Teaching Comparative Government and Politics

Tuesday, February 17, 2015

Farming productivity

One of the key factors of production (land, labor, capital, and entrepreneurship) is land. Since efficiency is one of the key measures of how well factors of production are used, public policy comes into play.

The English countryside is renowned for its beauty and tranquility. Not so much for its efficiency.

[There'll always be an England
While there's a country lane,
Wherever there's a cottage small
Beside a field of grain.
There'll always be an England... ]

Will the MPs in London be able to recognize what they can do for the lightly populated rural areas of England, Scotland, and Northern Ireland?

Dig for victory! Why British farmers are less productive than their international competitors

In the post-war decades British farms were among the world’s best. But that appears to have changed. Though it is hard to compare agricultural productivity across countries, attempts to do so by the United States Department of Agriculture (USDA) and the OECD, a think-tank, suggest that England is now less efficient than its competitors… “British farming may no longer be the world leader it thinks it is,” concluded Andersons, a consultancy, in a report in January. British officials agree.

What is more certain is that British farms are hardly improving. Productivity rose in the late 1990s as farmers managed to produce the same with fewer inputs—that is, costs such as labour, fertiliser and fuel. But the government calculates that farming has improved only slightly since then…

The country’s participation in the EU’s Common Agricultural Policy might explain some of it. Subsidies from Brussels—now falling, but achingly slowly—help to keep unproductive farms alive…

[A]lthough its top farms are among the most productive in the world, many others just trundle along… They are often run by old, generalist farmers whose children have been lured away by good jobs in the cities. A Eurostat study of 27 EU member states in 2007 found that 62% of British farmers were over 55.

Another factor is a shortage of R&D investment. Britain’s public research institutes were wound up in the 1980s. Over the past two decades the country’s spending on agricultural R&D has fallen by an average of 6% per year in real terms…

Britain’s hot market in agricultural land—a popular, lightly taxed investment asset—is another problem. Although land is not always counted as an input in measurements of productivity, its steep rise in value (by 12% year-on-year, according to the latest figures) can gobble up cash that farmers might otherwise invest…

Finally, Britons may be more sentimental about their countryside than others. Farmers whose ancestors have tilled or herded on a property for centuries are reluctant to move or consolidate… Another suggested that Britain’s early industrialisation distanced farming from business and technology in the national imagination; for policymakers, farms became things to conserve, not reform.

Farmers may be custodians of Britain’s beloved landscape, but more of them also need to be entrepreneurs. The government could help by reforming subsidies, creating a clearer path into agriculture for go-getters with commercial acumen and underwriting long-term investment in skills, research and technology…