05/5/2021
17:47 | Trade & Agriculture Commission? I did try to warn you...May 05, 2021By Catherine McBride 9 minute read WE SHOULD BE celebrating the new UK Australia trade deal this week. This negotiation really should not have taken very long. Here's why: - AUSTRALIA EXPORTS OVER A MILLION TONNES OF BEEF EACH YEAR. THE UK IMPORTS OVER 300 THOUSAND TONNES OF BEEF EACH YEAR but almost none of it from Australia. - THE UK EXPORTED £44.4 billion of motor vehicles in 2018 AUSTRALIA imported AUD$43.6 billion of motor vehicles in the same year but only about 2% of them came from the UK. Why couldn't the UK and Australia agree a trade deal? According to the Australian press the UK's Agricultural lobby group, aka the influence of Britain's Trade and Agriculture Commission (TAC) scuppered the deal. Why am I not surprised by this? Although many people like to be able to say I told you so, the Trade and Agriculture Commission report is something that I really would have preferred to have been wrong about. Not only does 'Trade' play a secondary role to 'Agriculture', but the only trade they seem interested in, is increasing exports. The benefits to the UK economy of importing less expensive food are ignored, while the needs of the UK's already heavily subsidised agricultural sector are sacrosanct. Most of the Report's 22 recommendations require the Government to: 1) spend more money to promote UK farm exports; 2) establish a permanent agricultural quango; 3) add a few more government ministerial positions; and 4) more public servants to provide exporters with international market research. The report completely overlooks the important point that farms and food manufacturers in the UK are private businesses, and never questions whether one set of private businesses should receive so much government help while other sections of the economy are overlooked. What was the point of the Commission and who is advising it? The Commission was meant to advise the government on how to serve the interests of British Farmers, Food Producers and Consumers in future trade agreements, however there is no one on the Commission representing consumers. In the brief subsection 1.4, entitled The Consumer, they claim to have done some research showing that: price is the main influence on consumer purchasing decisions; the average UK weekly expenditure on food and drink, including consumption outside the home is £46.60 per capita; and that many consumers want 'Affordable Choice'. The Commission did set up a consumer working group, but this working group was also full of companies who sell things to consumers not actual consumers: Tesco, Just Eat, Co-Op, a food wholesaler and Scotland Food and Drink as well as animal welfare and environmental groups like the RSPCA, LEAF and CIEH. Only the consumer charity Which? could be considered to be representing the consumer in this working group, but they became anti-trade activists long ago. But either way there were at least three times as many people representing animals and the environment in the so-called Consumer Working Group than there were people claiming to represent the consumer. The Commission also claimed to have used Henry Dimbleby's National Food strategy for England for context Henry Dimbleby is famous for not knowing that junk food is advertised and sold in the UK and that some of the world's biggest manufacturers are British companies. If the TAC did use Dimbleby's report one would have hoped that they saw the section on UK food poverty this should be a reason to encourage importing more food from countries with lower costs. But from the TAC recommendations it looks like they must have skipped that chapter. Instead, the report dismisses the potential of trade to achieve lower food prices, stating that 'Given that UK Shoppers pay comparatively less for food than shoppers in some other countries, trade policy may have limited incremental impact on food insecurity and poverty,' (my emphasis). However, even if this is true of some countries, there are literally hundreds of countries where food is cheaper than in the UK and trading with them would have a beneficial impact on food poverty in the UK. The UK has about 400 people to feed per square kilometre of farming land, the US has 80 and Australia only 6: until the UK starts to trade freely with other larger agricultural producers it is unlikely that UK consumers will ever get affordable choice. And as the UK already imports about 45% of the food it consumes, if the UK merely concentrates on exporting UK agricultural products without increasing imports UK food poverty would compound unless UK farm productivity is massively increased which is unlikely under the environmental regulation being proposed. Government document or lobbying exercise? Unlike usual Government documents, the Commission's Final Report resembles a supermarket's promotional material, in content as well as layout: with coloured photographs of sheep in grassy fields; recipe book photographs of healthy food; and a photograph of some quite expensive (but not plastic-wrapped) vegetables. (If the average person is only spending £46.60 a week on food they are unlikely to be paying these prices.) There is one realistic photograph of a child in front of a mountain of plain spaghetti - blasting any myth the report was hoping to spin apropos the UK's preference for healthy homegrown food: Spaghetti, a cheap carbohydrate imported from Italy, is now a stable of most UK diets. This colourful report is probably the work of the Commission Chairman, Tim Smith a former Tesco group technical director famous for the line 'Today we can confirm that a further 100 products have been tested and all were clear of horse meat'[1]. So, the Chairman knows a lot about low (EU) food standards as well as about producing colourful marketing publications. There are whole pages in the TAC Report with quotes taken from the document, in large font, such as: "We have not shied away from making bold ambitious recommendations" but they left out the rest of the sentence which finishes 'that are in the interests of the agri-food sector' and it is the ending of that sentence that pretty much sums up this entire document. This is an industry lobbying exercise but paid for by the Government and more incredibly, the report must be presented to parliament by the Department for International Trade. Competitive and innovative? That this document is helping to form official trade or agricultural policy is most worrying when we see platitudes like: "the UK's food and farming sector remains amongst the most competitive and innovative in the world". There is no evidence for this claim. It has been taken from Liz Truss's statement that the TAC was established to consider how the agri-food sector could remain amongst the most competitive and innovative in the world. The TAC report's dropping of the words 'consider how' and 'could' is telling and self-defeating: if the sector were already competitive and innovative there would be no need to establish the TAC nor to give the industry even more government assistance. Such arrogance is also why the UK agricultural sector is unlikely to ever improve it would first need to admit that it is neither competitive or innovative: UK farms are too small, almost half of them are less than 20 hectares for perspective St James's Park in Westminster is 23 hectares; many UK farmers rely on subsidies to break even and according to DEFRA 20% are making a loss on Farm Business Income which includes government subsidies; the UK's membership of the EU has prevented UK farmers from adopting many agricultural innovations; and the UK relies on imports to satisfy consumer demand even in products where the UK could be self-sufficient such as dairy products. Climate change, the environment and animal welfare The report's main concern is the environment, climate change, animal welfare and ethics probably because this is seen as the next method of protecting inefficient industries. The report claims that climate change and environmental degradation 'will have a profound negative consequence for the whole food system globally', however, many 'experts' predicted similar disasters in the 1970s, and that humans would be wiped out due to starvation by the year 2000. Instead, the opposite happened. The free market invented new seed varieties and better farming methods, farm yields increased, and farm commodity prices were lower than ever by the turn of the century and fewer people were living in poverty. Sometimes governments should just let the market and private companies adapt to changing circumstances. As the report claims that farmers will be most affected by climate change it is also most likely that farmers will adapt their business models accordingly. Rather than going out of business, enterprising UK farmers may merely change their crops from carrots and beets to mangos and avocados. Apparently during the Roman occupation, Britain was warm enough to produce wine who knows, maybe climate change will revive this industry? The TAC report is full of platitudes about things way beyond the scope of the Commission. In a page of hieroglyphics entitled Sustainable Development Goals, they include: 1. No poverty; 4. Quality education; 5. Gender equality; 7. Affordable clean energy; 11. Sustainable cities and communities; as well as 16. Peace, justice and strong institutions. Which? and the NFU are not objective sources of information The report's conviction in the consumers' concern for animal welfare may stem from politically correct answers the public likes to give polling companies but then disregards when they go shopping. Certainly, this concern does not tally with DEFRA's figures on higher welfare meat production in the UK: less than 3% of UK meat production is organic. Nor does it tally with the report's own figures If the average person is only spending £46.60 a week on food and drink, most people are unlikely to be buying higher welfare products. Alternatively, the report's belief may have come from its own members: the five National Farmers Unions on the Commission and Which? on the Consumer Working Group. They both conducted aggressive media and social media campaigns last year against a US-UK trade