Page last updated at 08:36 GMT, Wednesday, 26 November 2008

Farm subsidies - a necessary evil?

By Sarah Mukherjee
Environment correspondent, BBC News

A farmer ploughs a field in East Sussex, UK
The EU has agreed to redirect subsidies towards conservation

Over the last few years, agriculture ministers have been working to dismantle the system of paying farmers subsidies for the food they produce known as the Common Agricultural Policy, or CAP.

Originally set up to increase productivity and stabilise markets in a Europe still haunted by the spectre of wartime hunger, by the 1970s and 1980s tales of butter and beef "mountains", bought and stored by European officials to keep the price of produce artificially high, led to calls for reform.

It took many years, but payments are now being shifted to instead encourage rural development and good environmental practices on farms.

But some agricultural experts are warning that as world food supply is predicted to fall behind global demand, a return to production subsidies may be the only way to ensure we can continue to feed ourselves in the long term.

Although the words "agricultural subsidies" bring for most people the excesses of the CAP to mind, direct production subsidies are nothing new.


Governments have intervened to keep the price of basic commodities stable for hundreds of years, and after World War II - many years before the UK joined the European Union - farmers were paid to produce food.

Lord Plumb was president of the National Farmers' Union in the 1970s and of the European Parliament in the 1980s.

"It was Sir Winston Churchill who said, just after the war, '30 million people all living on an island where we produce enough food for, say, 15 million, is a spectacle of majesty and insecurity this country can ill afford,'" he says.

"That system of guaranteed payments which was created in 1947 created a fairly stable market for some time.

"History will prove that these were consumer subsides rather than producer subsidies that at least gave us that stability in the market."

New technology

"Consumer subsidies" sounds like a contradiction in terms, but many commentators agree that the CAP helped to underwrite the huge growth in agricultural productivity in the 1960s, 1970s and 1980s.

The BBC has had access to an as yet unpublished report commissioned by the government's chief scientist, John Beddington, into the agricultural and economic elements of food security.

It suggests we could double, even treble, our agricultural production in years to come with better farming techniques.

Food supply is going to change so dramatically [that governments] will not be sure what levers to pull
Lord Haskins
Former government agricultural adviser

But government advisers say this agricultural revolution will not happen unless there is price stability in food markets and farmers feel confident enough about their profit margins to invest in new technology.

Recently, however, the market rate for many crops has been very unstable, as world demand for grain and meat increases.

Lord Haskins, a former adviser to the government on agricultural issues, says despite this, a return to subsidies would be a huge mistake.

"Protectionism crept in in the 1930s and led indirectly to the Second World War," he says.

"Europe is going to be one of the bread baskets of the world, particularly with climate change, so I don't think we are going to have a food security problem.

'Food crisis'

"The problem is going to be for governments that food supply is going to change so dramatically they will not be sure what levers to pull."

Patrick Holden, director of the organic farming body the Soil Association, says that the old CAP was so disastrous it has given public funding for agriculture a bad name.

There are some things that only government can do
Patrick Holden, Soil Association

"But given the unprecedented precariousness of our food system and the growing likelihood we could suffer a real food crisis triggered by an external event like terrorism or a weather event, it's time to re-evaluate the role of government intervention in our food systems," he says.

"There are some things that only government can do."

Mr Holden wants to see the government intervening to help make food systems more local.

Whatever their view on subsidies, everyone agrees a return to the megalithic CAP of the 1980s is not the solution.

Intervention, supporters say, needs to have a light touch - available when needed, but easily withdrawn when price stability is achieved.

Whether the public could be convinced of any of this, especially in the current economic conditions, is another matter.

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