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The State of play
Last week, former Environment Secretary Theresa Villiers warned that British farmers ‘will go out of business’ if the UK signs a trade deal with the United States. Consequently, Ms Villiers voted for an amendment to the Agriculture Bill that she claims would give certainty to UK farmers on standards (and serendipitously protect them from US competition). Although the amendment was defeated in the Commons, the Bill goes to the House of Lords this week where protectionist supplicants will try again.
The current Environment Secretary, George Eustice, also fears that cheap US products will threaten British farmers. The president of the National Farmers Union, Minette Batters, joined the pile on, exclaiming that ‘there may be only 60 days to save family farms’. A beef farmer from Devon told the Daily Telegraph: ‘It would be a betrayal of British farmers if the Government signed off on a trade deal which floods the market with cheap, substandard meat.’
Interestingly, this debate is not about chlorine-washed chicken but feedlot cattle. According to Villiers in a Radio 4 interview, the UK has actually legislated to prevent the importation of chicken that has been washed in chlorine or any other substances that reduces food borne pathogens. Considering that the entire country is locked down by a virus that apparently started in a Chinese meat market, to legislate to preserve pathogens seems a little eccentric. Even Emeritus Professor of Epidemiology at the University of Nottingham, Keith Neal, told Radio 4 listeners on Monday morning that it is safe to go back in to the swimming pool because, wait for it, ‘chlorine kills viruses’.
But what I want to talk about is not Covid or chlorine but the potential benefits of a US trade deal for UK farmers and the danger of the protectionist propaganda that is implying that lower priced imports are necessarily ‘substandard’. They are not.
Does cheaper always mean substandard?
I find it incredible that some UK politicians believe that lower standards must be at work in other countries – even highly-developed countries like the United States – if they are able to produce things at a lower cost. Especially as the same UK politicians don’t seem to believe that ‘cheaper equals substandard’ when it comes to imported cars, or clothes, or electrical goods. With their misguided agricultural patriotism, Villiers, Eustice et al. are making the mistake of believing that price is solely determined by standards and that consumers are solely concerned with price. Neither is true.
In international agricultural price is determined by a whole range of factors: the cost of land, wage levels, currency levels, weather, soil fertility, the cost of seed, pesticides and fertiliser, availability of farm loans, futures markets, crop insurance, logistics, storage and transport costs. The first three items on this list are generally the most important. There is also the thorny issue of government subsidies such as CAP payments, which distorts the price without altering the quality, but more on that later.
A country with a lower cost of living, lower wages and cheaper farming land, coupled with a relatively cheap currency, will be able to produce agricultural products at a lower cost than the UK without resorting to untoward farming practices. In fact, it is much cheaper to let cattle or sheep forage on open grasslands in Argentina (land mass one million square miles) or Australia (three million square miles), than it is to let them live in a barn in Europe. Many European farmers have to keep their animals indoors due to their harsh winters, so it would be misleading for Europeans to claim that lower production costs in countries with temperate climates must be due to substandard production processes.
Some of the US’s larger agricultural states are bigger than the whole of the UK; Texas is almost three times the size. These states also have a lower cost of living than the UK, lower wages, as well as much more farm land. That doesn’t mean that US farmers don’t keep cattle in feedlots: some do, some don’t, and some do some of the time – usually just before the cattle go to market. But then, so do some UK farmers.
The high cost of UK farmland
Some of the costs that UK farmers must endure have been exacerbated by UK regulations. For example, the price of farmland in the UK is not just to do with constrained supply, although at only 94 thousand square miles the supply certainly is constrained. The UK government has exempted farmland from death duties in order to prevent family farms being broken up to pay this tax instead of being passed to the next generation. This exemption is well intentioned, but unfortunately it has made farmland more attractive to wealthy investors also looking to pass on their estates to their children, thereby increasing agricultural land prices for proprietor farmers.
Payments under the EU’s Common Agricultural Policy (CAP) have also increased the value of farmland, as they are now attached to land size rather than farm production levels. Admittedly this is an improvement on the previous subsidies, which resulted in wine lakes and butter mountains. However, although payment for land ownership seemed a more sensible way to boost farm incomes, the CAP has provided a yield to many non-farmers as well, including the National Trust and the Royal Society for the Protection of Birds, both amongst the biggest CAP beneficiaries in the UK.