deal. Which? was also against better labelling claiming that it would keep out US goods[2]. The misinformation spread by both groups vilifying US food, lying about US labelling requirements and US farm regulations was astounding. Using the hashtag 'save our standards' Which? posted simplistic cartoons on social media such as one with a cow and a syringe in order to try to scare consumers rather than clearly explain their choices or the benefits of trade outside the EU. Yet the TAC report cites information from Which? several times without mentioning this bias. This campaign was conducted in conjunction with a NFU petition regarding the Agriculture Bill before the House of Commons[3]. I have more sympathy with a Farmers' Union actively campaigning to stop trade deals[4] with more efficient agricultural producers than a consumer group trying to scare consumers, but should either of them be on this Commission? Their presence destroys any credibility that this report is objective or balanced. This is particularly important when you consider that much of the UK's agricultural products are produced in indoor intensive factory farms, similar to those used in the EU and the US. However, not all food is produced this way in either the UK, the EU or the US. Unfortunately, the NFU has been running a campaign against imports by trying to confuse less expensive food with low standard food. The NFU allows readers' imagination to conflate price with quality by never mentioning other influences on price such as economies of scale, relative currency levels, relative wages, and cost of living differentials. And both the NFU and Which? ignored the massive engine of food and agricultural regulations and standards imposed on US farmers by the US Food and Drug Administration and the US Department of Agriculture. Does the UK have world class standards? The TAC report reiterates the urban myth started by the NFU's campaigning that the UK has "world leading environmental and animal welfare standards". The TAC report mentions, but then ignores, the fact that the UK's higher welfare animal standards are voluntary, not mandatory, and many aren't very high. However, the farmers that choose to follow them are rewarded as they can charge higher prices for their wares. In some parts of the UK, even sheep are now being finished indoors[5] and fed on a mix of barley and beet pulp. But don't worry, they get straw bedding, clean drinking water, and the plastic slated floor is disinfected with a Defra-approved disinfectant. On the positive side: the shed can house 1,000 wethers, it shortens finishing times and saves on labour. I have no problem with UK farmers housing sheep in sheds but please don't try to suggest that the UK has 'world leading animal welfare standards' it doesn't. The UK also uses mass production farming techniques. And why shouldn't it we have a tiny landmass and literally open borders. The report talks a big game about standards and biosecurity yet skips over the fact that: it was the UK that gave the world BSE; the UK's latest outbreak of foot and mouth disease was in 2001; and the UK presently has problems with Bovine Tuberculosis which is being remedied by culling the UK's native badger population (so much for biodiversity and animal welfare). Yet still the Commissioners feel the UK is in a position of strength to lead the world in international forums regarding food, animal welfare, biosecurity, and environmental standards. The TAC report claims that UK food is 'produced in a way that does not harm the planet'. If that is true, then no farming is harming the planet. Yet the Commission and the NFU (if they are different) see environmental regulation as a convenient way of restricting future trade deals. The report claims UK farmers are required to maintain the environment but farming generally changes the environment, whether it is by planting neat rows of fruit trees or ploughing fields for crops or even allowing sheep to eat the native plants on the hill sides. If the NFU wants continued government subsidies for its members, then paying farmers for sequestering carbon during the winter would be a useful place to start. However as this also improves the soil, which then increases the farmer's yield, UK farmers should be improving their soil without requiring government subsidies. But measuring increases in soil carbon is a practical way to get to net zero farming allowing farms to prove that they soak up as many greenhouse gases as they produce. Trading with developing nations Despite the lack of UK consumer representation on the Commission, there was one Commissioner representing consumers in developing nations but he really should have been representing their producers. Unfortunately, the recommendations in the chapter on developing countries doesn't tally with other chapters in the report. For example, In the Agri-food trade strategy Chapter, in a section entitled "Reality Check" the report admits that developing nations will be unlikely to clear the import policy and environmental compliance hurdles that the report is recommending the UK Government introduce. This