Listen: Will food prices go up - ft.com/brexitunspun
How much food does the UK import from Europe and how dependent are UK farmers on European subsidies? Will the price of food in supermarkets go up, or down? And will food safety standards change? Siona Jenkins discusses these and other questions with Scheherazade Daneshkhu, FT consumer industries correspondent, and Tim Lang of City, University of London
Presented by Siona Jenkins. Produced by Fiona Symon.
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Welcome to Brexit Unspun, a podcast that looks at the impact of Brexit on our economy, our institutions, and our daily lives. Today we're going to be looking at something that is a key concern for all of us, food. How much do we import from Europe? How dependent are our farms on European subsidies? Will the price of food in our supermarkets go up or down? And will food safety standards change?
With me in the studio to discuss this is Sheherazade Daneshkhu, our consumer industries correspondent, and Tim Lang of City, University of London, who's an expert on food sustainability and public health.
Sheherazade, we've all noticed some increase in the price of food as a result of the fall in sterling since the Brexit referendum. But what are retailers telling you?
Well, retailers and food manufacturers are under a lot of pressure from rising costs. We've had several years of food price deflation, but all that's changing now. There are two main reasons for this. One is that commodity prices-- the price of butter, milk, various inputs-- have been going up in the last year or so.
But also, as you mentioned, sterling has fallen very sharply since last year's referendum. And that has exacerbated those price rises. So recent inflation figures show that food prices are rising at their fastest rate in four years, at 4%. And what's happening is that food manufacturers are trying to pass on these costs to their customers, which are the retailers, the supermarkets.
And the supermarkets are finding it very hard to pass on the costs to shoppers, because they are facing a lot of competition from the German discounters Aldi and Lidl. Nevertheless, they are managing to pass some of those price rises on, but not the full extent.
Now, you've also recently interviewed farmers who warned that they were having to leave crops in the fields to rot, because they couldn't find the seasonal labour they needed to harvest them, because of a falling migration from the EU. How big a problem is this?
Yes, it's a problem that's been growing throughout the year, in terms of fewer migrant seasonal workers presenting themselves for work. And recently, I was looking on the website of Cornwall council and that was a region that voted to leave the EU. And the council were saying that they're suffering a shortfall of migrant labour, something like a 35% shortfall of labour. And that they were unable to harvest fully this autumn.
And I've been talking to farmers. We've seen a similar problem in parts of Scotland, Kent, and the West Midlands. They're all having the same problem with harvesting apples, blueberries, and raspberries. But I would point out that we're not seeing the wholesale price of domestically produced food rising at the moment. I've been having a look at those figures. So that suggests that although this problem has manifested itself, it's not serious enough, at least yet.
What will happen about the loss of EU agricultural subsidies? And what are farmers telling you about their ability to survive without them?
Well, this is a huge concern for the farming industry in general. It's very dependent on subsidies. These mostly take the form of direct payments under the EU's common agricultural policy. And based on the last set of figures from the Department for the Environment, the basic payment count of something like 74% of the average farm income.
Now, I should add that that figure was exaggerated by the fall in the price of sterling against the EU since the payments are made in euros. But nevertheless, now the government has said that it will continue to pay the same cash total of GB 3.27 billion annually that farmers receive in support. Until the end of this parliament, which-- in theory-- is 2022.
Of course, we don't know how long this government will last. And the talk is of rewarding farmers for providing environmental benefits. But really, we haven't had any detail on how this transition will take place. And, of course, it is a source of anxiety for farmers, particularly given that obviously, they have to plan years ahead in terms of growing their crops.
Turning to you, Tim, you coauthored a recent report which looked at the impact of Brexit on the cost and availability of food. Could you outline your findings?
Yes. I'm still surprised that our report is still the only publicly available report on food. I'm surprised because in the run up to the referendum, basically we tried very hard-- lots of people in the food industry, academics-- to get the food issue on the agenda. It just didn't feature.
And that is one of the main points of our report that came out in July this year, which is that food is a massively important issue within the Brexit process and is barely getting any attention. And yet, exactly as Sheherazade has been saying, it's already having impact on consumers. In particular, our low income consumers. So that was the first point.
The second point is we have been waiting for five years from the coalition government and the current conservative government for a new vision for agriculture. I indeed read the 25 year food plan four years ago. We're still waiting for it. And why that matters is because when and if Britain leaves the European Union, what then? What's the vision? What's landfall? What's the point of farming?
Sheherazade was talking about farming and consumers. This is the biggest industry in Britain. This is nearly 4 million workers. Food manufacturing is the biggest manufacturing sector in Britain. It has a huge identity role. British consumers say they like eating British food. Actually they're getting 31% of their food from within the European Union.
There is a basic food security issue at stake. Our report outlined 16 really hot issues that must be addressed. One of which is literally trade. And we're already beginning to see-- in the Financial Times and other newspapers and TV-- it's beginning to cover this. The potential for massive holdups at ports.
And there is also the really tricky issue of Ireland and Ireland's politics, north versus south. And that mainland Britain is the main recipient, let alone the conduit, of Irish food commodities piling through the ports, Holyhead, et cetera, and going through to the rest of Europe. So within Brexit, the food issue is, if you like, a microcosm of a huge problem.