Instead of helping struggling farmers, most of the CAP payments go to the largest land owners, running the largest and hence most competitive farms. Not all use their farms as imagined by Beatrix Potter or Theresa Villiers. In Scotland, the third largest recipient of CAP payments is the son of a UAE billionaire, who is enterprisingly producing Wagyu beef. Don’t tell Ms Villiers, but the cattle are kept in a ‘Zen-like’ shed – aka an upmarket feedlot befitting cattle that sell for £250 per kg. The family own the surrounding countryside as well but the cattle don’t spend much time roaming the fields, although they do have a private golf course. However, I don’t want to knock Highland Wagyu, as they are a great example of the solution I am proposing for the survival of British farming, as you will see.
Animal welfare or just plain protectionism
Theresa Villiers’ fear of feedlots can only be seen as protectionist. The UK is happy to continue to eat UK and EU factory farmed chickens that live in artificially lit sheds containing tens of thousands of birds, with no access to the outdoors. They are slaughtered in high throughput abattoirs with no requirement to pre-stun; but unlike their US cousins, their carcases are not cleaned with lactic acid afterwards to reduce pathogens.
There are 2500 broiler farms in the UK producing 875 million chickens each year. Although largely self-sufficient, the UK still imports about half a million tons of chicken meat each year predominately from the EU with the Netherlands and Poland providing 60%[1]. UK Chicken farms still abide by EU farming regulations. 90% of UK chickens will be raised at the UK’s minimum standard of 19 birds per square meter, the UK Red Tractor Standard. However ‘extensive indoor (barn-reared)’, the lower of the three higher welfare production standards[2], is only slightly better at 15 birds per square metre. That is three rows of five birds in every square metre. This maybe fine when they are chicks but when fully grown they would be still be unable to turn around. There is no maximum number of birds in a ‘barn raised’ shed and there is no requirement for the birds to spend any time outside the shed. But as they can be slaughtered after eight weeks, this overcrowding may not be for very long.
But Feedlots in the UK are not just for chickens. Only 40% of UK pigs meet the criteria to be called free range, while the RSPCA estimates that only 3% of UK pigs will live their entire life outdoors. The UK imports roughly 40% of its pork from the EU; but unlike in the UK, there are no EU regulations for free-range pork. And the biggest EU supplier is Denmark, supplying 50% more than our second biggest supplier Germany[3]. Are we really supposed to believe that pigs have a better life in tiny Denmark than they do in the vast states of Oklahoma or Texas?
Denmark is a mere 16.5 thousand square miles and produces between 25 to 28 million pigs each year from about 5000 pig farms. For the most part they are kept in what the EU euphemistically calls ‘zero hectare’ farms. Denmark is not alone in this; in France, despite having the largest landmass in the EU, the proportion of pig meat produced by zero hectare farms increased from 31% in 2004 to 64% in 2016, while the proportion of chicken meat rose from 11% to 28% between 2004 and 2016.
According to Eurostat, the number of zero hectare farms in the EU grew by 31%, from 164 000 to 214 000 between 2013 and 2016. At a zero hectare farm, animals are kept indoors and are fed with harvested fodder, or a concentrated diet of grain, soy, and other supplements because according to the EU; ‘farms raising granivores (pigs and poultry) do not necessarily need agricultural land’[4]
Many environmental campaigners believe that the EU agricultural policy actively encourages the scaling up of farms and industrial farming. In the EU only poultry benefits from specific housing limits for barn reared, free range and organic distinctions. There is no limit on the density rate for other types of livestock unless it is labelled Organic. Some MEPs are hoping to change this and have proposed withholding national subsides unless the animals are housed at a density where they are able to ‘turn around’. So not a big improvement, but something.
Scuppering a trade agreement with the US to prevent industrially farmed meat being imported into the UK is unjustifiable when there is so much industrial farming not only in the EU, presently the UK’s largest supplier of agricultural products, but also in the UK. According to Compassion in World Farming, in 2017 the UK had 789 ‘US-style’ mega farms – defined as a factory farm warehousing more than 40,000 birds, 2,000 pigs or 750 breeding sows. The largest UK poultry factory-farm houses 1.7 million birds; the biggest UK pig factory-farm holds about 23,000 pigs; while the biggest UK cattle factory-farm houses about 3,000 animals. The idea that signing a trade deal with the US will flood the UK with cheap substandard meat does appear to be shutting the gate after the horses have bolted. The UK’s and EU’s own factory farmers are already doing this.
