Since formally leaving the European Union (EU) in 2020, British farmers have been faced with a myriad of challenges. Issues with increasing production costs, a shrinking workforce, and bureaucratic red tape have been compounded by the loss of EU Common Agricultural Policy (CAP) subsidies.
In past years, EU subsidy payments have accounted for 50–80 percent of UK farmers’ income. In leaving the EU, the British government committed to slowly phasing out the CAP subsidy payments. In 2022, farmers lost between 20 and 40 percent in subsidy income compared to 2021. By 2024, subsidy payments will have gone down between 50 and 70 percent. This loss in income has coincided with large production cost increases. In the past year alone, the cost of fertilizer has increased by around 171 percent, in part due to the war in Ukraine. Rising energy and fuel costs have made it more difficult for farmers to harvest and transport produce. All of these factors have led some to believe that the UK will enter a food supply crisis. As the CAP is being phased out, Parliament has not supplanted it with a domestic alternative. Farmers are reaching a breaking point. The UK government must implement new, better subsidies to support domestic farmers, and they must do it now..
The EU CAP was launched in 1962 in an effort to revitalize European agriculture after the devastation of World War II. When the program was started, it supported farmers through minimum price guarantees. A price floor was set for major crops, ensuring that farmers made enough money from crop sales to recover the cost of farming and maintain a reasonable quality of life. Starting in the 1990s, as production outpaced market need, the EU reformed the CAP to limit how much food was produced and instead pay farmers additional income for environmental initiatives. Through the 2000s, direct payments to farmers continued to increase.
Making up a third of the EU budget, the CAP is the one of the largest and most impactful EU programs. According to a 2018 brief to the House of Commons, “CAP subsidies can make up anywhere from 50 to 80 percent of a UK farmer’s income.” Without subsidies, 42 percent of British farms would have experienced a financial loss between 2014 and 2017. Direct payments have been a lifeline for British farmers.
Despite its importance, the CAP has also earned some criticism. Several environmental groups say that the CAP does not go far enough in protecting the environment. They claim that the CAP does little to stop wasteful energy and natural resource management, even though the subsidies seemingly reward conservation efforts. Until it was reformed in 2021, the CAP allocated a majority of subsidies to large factory farms. Finally, in the UK, policymakers argued that the country was contributing more to CAP than it got back. One of the main arguments in favor of Brexit was that the UK was a net contributor to the EU. By leaving the EU, the government would have more money to invest domestically instead of sending funds to Europe.
With new agricultural subsidies, the UK government has the chance to succeed where the EU CAP failed. In January 2023, the government proposed a new environmental land management scheme (ELMs) that would invest 2.4 billion British pounds (£) per year in domestic agriculture. Under the new plan, farmers can apply for funds under three different programs. The first scheme is the Sustainable Farming Initiative, which rewards farmers for sustainable agriculture practices like increasing soil health and biodiversity. The second scheme is Local Nature Recovery, which will provide project-specific funding to restore the British countryside. For example, farmers could get funding for preserving land as a flower meadow or tree forest. Finally, Landscape Recovery will provide funding for long-term conservation projects. Prime Minister Rishi Sunak has praised the proposal, stating that it will incentivize farmers to invest in new technology and engage in environmentally-friendly farming practices.
While the new ELM subsidies were welcomed by the National Farmers Union (NFU), the organization is maintaining cautious optimism. In January 2023, NFU Vice President David Exwood highlighted the need for transparency surrounding the program’s implementation, saying “It’s vital they [farmers] have the full details as soon as possible.” Exwood went on to call for a “speedy application and payment process,” and the inclusion of all types of farmers, not just large farms. The latter point was a long-time criticism of the CAP, and it is important to make sure the ELMs do not reintroduce old problems.
The new ELM scheme will distribute £2.4 billion per year, slightly less than half of the £4.9 billion that the country got in EU CAP funding in 2019. Pro-Brexit politicians often said that because the UK was a net contributor to the EU, Brexit would lead to increased domestic investment. This has not borne out in the farming sector, as farmers will now receive lower subsidy payments under the ELMs than they did under the CAP. Still, if managed correctly, the new ELMs could improve upon the shortcomings of the CAP.
On some issues the ELMs are already on the right track. In response to the criticism that the CAP did not do enough to protect the environment, the new subsidies are explicitly designed to promote environmental protection and conservation. However, there are concerns that the distribution of funds under the ELMs might not be equitable. Because the subsidies are based on a farmer’s ability to protect the environment, some worry small farmers may be cut out of the deal. Large farmers can afford to leave fields unplanted in return for subsidy income. This luxury may not be available to smaller farmers, who have to use a majority of their land.
The true test of the ELMs will come over the next few years when the program is put into practice. In these early stages, its success will be determined by the government’s ability to identify faults and fix them. This could mean redesigning how funds are allocated, setting up new initiatives for small-scale farmers, or increasing the total amount of funding if the current £2.4 billion is not enough.
Farmers in the UK are struggling. As the costs of production increase and subsidies are phased out, many farmers have encountered unprecedented economic hardship. While a new environmental land management scheme has been passed to replace the CAP, it has not yet been put into practice. While the ELMs could be a much-needed lifeline for British farmers, they are untested. But with substantially less funding than the EU CAP, it is vital that the program is well-managed and the funds are distributed fairly. This will mean avoiding the pitfalls of the EU CAP and working to support all farmers with fast, reliable, and equitable payments.