And the final point our report makes is that this is basically a battle about culture. It's about environment. It's about jobs. It's about the economy. It's about prices. It's about all these complicated political economy issues. But it is actually about culture. What do the British want?
And it's like an ink blot. How do you interpret it? Is it all going to be perfect afterwards? Well, Brexiters say yes but aren't telling us how we're going to get perfection. And the Remainers say, well, we want to stay in it, when in fact most of the Remainers spent all their time campaigning against aspects of the EU.
So the conclusion for our report was that this is an opportunity to have a really big think. Whatever happens in the process, whatever the outcomes, this has to be a major turning point for thinking about Britain and its food and its role in the 21st century economy.
So are you optimistic? You said at the conclusion of your report that this is a chance for a rethink. And are you optimistic that this will happen, given that there's been a delay for publishing this plan for the future already?
We're not optimistic about the politics. My colleagues and I were old colleagues from three different universities, with very different traditions and disciplinary backgrounds. But from wherever we stand, we have pretty good antennae and we've spent two years-- both before the referendum and since-- really trying to dig into this and the potential for it.
Our argument is essentially what we called [INAUDIBLE]. This is the occasion for having a one nation food approach. Unless you're seriously going to say you want to continue people on low income dying prematurely from diet-related diseases, which is what we have at the moment. It's a massive income inequality gap between life expectancy. A large amount of that is diet related.
If you really want to continue that, OK, fine, there's not much of a discussion. Carry on. But if you want to improve the food system and address the big coming 21st century issues-- climate change, biodiversity, water, nitrogen, phosphorous-- where the food system is the major driver of ecosystems, which is why it features totally across all of the sustainable development goals, why it's a major issue of the Paris climate change talks. Basically, if you want a better world, you've got to sort out food.
And here we have in Britain, an opportunity to do that and to really think about it, whatever happens in Brexit. And we make all sorts of suggestions in our report, because we're policy people. Obviously I was lead author, I was the world's only professor of food policy. Now I'm glad to say there are others. And we made proposals for what we think policymakers should do.
Like we need to have a national commission, a standing commission, which operates as a sort of an orbiting body that just keeps pushing the food issue as an integrating point for public policy of the agenda. And it's lean, it's mean, it's very easy to do. But the main issue is to bring the public on board.
The public are not realising it, although they're beginning-- because of price rises, they're beginning now-- to see the enormity. Even those Brexiters who thought nirvana would happen, they're now saying, wow, it means more expensive food. Not just because sterling going down, but because of dislocation of supply chains, labour relations, labour processes. This is a major moment of restructuring unfolding before our eyes.
So Tim, do you think going forward that we are going to get more of our food from other sources beyond the EU?
For someone like me who is a boring academic, I take the very long view. Britain was last self-sufficient in its food maybe in the mid to late 18th century. And the really important issue is to remember the whole debate about the corn laws and the repeal of the corn laws at the beginning of the 19th century, culminating in the repeal of the corn laws. Those were taxes on imported foods that protected British producers. When that happened, gradually, food prices went into a decline. And the amount of production from within the British Isles dropped.
World War I shook us up. We had to start growing it again. Went back to situation as normal, relying upon the empire, getting other people to feed us. 1939 Britain was producing about 30% of its own food and, in the Second World War, had to rapidly increase that. Forced labour, land army, women conscripted to work on the land.
And after the war, there was a big restructuring. Acts of Parliament said, we've got to produce more food ourselves. And it went to the high point in the early 1980s. We were producing about 80% of our own food. Well, it's now down to 60%. And arguably, on some figures, it's about 54%. So we're importing, let's call it, 40% of our food. 31% of that 40% is coming from the European Union.
So if we're not going to get it from the European Union or it's going to cost more, where are we going to get it? And this is one of the most extraordinary debates going on inside cabinet that we're not seeing publicly yet. We've got different nuances among so-called neoliberals within the minor group, who've taken us down this route.
Do we become an appendage of cheap American food? Do we try to recreate the empire? Companies are now already being switched and turned. They don't really know what they're getting. There's no clarity yet. Should we produce more food? It depends on what product we're talking about.
Most of us in this world of food policy think that, yes, everywhere in the world, rich countries tend to get others to feed them because of labour issues and land use issues. We ought to produce more sustainably. We ought to be feeding more people per hectare. If there's one indicator we in our report stress, it's probably that.
But we've got to do it in a sustainable way. There's no point having British food if it's high carbon and adding to climate change. So there's a really complex juggle that has to go on. And that's why, in our report, we concluded that there's a really serious issue, that Brexit is being a deviation from getting the food system right.
Sheherazade, do you have anything to add to that?
Yes, I'll just pick up on Professor Lang's point about trade, which obviously is very important here. And the self-sufficiency point. I mean, British consumers have now got used to having certain types of food all year round-- pineapples, exotic things, pomegranate. And these types of food can't be produced here.
