KF, well the multi-billion dollar question! Was going to put million but not sure where the dollar will be by the time you read this!!!
May I suggest reading Allan Buckwell's Key Note Address to the CLA conference in May 2007. I think Allan has highlighted the issues ahead.
http://www.cla.org.uk/About_the_CLA/CLA_Centenary_Conference///8311.htm/
The key point is that food security is about to come around and be centre stage again. This time it is not global conflict that is creating the issue but more simply the 'success' of the human race in achieving an unsustainable growth rate. I think we can talk as much as we wish about working without government-originating payments or government intervention, neither will disappear.
One reads a lot about allowing market forces to work and farmers to be unshackled in their decision making. Farmers do, however, have a unique position in that they provide society with a basic service from a business base that is so small and atomised that as individuals farmers are powerless to influence too many broader economic factors around them. Compare this to the other basic utility providers, they are usually and increasingly large and oligopolistic in nature. In some cases they have grown to the extent that governments have to regulate to stop them abusing their position to the detriment of broader society. Free markets are good but ultimately they have to be reined in because there becomes a point that they begin to act against the interests of the broader society. The free market and capitalist system assumes that their is open and transparent competition whereas history tends to show that businesses tend towards seeking a dominant position so as to suppress competion.
Hence, agriculture is the odd one out in that it has millions of producers all of whom are faced with supplying an increasingly growing urban population. As we have seen this has created a food supply chain requirement that was at first (probably) beneficial to society but has now become increasingly dominated by businesses that have become oligarchs. They are working against the broader interests of society via their ability to control too much of the economic spend at one end and too great an influence over society's food supply at the other. Ultimately they are driven by their desire to provide dividends to shareholders and unfortunately for society that seems to be based around rewarding management for short-term gain rather than long-term sustainable dividends. Possibly one of the great fracture points to come in the future in the 'developed' economies is how goverment is going to rest control of the food supply from these oligopolists. Dramatic yes, but it will either have to be achieved by government intervention or farmers! I wonder what colour government is going to address this one!?
To follow this further, government intervention has come about because farming is so atomised as an industry. A food crisis is met with a political desire to rectify the problem. In a non-communist system that means government providing some sort of incentive. It will happen again. I would suggest that the problem lies with the quality of government intervention and increasingly the desire to play political games in the interest of short-term political gain (we see it constantly at presnt with the issue of food quality/safety). A fundemental problem of democracy is the cycle of elections induces short-term thinking whereas all farmers know that the industry can only work with long-term stability. In a time of major food crisis like post-WW2 stability was created by all politicians knowing that ensuring that rationing did not return was paramount. The further western society has moved away from that point the poorer has been the quality of food production-related political decision-making and the greater has been the complacency about food supplies. An increasingly urban society has also left the land (i.e. more than two generations past) and this has further moved the food availability issue away from the political agenda.
We therefore have a situation where politicians are increasingly short-term and urban driven. The food supply-chain is dominated by fewer businesses that are managed by people incentivised by short-term achievement/reward targets. Farmers remain largely small and independent in comparison. Global food supplies are going to become the major issue over the next decades. Hence, eventually government is going to step in again and try to alter the balance. It is going to happen and I suspect that the worst position that can be taken is the current one of thinking that we can survive without government-derived payments or government intervention. Ultimately that will be accompanied with an opt-out from being party to the big decisions.
A pretty bleak scenario given the quality of government intervention of the last two decades. In a nut shell I would say that that is where the problem lies, the quality of government intervention. It is interesting to note that two respected commentators on the industry have commented on food security and the need for governments to address this, Allan Buckwell at the CLA and formerly at Wye, and in this forum David Richardson. It was interesting to note that David Richardson's response was to say that the government needs to talk to people who understand what is what and by that he means farmers! He is right because ultimately the food industry needs to work with the long view and it increasingly appears that farmers brought up on a tradition of good husbandry remain a section of society that are not driven by the chasing of a 'quick buck'. It is also interesting to note that so many comments from the younger contributors here also relate to a desire for a 'fair return' and to be able to get on with just being farmers. The younger generation clearly still understands this fundemental long-term, good husbandry aspect of our industry.
In conclusion, we are not going to see and end to either. Personally I would prefer to see the incentive payments come in the form of capital grant and to see an end to market distorting annual payments. Yes capital payments can be argued to distort the market but at least they can be directed at immediate needs. Government intervention is an an inevitable part of our future and to be honest I cannot see it reducing as food becomes a greater issue amongst our urban bretheren! All I think we can hope for is for a better quality of governance. For that I think farmers needt o opt into the debate and not out of it. As an industry we need a strong and collective voice within the political process. I would also add that we need to regain a stronger collective voice within the down-stream food supply-chains and for that we do need to be doing what we should have been doing 20 years ago and that is learning to work together. As was rightly pointed out elsewhere recently, the negative legacy of the excess subsidy era was that farmers operated in a comfort zone that allowed them to believe that they could operate as individual entities and to distance themselves from a stronger involvement in the food marketing system. Now that, and regaining a stronger political voice relating to the allocation of society's resources to the fundementals of food production is where we need to focusing our attention.
My apologies KF and Ally, I still do not think I have got close to answering the question!
Stuart