TAX THREATENS INCOMES

27 February 1999




TAX THREATENS INCOMES

Evidence that a tax on pesticides would do untold harm – and no environmental good – to the industry is mounting following two new reports.

A TAX on pesticides would cut total farm incomes by £320m, according to reports from the Centre for European Agricultural Studies and ADAS.

Commissioned by the NFU, they also confirm that there would no environmental benefits from such action. ADAS says farmers would turn to older, less environmentally friendly and cheaper products if a tax on pesticides were imposed.

CEAS endorse the point: farmers cant expose themselves to risks regarding crop quality by not using pesticides. So high rates of tax would be needed to cut pesticide usage significantly, it says.

Passing on increased pesticide costs to processors, retailers and consumers would only make British food uncompetitive. Cheaper produce would ultimately be sourced from the Continent, say the CEAS, cutting the trade balance by up to £121m.

CEAS looked at three levels of tax, with pesticides banded into three levels of toxicity. It found that the direction of impact was the same whatever the level of tax. In percentage terms, the impact on gross margin would be greatest for potatoes – down by up to 18%, a total loss of £55m. But losses in the cereals sector could amount to £206m – a drop of 13.4%, making this the worst hit overall.

Gross margins in winter cereals and oilseed rape were higher in 1997 for UK farmers than those in France or Germany. Pesticide tax could wipe out this advantage, according to CEAS. The gross margin disadvantage for UK sugar beet producers would be further widened, it says.

The CEAS report also finds that the increased pressure to reduce costs could drive more marginal producers out of business and speed the trend towards fewer, larger farms in the UK.

Pressure on costs would have a number of other undesirable knock-on effects. Use of just a few cheaper products would increase risk of resistance, says ADAS, which could ultimately lead to more pesticides being used.

Better technology in pesticide application could reduce pesticide use. But fewer farms will be able to afford to invest in machinery. Increased use of contractors, says ADAS, means products will be applied to suit the contractors schedule rather than at the optimum time for control when reduced rates could be used.

Agriculture minister Nick Brown has said on several occasions, including the Crops conference, that he is not even in favour of a pesticide tax. However, it is still being considered by the Government as part of environment minister Michael Meachers green package.

Technology, research and development is the constructive way ahead, according to the NFU, rather than a penalising tax which will have a detrimental impact.

&#8226 Total farm incomes down by £320m

&#8226 Trade balance cut by £121m

&#8226 Cereal gross margins cut by nearly 14%

&#8226 Encourage use of less environmentally friendly products

&#8226 Increase risk of pesticide resistance

&#8226 Fewer, larger farms


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