UK Farming Post Reform

Abstract

The 2003 reform of the Common Agricultural Policy largely replaced the European Union's production orientated system of price support with a decoupled, single farm payment (SFP) system that freed farmers to choose what to do with their land, be it crops, livestock or withdrawal from farming. The outcome is reductions in the levels of farm-gate prices and greater exposure to the vicissitudes of market forces. In justifying the reform, the authorities argued inter alia that a positive outcome would be the encouragement of a more market orientated and competitive farming industry. This paper examines the likelihood of this outcome for UK agriculture and how it might be achieved. The authors find the arguments that the reform will encourage extensive farming techniques, which will serve as the basis of a more market orientated industry unconvincing. We argue that the reform is more likely to achieve its objective of a more market orientated industry if the reform encourages farmers to collaborate in horizontal networks as user members of Farmer Controlled Businesses. Such businesses operate as vertical integrators and are particularly suited to developing a market orientation. The paper concludes by highlighting potential areas for further research that can aid an understanding of the marketing functions of Farmer Controlled Businesses and their influence on the economic returns to their user members.