However, if UK consumers are happy to eat intensively farmed chicken, pork or beef, then that is their prerogative. For the record, I don’t buy either. But I also do not decry other people’s preferences. Factory farming has lowered the cost of protein for millions of consumers. But given the choice, surely it is better for the UK to import free range meat from lower cost producers, than legislate to protect their own factory farmers from competition?
Politicians can hardly claim that the UK population are demanding better animal welfare. According to DEFRA[5], in 2018 only 2.7% of British farmland, 474,000 hectares, was classified as organic and this was 8.4% lower than in 2017. Although poultry farmed organically in the UK in 2018 was almost 3.4 million birds, this equated to only 1.8% of the total UK poultry population. Sheep reared organically in the UK decreased by 6.8% to 827 thousand animals in 2018, about 2.5% of the total UK sheep population of 33.8 million. Pigs reared organically in the UK also saw a decrease in 2018 of 4.2%, falling to 37 thousand animals less than one half of one percent of 10.5 million animals. On the positive side, organically reared cattle increased by 10% to 324 thousand in 2018, but was still only just of 3% of the total 10 million UK cattle population.
So UK consumers have already voted with their wallets. If the percentage were the reverse – if 97% of British farmland was organic or even 51% – then maybe Villiers would have a case for protecting British family farmers. But it isn’t. This amendment would only be protecting UK factory farmers.
If this isn’t about animal welfare standards then what is it about?
Unsurprisingly the British Poultry Council BPC Chief Executive, Richard Griffiths welcomed George Eustice’s stance[6]. Griffiths claims that protecting British farming standards will ensure access to British grown food for all and prevent the creation of a two tiered food system where only the rich can afford ‘British grown food’. But British factory farmed meat is not expensive. It is so cheap that environmental groups are constantly demanding that we eat less of it. Thanks to factory farming, few UK citizens are in a position where they cannot afford to eat meat.
But Griffiths gives his motivation away when he goes on to say that he wants the healthy trading relationship with the EU to continue. The profitability of UK chicken farms, whether factory farms or family run farms, depends on exporting unwanted dark meat, roughly 50% of the meat on a chicken. British consumers prefer breast meat to dark meat such as wings, legs and thighs. Currently much of this dark meat is exported to the EU but this is simply because of our present EU trading restrictions, we should not assume that there are no markets for this meat outside of the EU. Although South African farmers have been complaining since 2017 that the EU is dumping dark chicken meat on their markets[7]so maybe the EU is simply the middle man.
It is probably worth mentioning at this point that the fashion for eating white chicken breast meat began for health reasons because it is leaner than brown thigh meat. But Grass fed animals, free to roam in a paddock produce much leaner meat than feedlot animals. Maybe the UK family farms should be promoting their leaner meat as a selling point rather than trying to block the trade deal.
Antibiotic use in the fattening of farm animals
The reduction of antibiotic use in farming has been a worldwide initiative to stem the growth in antibiotic resistant diseases. Unfortunately, while antibiotic use in farming has fallen in much of the developed world, the high use of antibiotics in intensive farming has now moved to some developing nations. Use of antibiotics as a preventive health measure (with serendipous growth enhancement benefits) is predominately used in intensive agriculture were thousand or hundreds of thousands of animals are kept, inside and in close quarters. So countries with predominately mainly outdoor grazing agriculture such as Australia and New Zealand have very low usage.
In 2017 the US Food and Drug Administration banned the use of antibiotics to make animals grow quicker, a practice known as growth promotion, and US farm antibiotic use for this purpose has been falling since the ban was announced in 2014. The new rules meant the drugs, formerly available over the counter, can only be obtained with a veterinarian’s order for a sick animal. The FDA banned US chicken farmers from using the critically important antibiotic fluoroquinolones in 2005. They can still be given to cattle and pigs, but account for less 1% of total antibiotics use in US agriculture. Regrettably, the EU and the UK have not followed suit and fluoroquinolones are still used in the UK and in the EU agriculture.
