It has been five years since Professor Sir John Beddington, the government’s then-chief scientific adviser, gave his now iconic “Perfect storm” address to the UK Sustainable Development conference. It warned of the potentially dire effects of global population growth and rising energy and water use, set against the backdrop climate change.
His prediction of an increasingly affluent global population of nine billion people by the middle of the century sparked much debate internationally regarding the scale of the challenge of sustainably increasing food production, without exacerbating the environmental degradation already witnessed in many areas of the world; a challenge that puts agriculture squarely back in the public consciousness.
Food production was suddenly back on the political agenda and “sustainable intensification” became the rallying cry for an industry that had spent a generation in the wilderness, marginalised by well-fed consumers, politicians and the media in the wake of the rise of popular environmentalism.
We need to manage volatility and market access in the shorter term if we are to benefit in the longer term
All of a sudden the era of cheap food was over; a rapaciously hungry emerging Asian middle-class was driving demand for food at an unprecedented rate with its appetite for meat and dairy. We were on the threshold of a new golden age of agriculture. Time to take the brakes off production and “grow baby, grow” – or was it?
Half a decade of buoyant markets later we find ourselves teetering on the precipice of a global collapse in commodity prices. Production has steadily risen, driven by the unfettered optimism of historically high prices. But then one relatively incident-free growing season, combined with faltering growth in the Chinese economy, created its own perfect storm. One that has seen markets plummet to their lowest levels since the global financial crisis.
We have always been predominantly domestic market-focused. Some 65 million of the world’s wealthiest consumers have for many years been an asset to UK agriculture, but perhaps one that has lulled us into a false sense of security.
We lack the export infrastructure and focus of, say, New Zealand or the Netherlands, compromising our ability to access world markets and leaving us vulnerable to a savage domestic retail price war. A war that can only be described as a race to the bottom – one that has already eroded much of the premium that was, until a few years ago, a hallmark of our home market. Despite the green shoots of economic recovery, UK consumers remain staunchly resistant to paying over the odds for anything. So while the fundamental prospects for agriculture remain positive, we need to manage volatility and market access in the shorter term if we are to benefit in the longer term.
Nowhere is this more relevant than in the dairy sector, where two years of buoyant milk prices have seen much-needed new investment on farms and a welcome reversal of a seemingly irreversible decline of the national herd. However, with the imminent removal of milk quotas across the EU next year and the rest of Europe poised to take advantage of this potential opportunity, we need to be wary of the risks of producing more milk before we know where it’s going and how it’s going to get there.
Having recently downgraded its profits by £250m and seen its share price tumble, we can hardly rely on Tesco’s largesse in the face of a potential white tsunami, to support what is a finely balanced and fragile milk market.
David Alvis is an independent agribusiness consultant, based in Cambridgeshire. He is a Nuffield Scholar and recently co-managed the Technology Strategy Board’s sustainable agriculture and food innovation platform.