism of pressure groups, supermarkets are here to stay because the vast majority of consumers like their convenience, range, quality and value: 50 million people choose to shop in them every week.

Rural services have declined as the number of farmers has reduced, being replaced by urban commuters who do not have quite the same commitment to support the rural infrastructure. This decline will continue as farmers retire - their present average age is 58 years - and their children choose the economic and social attractions of urban life. The government is keen to rebuild rural services, but if the people in the countryside are not interested in supporting their local shops and public transport, the state cannot force them to do so.

However, if people are prepared to accept the need for radical institutional and economic change in the countryside, in line with continuing long-term demographic trends, a different but attractive and viable future is possible. Evidence of this potential is that, despite the current crisis, agricultural land prices have risen by about 10 per cent this year.

Prospects for renewal are far more uncertain in our inner cities, where there appears to be little relief from generations of despair and insecurity. The present plight of small farmers is at least highlighted by influential lobbyists. No such lobby exists for the millions of socially excluded inhabitants of towns and cities. Urban renewal, therefore, remains a much greater priority, and a much more intractable problem than that of the countryside.

Christopher Haskins is the chairman of Northern Foods plc