We can’t eat money: why the UK needs a more joined up ag policy to absorb systematic shocks

June 8, 2022

Posted in Policy

bottles of dark beer standing in a field

British life is measured in the prices of bread and beer, the staples of the mass population. The moment commodities markets go to the races, the whole population feels it.

This inevitably starts with murmurings around energy prices and culminates with soft commodities such as wheat or maize being traded by people in suits who wouldn’t know what to do with one lot (100 tonnes) of wheat if they were ever to take delivery of it.

Farmers are very much the passenger in all of this, price takers on both the inputs to produce their crops and livestock, but also on the outputs. The vulnerability this brings very often means farmers are the proverbial “canary in the coal mine”.

We urgently need a reassessment of the UK food system. The distinct lack of strategy from our policy makers around food security and supply has been starkly exposed by the crisis in Ukraine, and is at our peril. It is not set up to absorb large systematic shocks.

It also brings our agricultural policy into sharp focus as it is evolved. Land use is at the heart of food chain functionality and resilience, and we need to delicately balance production and environmental measures for true sustainability.

As prices of everything from fertiliser to concrete went up every time an order was placed, most of us started to feel the pain of inflation, and no one was thinking it was transitory. We were doing our sums about the amount of working capital it was absorbing in our businesses.

A quick list below shows the amount of impact energy prices alone have on a crop of wheat, with 21 different points at which fuel is required between buying a seed and the mill door.

With inflation running north of 179% on fertiliser and 100% on electricity and diesel, the farmer has to live in hope and little more that the market returns a margin.

I remember discussing the likelihood of Russia invading Ukraine in Jan 2021. At that point we were nervous on so many fronts. It was clear how ill-equipped UK food policy would be to deal with the fall out, knowing we only have one harvest a year and fertiliser prices had already trebled in the preceding eight months. The only reason it had been noticed in any meaningful way by government was the lack of CO2 availability, which did not fill us with confidence.

The UK has become used to shopping on the global market, as a wealthy country the UK can always go to the market and buy what is required, or can it? What if that supply is simply unavailable? We saw during covid just how reliant the whole food system is on ‘just in time’ supply chains, how finely tuned it is to consumers (us!) doing the same things consistently.

There is no central point of government food policy. The levers do not exist for government to pull, they are all owned by private companies. At this point if you want to further understand the dynamics of the food system, infrastructure and businesses, I would point you towards Feeding Britain by Tim Laing.

The compounding impact of soaring fuel and fertiliser prices has been farmers minimising their usage, which is sensible from a business perspective, however it does not maximise the yield of crops. Which potentially means that the UK will need to “shop” on the world market for any deficit.

In more normal times an import year wouldn’t be of great significance but given the challenges in logistics due to the Ukraine crisis and the associated sanctions, this takes on additional implications.

Meanwhile, the drought in Africa continues, famine stalks areas of the developing world like never before and the global south cannot afford to condemn aggression by the hand that feeds it.

Suddenly the question become one of morality, should the UK be shopping on the global market? What impact does that have on nations with hungrier populations than ours?

Which brings us neatly to land use. There are many rural communities finding that prime, productive farms which support rural jobs are being sold, to be planted with trees, to offset the carbon footprints of businesses. Not only are communities facing being hollowed out, but the UK is losing the productive capacity of that land for food. Which potentially leads to greater demand for imported food.

Poverty and hunger is an issue in the UK. With the divide between the high consumption “haves” and the low consumption “have nots” becoming ever wider, it would seem indefensible to not have a food and agriculture policy which drives resilient domestic food production, whilst addressing the issue of food security for the population both domestically and in the global sense.

There needs to be less ‘either/or’ and more longer-term, joined up thinking on how to integrate both production and environmental stewardship into land management, policy and contented, full bellies.

We live in short term political cycles so there is no real incentive to drive careful, long term, joined up policy when the can could be kicked down the road, but I am sure the crises will continue to come thick and fast, and much like climate change, governments of tomorrow will wish that difficult conversations had taken place years ago to put in place a pragmatic policy framework, driving profitable, productive agriculture which protects the environment in our green and pleasant land.

One day the political class may just realise what farmers have known all along: that whilst we need it, we cannot eat money.

The 21 different points at which fuel inputs are required for wheat production between buying seed and the mill door:

  • Seed Processing (electricity)
  • Seed delivery (diesel)
  • Seed handling in to and out of storage (diesel)
  • Drilling – putting seed in ground (diesel)
  • Rolling – firming seed in (diesel)
  • Weed control in the autumn (diesel)
  • Weed control in the spring (diesel)
  • Fungal disease control in the spring (three operations using diesel)
  • Fertiliser manufacture (natural gas)
  • Fertiliser delivery (diesel)
  • Fertiliser handling in to and out of store (diesel)
  • Fertiliser application in the spring (three operations using diesel)
  • Crop harvesting (diesel)
  • Crop drying and handling (diesel)
  • Crop conditioning – aeration (electricity)
  • Crop loading (diesel)
  • Crop delivery to mill (diesel)