Reality Check section is also recommending that the UK tackle 'unacceptable market distortions' without mentioning that by subsidising its own agriculture it is the UK that is distorting the market. Most developing nations cannot afford to subside their farmers. Except for China and India, who both still identify as developing nations under WTO rules, another thing that the report overlooks while presenting figures (and drawings) of UK agricultural trade with four African and one Caribbean country. Report recommends more government funding The recommendations of the TAC report do not include giving the consumer 'affordable choice' because that would require trading with more efficient producers. Instead, the report recommends more government funded permanent quangos, more government payments for private company's marketing and private company Brand development, more government payments for international market research and more Government money for promotion of UK products in international markets even though the UK is not self-sufficient in food and presently imports about 45% of the food it consumes. The report exaggerates the importance of farming to the UK economy by conflating the entire food industry with farming even though the industry is mostly manufacturing and restaurants. Both sectors often use imported ingredients as well as imported labour: from marmalade made with imported oranges; chocolate bars made with imported cocoa; or the many coffee shops using imported coffee and imported baristas. The idea that the government must protect the UK's 428 thousand farmers from imports in order to also protect the 3.5 million people employed in food wholesaling, retailing, manufacturing, and non-residential catering is one of the many pieces of propaganda in this report. Most food manufacturing businesses are happy to use less expensive imported ingredients. Beef imported from Ireland is cheaper than UK beef and, as we found out when Covid closed the restaurants, is mainly used in the UK's catering industry. Similarly, the report happily highlights the £120 billion the entire sector contributes to the UK economy, without explaining that agriculture is only responsible for £10 billion of this. While most people would be happy to help family farmers start exporting, they would probably baulk at subsidizing food manufacturers' exports even though it would be food manufacturers that would benefit the most from any government export assistance. The TAC report concentrates on improving the UK's agricultural exports without considering that the UK is a major net importer of much of its food. Admittedly this can be exaggerated by using value rather than volume figures, but the UK still needs to work on its own agricultural productivity and supply a greater proportion of its own food, before thinking about world domination in export markets, let alone taking the lead in international rule making fora. Finally, the TAC is recommending that impact studies be carried out on possible trade agreements. But would these be impact studies on the whole economy or just the farming community? Either way, the fact that the government has already signed a zero tariff and zero quota deal with the EU without doing an impact study makes this idea, along with the rest of the report, obsolete. If the Commission is suggesting that only new trade agreements should undergo scrutiny that was not required of the recently ratified EU-UK Trade and Cooperation Agreement, then this is probably against the WTO's regulations. Conclusion There will always be a question as to whether it was wise for the Government to ask an industry group to advise them on trade policy and expect to get an objective answer. But if the DIT wants to open its net a bit wider it will find that the Society of Motor Manufactures and Traders (SMMT), the motor industry lobby group, has also written a report (at their own expense) which also has recommendations for the Government that include: Seek new trade opportunities; Lead regulatory discussions; Foster trade promotion; and Link trade and industrial strategies. Almost carbon copies of some of the 22 recommendations of the TAC. I am sure that every industry in the UK would be asking for similar assistance if they thought that they could get away with it. From a free market perspective, this really should not be the "UK's" or even the "UK government's" problem. UK farms are still private enterprise even though they are heavily subsidised now and this TAC report is clearly designed to get additional government financial assistance. The TAC report wants the government and industry to work together i.e., the government should pay for the marketing expense while industry takes the profits. In the real-world businesses promote their own products domestically and internationally so that they can increase their profits. It is only crony capitalists who set up quangos demanding: government assistance; restrictions preventing competition from imports; as well as increased regulations to keep out new market entrants. | 
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