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Free traders need to stop pretending they’re living in the Corn Laws era

There is no comparison to the UK’s food system in 2020 and the 1800s Corn Laws, and free traders are doing us all a disservice by denying this fact, says arable farmer and NFU Sugar Board member Tom Clarke.

With the assent of the Agriculture Act 2020, for the first time in 174 years the British Government has (perhaps unintentionally, perhaps misguidedly) abandoned a longstanding policy of cheap food.

 

In the 1800s, under the Corn Laws, bread was both scarce and expensive.

 

The working classes spent a big part of their incomes just feeding themselves, and the middle classes were frustrated by the lack of customers with pennies to spend on their wares.

 

Only landowners prospered.

 

In 1846 the Corn Laws were repealed, and in the following decades the price of wheat, and therefore bread, fell.

 

Lots of British farmers left the land and Britain became dependent on imported food.

 

Afford

 

But the general public prospered as food became plentiful and cheap and they could start to afford a higher standard of living.

 

Fast forward to today and free traders in Government believe that, in leaving the EU with its Common Agricultural Policy and the high Common External Tariff on imported goods, they are repeating the same trick.

 

This totemic lesson of economic history lurks in the marrow of every tinpot-Thatcher, PPE-Peel and Brexit Buccaneer.

 

The lesson they draw is that lower tariffs on foreign food lead to greater prosperity.

 

That lesson is misunderstood, and doesn’t apply today.

 

Enriching

 

The enriching effect of repealing the Corn Laws was because, in 1846, basic sustenance was both artificially scarce and artificially expensive.

 

There is no read-across now because the UK has the third cheapest food in the world, produced and sold to some of the highest standards in the world.

 

We have such abundance and affordability of calories that obesity and type 2 diabetes are now indicators of low income households.

 

And we have such year-round diversity and choice that we can expect strawberries at Christmas, chargrilled asparagus for Boxing Day, and even (if you are that way inclined) fresh lychees air-freighted to your doorstep on New Year’s Eve.

 

In 2020, our problem is that food is both artificially cheap and artificially abundant.

 

Nice

 

Some may say that’s a nice problem to have. If only that were the end of it.

 

Firstly though, let’s examine how this modern miracle has come about.

 

Every boy scout and girl guide learns about the fire triangle.

 

To light a fire you need three things: heat, oxygen and fuel. Without all three you can’t light a fire.

 

The same thing holds for cheap food.

 

The sides of the UK cheap food triangle are high standards, low prices and subsidies. Lose any side and the miracle sputters.

 

The price you pay in the shops is not the price of food. There are off-label costs too.

 

Most obvious is tax.

 

Gap

 

To get high-quality, cheap food, Governments fill the gap between regulation and the price tag with subsidy.

 

Farm subsidies stop farm businesses going bust from producing high-quality food at low commodity prices.

 

They are not there to make farmers rich, they are designed to keep food cheap.

 

Hang on a minute, that’s all very well I hear you say – but you’re a farmer and you have a vested interest.

 

I am a farmer and at present I wouldn’t be in business for long without the Government cheque.

 

The Government spends a modest £3bn a year on direct farm subsidies to keep food cheap.

 

Cost

 

But, cards on the table, there is even more cost to the exchequer than that. Farms are also exempt from business rates, inheritance tax and fuel duty – that’s another £2.5bn.

 

So, £5.5bn for cheap, high-quality food. Pretty pricey eh?

 

But, because farmers don’t get to name their own prices, paying subsidies to farmers is like pouring champagne through a sieve.

 

Most of that money ends up with landlords, suppliers, middlemen and, yes, consumers.

 

In fact, the biggest drain on HM Treasury is the estimated £17bn annual cost of exempting food from VAT.

 

Developed

 

We’re one of the few developed countries that doesn’t charge VAT on food, and that’s why the biggest recipient of state aid on food, and the biggest vested interest of all, is the consumer.

There is a second off-label cost to cheap food, and that is the unpriced costs to society, to the environment and (for some) to our morals.

 

It’s the cost of wearing out soil, extracting too much water, pollution, poor animal welfare, unethical labour practices, lost habitats.

 

It’s the cost of low priced food with a massive carbon footprint.

 

In economics, these costs that no one has to pay out for are called ‘externalities’, but they are paid by all of us in the end.

 

That’s why I described lower standard, imported food as artificially cheap.

 

Regimes

 

Often this food comes from regimes with much greater subsidies and/or higher externalities, none of which are reflected in the price.

 

That is why in a recent debate with former Aussie PM Tony Abbot, NFU president Minette Batters said, “Go for ever cheaper food and the world will regret it.”

 

In turn, Mr Abbot (Boris’ new trade advisor) dismissed these concerns as ‘a smokescreen to protect those who don’t want to change or innovate’.

 

If the plan now is for trade deals with low cost exporters to replace subsidies as the way to keep food cheap, then the trade-off is reduced production standards with higher externalities.

 

Few with this vision have been brave enough to suggest the UK might face lower regulation or standards to produce even cheaper food.

 

If you then keep UK standards the same, you also sacrifice domestic production and a vital element of our food security.

 

Gambit

 

So this gambit relies totally on lower standard, artificially cheap foods being grown out of sight and out of mind overseas.

 

Meanwhile, the deception at the heart of the new Environmental Land Management (ELM) scheme is that money formerly paid to farmers to keep quality food cheap will now be for looking after the environment, but somehow, food prices are still going to stay low.

 

That is just magical thinking.

 

But Britain, along with much of northwestern Europe, is well-placed to increase food production under climate change scenarios, and to do it while reducing our carbon footprint or even going net negative.

 

With a global population forecast to hit 10bn, 3bn more mouths to feed by 2050, can we really forsake food and calorie production?

 

Intensification

 

I think not. Sustainable intensification has to be the route.

 

And so, in the wake of the Agriculture Act we can expect a double whammy from this Government.

 

On the one hand, a trade policy which undercuts domestic production standards, and/or raises reciprocal tariffs; and on the other, explicit removal of subsidies for food production.

 

The era of cheap food is over, and from now on our food will cost the Earth.

 

Tom can be found tweeting at @Tom_Clarke

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