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Ngaire Woods is dean of the Blavatnik School of Government and founder of the Global Economic Governance Programme at the University of Oxford. This editorial was first published in The Guardian.
As it stands, large parts of UK agriculture are locked into the EU’s Common Agricultural Policy (CAP), which is accused of driving the sector toward larger, more industrial and more environmentally damaging practices, including by failing to support farm diversity and directing payments to Britain’s wealthiest landowners. A 2005 investigation found that the £3 billion (€3.3bn) in subsidies that the UK receives from the CAP went largely to major agribusiness and food-manufacturing companies, such as Nestlé, Cadbury, and Kraft.
Once freed from the flawed CAP, Brexit’s proponents argue, the UK will be able to build a more competitive agricultural sector that better serves farmers and agricultural workers, including by reducing dependence on distorting subsidies. And they could be right. In New Zealand, the abolition of subsidies in 1984 helped to catalyse innovation and diversification in the agricultural sector, which today drives New Zealand’s economic growth.
It should be noted, however, that New Zealand’s agricultural sector had decades of experience surviving without subsidies. Indeed, those that were abolished in 1984 had been created in the 1970s as a short-term solution to new challenges to the sector.
In the UK, by contrast, subsidies are deeply entrenched and flow to powerful wealthy supporters of the current government. This may explain why the government’s Brexit strategy proposes sustaining subsidies, to be paid for directly from the British public purse.