Brexit perspectives : Lessons from NZ

Wednesday, 16 January 2019

With the loss of direct payments now one of the few political certainties for farmers and growers in England and Wales, discussions often cite New Zealand as a shining example of subsidy-free farming.

In 1984, a snap election in New Zealand brought in a wide-scale programme of austerity, which saw budget cuts and price supports being removed from a number of sectors, including agriculture. Fast forward to 2019 and agriculture is New Zealand’s largest trading sector.

England and Wales, on the other hand, have a little more time to adjust during a seven-year transition period, although reductions in direct payments will start for larger enterprises as soon as 2021. Also, direct payments will become separate from the requirement to farm the land and may be paid in a single lump sum, meaning farmers and growers can invest in their farming enterprise, diversify or even retire from farming.

The New Zealand cuts, combined with other economic factors, served to hold up a mirror to an unprofitable and inefficient agricultural sector and marked the beginning of a period of significant change as the industry adjusted. So is it fair to draw parallels between the two countries? The change process is one that few countries have experienced, so how do the situations truly compare? Are we in a position to replicate New Zealand’s success story here at home?

We’ve published updated analysis to help industry answer some of these questions.

The report highlights many differences between UK agriculture now and New Zealand agriculture in 1984. And expecting the domestic industry to respond and work in the same way as it did 33 years ago would be a dangerous precedent to set.

But there are some key lessons that can be taken from the New Zealand experience. We can expect the transition period to be challenging for many farmers and growers, especially in light of Brexit and all its ramifications on our industry, many of which currently remain unclear.

And in order for the UK agriculture industry to be successful, there will need to be a focus on efficiency and streamlining. Fundamentally, success for UK agriculture post-Brexit will come from the same school of thought as it did in New Zealand – efficient, market-led production.

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