And what the farming community is very concerned about, given the amount of trade that it does with the EU, is exactly what kind of trade arrangements we're going to have after Brexit. And whether there will be tariffs and whether that will make some types of food production, perhaps lamb, uneconomic.
I would just add to that. One of the critical issues in this legislation that one can identify is the issue of food standards. One of the attributes of being a member of the European Union is Britons had to negotiate with other countries about standards. That's what the Brussels Process actually is. It's not Brussels telling us what to do, as some of the tabloids like to say. It's actually a negotiation between member states.
And Britain has been very powerful, because we have a very powerful food industry, retailers and manufacturers. That is now all up for grabs. What are those food standards? And in our report, it took off in publicity around the issue of the fact we were flagging one of our 16 points was the issue of food standards. And it's going to be very delicate.
And we said, look, if you're going to get chicken operating to American standards, you're going to get poly-chlorinated, washed chicken. Well, that is still running. And it, in a quiet little way, completely derailed Liam Fox when he was in America about to try and do embryonic deals about this.
And suddenly, the backlash was really mainstream. There's a long record of anti-adulteration concerns in the British public. It's sort of deeply ingrained. So I think the issue of food standards will be very important leverage point, but also a connection point between the political economy aspects of Brexit and food and consumption. It matters to people. No one likes to think they're getting worse standard food. And that's what they might very well get out of Brexit.
Now, if I can bring in one of our listeners at this point, Hayden Evans, a dairy farmer producing organic milk, wrote in with these comments. I'm quoting him here.
"One of the milk co-ops supplies cheese to America under an EU trade deal. And there is a lot of anxiety about a new bespoke bilateral trade agreement post-Brexit and the time it could take. The UK is also short of processing capacity, and the shortfall in this area is made up by the EU. In this particular case, France. A wrong Brexit deal would put a huge pressure on this area."
Tim, is this a typical concern?
Yes, it is. What people don't realise-- but farmers, growers, and sellers and retailers clearly do realise-- is that a whole web of relationships and contracts and specifications is the ground on which the food system operates. If we change that, which is what Brexit does, all of that has to be renegotiated.
It's not just tariffs, it's standards. It's not just sourcing from Europe, it's contracts with whom? Done how? Under what legal basis? What points of arbitration? What ultimate act of arbitration is possible? And You're beginning to see farmers who voted overwhelmingly to leave, despite the union saying, please don't, beginning to realise the enormity of it.
But in our report, we three professors concluded actually, people will still vote for Brexit. It's not the rational situation which changes minds, it's actually identity and cultural and mass psychological issues. And partly, that's one of our points. And in answer to Hayden the farmer, he's right to have this concern. Many others have it, too.
But ultimately, we've got to discuss, well, what do we want from our food system? If people are prepared to pay more or to get lower standards and get it cheaper and have it shipped from abroad and have a neo-colonial food system, well, fine. Actually, it won't be fine. But that's the consequences of voting. That's the politics of referenda.
Finally, I'd like to ask both of you how you think the government has handled the Brexit negotiations in relation to food and farming so far. Can I start with you, Sheherazade?
Well, I think the government has kept its cards very close to its chest. I mean, one thing that the farming community says is that they are frustrated that so many months after the referendum, they really are no clearer as to what the path after Brexit is going to look like, both towards Brexit and after it.
And one sense of frustration is that we've had three different heads of department since the middle of last year. So farmers are having to go-- and the industry is having to go-- and explain its case. They do say they get a very sympathetic hearing, that they believe that the government understands what they're saying very well. But that's it. That's where it stops.
We don't see that resulting in any policy measures. As I said before, the government's made clear that it wants to reward farmers in the future for providing environmental benefits rather than producing food. But how they're going to get there is going to be complicated. They've said there'll be a gradual transition phase, but there are no details.
I agree, the lack of detail is the problem. But there's a lot of thinking going on beneath the surface. There are some fundamental contradictions, I think Sheherazade and I would agree. Our Secretary of State for Environment, Food, and Rural Affairs, Mr. Gove, is making very surprising and very welcome eco-ish, pro-environment. We wouldn't lower standards for birds and bees, would we? But at the same time, wants to encourage transatlanticism. That doesn't quite match up.
I'm going to be less kind than Sheherazade. And drawing upon immense amounts of interviews we've done-- and particularly, I've done with people across industry-- I've never known such a shambles in DEFRA. I've never known such a weak position. I've never known such difficulties in refusing to talk straight to industry without betraying confidences.
Incredibly senior people have been seeing prime ministers, secretaries of state saying, look, very serious things about potential for national food security. And being just ignored, brushed off. This is astonishing. This is not the way to be a government. This is not the way to treat the public. And I really fear for the consequences.
Well, next week, we're going to be continuing this discussion with a look at farming and the environment. But that's all we have time for today. My thanks to Sheherazade and Tim, and thank you for listening. We hope you'll join us next week for another unvarnished look at what Brexit will mean for Britain's trade, economy, public institutions, and private sector.
We'd be delighted, in the meantime, if you wanted to review or subscribe to our podcast on iTunes or wherever you get your podcasts. You can also email us at BrexitUnspun@ft.com if you have a question or would like to suggest a topic for future episodes.