Although the EU technically banned the use of antibiotics for growth promotion in 2006, some EU countries still have the highest use in the world. Cyprus, Italy, Spain, Hungary, and Poland. Some UK lobby groups are trying to block a US trade deal claiming that the US’s antibiotic use in farm animals is too high, however high antibiotic use has never been a problem for the UK’s trade with its second largest EU chicken supplier, Poland. While both Italy and Spain provide the UK with dried and cured hams and sausages despite their extremely high use of antibiotics. The EU plans to ban all routine antibiotic use at the end of Jan 2022.
It is difficult to compare antibiotic use between countries, for example, the country with the lowest antibiotic use in the world is Greenland but this isn’t to do with their animal husbandry. It is also misleading to refer to an average or medium Antibiotic use between EU states as antibiotic use depends on whether a country is intensively farming chicken and pork or mainly grazing animals such as lamb and beef cattle. European diets vary as well some central EU countries have a diet based on pork, high intensive farming, while other EU countries have a diet is based on fish, low antibiotic use. While many EU countries have outsourced a lot of their intensive agriculture to other EU states, together with their antibiotic use.
It is hard to keep up the pretence that the UK’s factory farming standards are so much higher than the US’s but it is good to read that both countries have dramatically reduced their antibiotic use in Agriculture since 2015. According to the British Poultry Councils website, the UK has lowered its antibiotic use in poultry production by 80% since 2012. While the US cattle farmers have slashed their use by 40% since 2013. One thing that is obvious is that we have all been eating far too many antibiotics. But before that UK threatens to withhold a trade deal from the US over antibiotic use, they might want to ban their own use of fluoroquinolones as these are classed as critically important to human health by the World Health Organisation.
Consumer choice and welfare labelling
Right now, UK consumers have a choice in every supermarket. Whether they are buying chicken, pork, lamb or beef, they are all available in ranges from budget, branded, specialist feed, a particular breed, free-range, organic, even pre-prepared with an accompanying gourmet sauce.
Provided food is safe to eat, the government should not limit consumers’ choices with import restrictions. All the government should do is ensure that everything is labelled and let the consumers decide. Right now, the label on a UK produced budget chicken does not tell potential purchasers that the chicken spent its short and unhappy life in a shed with a cement floor and 40,000 other birds, but maybe it should.
If politicians really want to improve animal welfare, then they should make sure that consumers know how all meat sold in the UK has been produced, regardless of whether it is from imported or domestic production. Labels should state not just the good, such as free range, grass-fed or organic, but also the bad. Maybe even a photograph of the animals’ living conditions. Other products require truth in advertising but not our food – why not? Why do we let producers use a drawing of a hen outside a 1930s style barn on a carton of eggs, when the eggs come from hens stacked in metal cages inside a giant warehouse?
So should we protect UK farmers from international competition?
UK farmers don’t need protection; they need more self-awareness and a lot more self-confidence. Just as any other private business, UK farmers have to ruthlessly assess what they can produce competitively and be open-minded about the possibilities. Competing in the international market, without subsidies, would give them the self-confidence to appreciate their many talents. This is exactly what happened to New Zealand agriculture 30 years ago.
Granted, UK family farmers do not have the benefit of a low currency, cheap farmland, or a low cost of living. But they do have, or could develop, a superior product that they would be able to sell at a price that covers their higher costs of production. The UK has to accept that they are unlikely ever to be the cheapest producer on a world marketplace – but in certain products, they could be the best.
The French fashion industry realised this in the early 1990s. Unable to compete with clothing made in countries with lower production costs and lower currencies, most people were predicting its demise. But the French fashion houses have not gone out of business. Instead they have become larger and more profitable by amplifying their up-market credentials, protecting their brands and only supplying top of the line products for the world’s wealthiest.
British agriculture could take a similar route, but they have to stop believing that people only want cheap food. They don’t. The UK’s largest agricultural exports is whisky, and the UK didn’t sell 374 million litres of whisky in 2018 because it was cheap. The UK sells whisky all over the world, even in countries with high tariffs, because it is considered the best.
At a certain level of affluence, price ceases to be the only criterion of choice
Although basic economic theory tells us that the amount that people spend on food will become a smaller and smaller part of their total consumption as they become more affluent, this theory only appears to hold true up to a certain level of affluence. When people have enough of the basics, they begin to spend more of their income on food, opting for eating in restaurants, having restaurant deliveries or buying semi prepared food even though it is cheaper to make it yourself from scratch. Also many people will pay more for food they perceive to be better quality, or more exotic, or free from additives or that they believe has been produced ethically. We know this because, if there were not a market for these choices – they would not be available in every supermarket in the land.
