Wednesday, 12 March 2014

They own land! Give them money!

Exhibit One


Squaring the circle is hard, but according to Stuart Roger UKIP wants to achieve something even harder. They are determined to ditch Europe but equally determined to hang on to its biggest gravy train: the Common Agricultural Policy. Money from CAP goes to some of their most enthusiastic supporters: rural landowners and farmers…

At present the EU ladles out between £60 & £90 per acre to these and other lucky landowners. UKIP's agriculture spokesman Stuart Agnew is guaranteeing that rural landowners will still receive £80 per acre from the UK taxpayer if we quit Europe, and will have to comply with fewer irritating Brussels rules to get their mitts on our dosh. Courtesy of UKIP we will continue to subsidise the wealthy but will get even less for our money.

From the UKIP leaflet:

£80 per acre on lowland, pro-rata decrease on marginal and hill land, capped at £120,000.

Having a cap is a good idea, although it is still far too high and can easily be fiddled by splitting up a farm. I assume that Stuart Agnew's farm is just a shade underneath the £120,000 limit, that's not a random figure.

But what is nonsense (and existing EU rules are the same) is having higher subsidies for more productive land; the subsidy is supposed to "help struggling farmers" or some such bullshit, in which case the subsidies ought to be higher for marginal land.

Exhibit Two

Via LVT Campaign, from the FT:

The government has spent £63m buying up 106 homes blighted by the proposed HS2 high speed rail link. Estate agents say tens of thousands of homes along the route have lost up to a quarter of their value.

Although the future of the £50bn north-south rail link is still uncertain, more than 500 homeowners have applied to have their property bought under the government’s exceptional hardship scheme.

Of these, 340 claims have been rejected, but 106 homes have been purchased at an average price of just under £600,000, highlighting fears of how soaring property prices could inflate the final compensation bill.

The government is spending £1.1bn in this parliament on consultants, preparatory work, compensation and other expenditure. The majority of the properties it has bought have since been rented out.


Kj said...

Your point under exhibit 1 is very true, it´s a strange idea even when you´re for subsidies, and it´d be fun to find out what arguments they have for it. However, is it really the case that this is EU policy now? For example in the link below, LFA-status (at least in Scotland) gives more subsidies the more marginal land there is (I assume the LFA payments come on top of other payments).

Mark Wadsworth said...

Kj, it has been EU policy for a long time (ten years or so?) to pay more subsidies to the best land.

THe LFASS does exactly the opposite, presumably because their first idea was so shit they thought "Let's also do the opposite, and hopefully if one scheme doesn't work then the other one will."

Derek said...

Exhibit two is like "Right to Buy" policy in reverse. Perhaps any houses bought under it should be turned over to the local authority for use as "new" council houses but with no right to buy for at least twenty years.

Mark Wadsworth said...

D, oo yes, tasty.

They can rent out those house they bought at overvalue for a few years, then sell them at undervalue via Right To Buy, thus doubling up the losses for the taxpayer.

Bayard said...

It was interesting talking to a dairy farmer recently and learning that the supermarkets no longer control the price of milk, it's all global now, i.e. in the hands of the commodity speculators. Perhaps if UKIP proposed to do something about that they wouldn't need to keep the subsidy, but that would simply upset a different bunch of the R&I, I suppose.

Kj said...

MW: Double up, nice.

Bayard: commodity markets you mean. And there´s milk and there´s milk. You can probably transport fresh pasteurized milk from France to the UK, UHT from most of Europe, and you can get butter and cheese from NZ. International markets in dairy farming is for butter and milk powder AFAIK. We actually have price controls for most ag-products, some years the domestic price is lower than the world market for commodities, and that´s how the farmers keep public support up for the system. Somehow most people have forgotten when there wasn´t any butter left...

Mark Wadsworth said...

B, of course it's "supermarkets' and large buyers who set the price, but they do it on a more international scale than previous.

I don't think that evil speculators (to the extent that there are any) deliberately push the price of milk up (to benefit farmers) or down (to benefit supermarkets), milk is not something that you can speculate in and hoard like land or gold and other long-lasting stuff.

Kj, thanks for back up.

Bayard said...

I doubt that the speculators ever get within sniffing distance of the stuff they speculate in, it's all on paper (or on harddrives, these days). Even most of the long-lasting stuff is paper too, although I suppose a few speculators actually take delivery of their gold or go and look their land. If you aren't dealing with the actual substance, its perishability doesn't really matter and of course the speculators wouldn't influence the price to benefit anyone other than themselves.

Kj said...

B: For practical purposes it does in the milk market, as so in a lot of fresh products, but it may not in wheat, soy etc.. That speculators haven´t been a kilometer in the vicinity of a grain silo doesn´t matter, what matters is that someone is willing to bet on future prices, and incentivise production and allocation to meet expected demand. Intermediate storage, which we need, is built upon each actor, from farmer to processor, having the wits to have storage capacity to be able to hold out for a decent price/buy up enough to last. This is also "speculation" in some form of another. We´d be living with more uncertainty without (in commodities markets that is).

Kj said...

Or maybe that is intermittent storage...?