Queen Elizabeth gets an annual subsidy of about £650,000 (over Rs 6 crore) from the European Union (EU). That’s for running a farm on her 20,000-acre Sandringham Estate in Norfolk. Not many Brits qualify for such subsidies. Farming accounts for much less than 1 per cent of Britain’s GDP — and employs half a million people, in a country of 65 million. A farm of 700 acres might need three-and-a-half people to work it. Farmers use satellite-guided tractors that drive themselves in a straight line without the driver’s intervention, while vegetables are planted very precisely, again using the global positioning system (GPS), so that machines can harvest them. The annual European subsidy for British agriculture totals the equivalent of almost Rs 30,000 crore, which works out to Rs 6 lakh per farm owner and farm worker per year.
Why is this relevant? Well, less than a week before Britain votes on whether to leave the European Union, the air has been thick with the Brexit debate — focusing primarily on immigration: the number of Poles in the country is greater than the number of farm workers; indeed many of them are farm workers! While the experts have argued over the economic consequences of a decision to break loose, it would seem that only a relatively minor strand of the debate has been on how Brexit might affect British agriculture — which would lose not only its subsidy support but also protected access to the European market with its half-billion population.
That deficit in the Brexit debate has been made up by a marvellous, rambling piece in the current issue of the London Review of Books, by James Meek (“How to grow a Weetabix”). The factoids that I have used here are from him, like the Queen’s subsidy and GPS-enabled tractors. Mr Meek argues that British agriculture might fall apart without the European or an equivalent subsidy. Interestingly, a third or more of the subsidy is paid for maintaining the countryside, allowing birds and butterflies to exist amidst the hedgerows and fields (it’s the same in other parts of Europe). Briefly, Mr Meek considers also the prospects for farmers in poor countries around the world, if the subsidy were not there. That brings Brexit close to home.
One of the arguments by those wanting to “Leave” is that an unencumbered Britain (traditionally more inclined to free trade than continental Europe) would be able to negotiate free trade agreements with countries like India, Australia and others. A leading advocate of “Leave” argues for duty-free food imports — which Britain used to allow before it joined the forerunner to the EU in 1973, even as it also subsidised its farmers. So one wonders, would any FTAs after Brexit include opening up of trade in agricultural goods — at potentially substantial cost to Britain’s farmers? Perhaps, but (as in pre-1973) that might not mean an end to farm subsidies. If Britain’s farms, including Queen Elizabeth’s Sandringham, and indeed all of the British countryside survives in the present form only because of handsome subsidies, no rational government in Britain is going to sacrifice that merely in the interest of free trade with countries like India.
Writers of editorials in Indian publications are in the habit of berating the government’s agricultural policies, especially the many complicated, inefficient and price-distorting ways in which Indian farming is subsidised. India’s total subsidy for farming is very much bigger than what the EU gives Britain, but then Indian agriculture is 15 times the size of British agriculture. The question to ponder is: might we profit from copying pre-1973 Britain, by cutting out the inefficiencies and distortions, and allowing duty-free trade in agricultural goods? As an essential corollary, make sure that farmers get enough by way of steady cash subsidy payments to keep them going through the ups and downs that are a part and parcel of agriculture. Both farmers and consumers might be happier.
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