British farmers will never be feeding the world’s poor. But they could be feeding the world’s affluent – if they concentrate on producing a high quality product; pay more attention to branding; advertise their higher standards of animal welfare; and promote grass-fed cattle over feedlot cattle. There is a market for this.
At the same time, the less affluent section of the UK population should be allowed to eat less expensive, imported food if they want to. Why would any politician want to prevent them from doing so by restricting imports? Provided food is safe to eat, if it can be imported at lower prices from other parts of the world – it should be.
An Australian example
As an Australian, I grew up with complete confidence in my country’s agricultural standards. I knew that our cattle had been grass-fed, spent their entire life outdoors, and produced beef that is lean – because Aussie farmers use British breeds that are slow to grow and free to roam in massive paddocks. Australia also has the highest proportion of organic grassland in the world, not because we are zealots but because that is what grows naturally – it’s cheaper.
When the fashion for grain fed beef began in the 1980s, the Australian Meat and Livestock Corporation fought back by extoling the virtues of lean grass-fed beef that advertisements reminded us: ‘walked to work’. But they did not ban grain-fed beef. They let the consumer decide. Some misguidedly chose the fat-filled, grain-fed beef – ironically not because it was cheaper but because at the time, it was more expensive. Some may have mistakenly believed that more expensive must be better, others might just have preferred that fatty taste. Who knows?
Australia now has a free trade agreement with the USA. It includes beef, a commodity that both countries produce very efficiently. Consumers in both countries buy beef from the other without driving either out of business. But grass-fed Australian beef is now the more expensive commodity, retailing at about 30% more than grain-fed beef. Grass-fed beef is strictly labelled, and supermarkets are fined for mislabelling. Grass-fed beef is popular for being higher welfare and for containing less fat and more omega 3 fatty acids.
The benefits of a US UK trade agreement
Trade is rarely a one-way process. Most countries see trading into the US market as a potential goldmine rather than fearing competition in their home market. Many UK exporters such as Burberry, Mackintosh, McLaren, Range Rover and JCB may all face competition from a US trade deal – but they are not demanding protection from US “substandard” products. If their US competitors are really producing to a lower standard, then that will make it easier to sell into the massive US market, with the added advantage of their products now being tariff fee.
Many British farmers may discover that some Americans prefer to eat grass-fed Hereford beef, or Welsh lamb, or Scottish smoked salmon. Even British sausages are different to their American ‘hot dog’ cousins. Certainly traditional English Cheddar should be well received in the US, as would Stilton, Wensleydale and Red Leicester. The UK could possibly even export grouse, partridge or pheasant. Despite kangaroo being a delicious meat, Australians never commercialised its production until they discovered in the 1980s that they could sell it to the Japanese. Similarly, Australians discovered that their (extremely) wild boar – descendants of three escapee pigs from Cook’s first voyage and considered a dangerous pest by Australian farmers – could be sold to Germany as a delicacy. Trade produces some unexpected windfalls.
Conclusion
The UK can produce a lot of high value food to export and simultaneously can import lower cost – but not lower standard – food that would be welcomed by the half of the population who earn less than the median UK income of £29,600. Some people may be happy to spend their incomes in restaurants, or on rarer foods, or on higher animal welfare products, while others will want to save money on food to spend on other things.
Politicians should let consumers decide demand for themselves and let trade do what trade does best: provide the most efficiently produced products to meet that demand.
If UK farmers want to survive and flourish they need to produce high-quality products that people are prepared to pay for, and make sure their customers know how to recognise their brand.
[1] https://www.trademap.org/tradestat/
[2] EU regulation 543/2008 Annex V
[3] https://www.trademap.org/tradestat/
[4] https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Agri-environmental_indicator_-_livestock_patterns#cite_note-3
[5] DEFRA, Agriculture in the United Kingdom 2018, ONS June 2019
[6] https://www.britishpoultry.org.uk/welcome-george-eustices-commitment-to-maintain-uk-standards-in-trade-deals/
[7] https://www.euractiv.com/section/trade-society/news/south-africa-and-eu-spar-over-chicken-meat-dumping/
