The minister felt that outgoing farm commissioner Mariann Fischer Boel didn’t envisage that pendulum swinging too far, ruling out headage payments, but new commissioner Dacian Ciolos could bring in a new era.

There are certainly those in Brussels who think that Ciolos will favour more market support and help to smaller farms. However, others take the view that he is on message with the Commission view on reform and has been playing down his linkages with France to reassure pro-reform countries.

However, Christmas has come early for some English farmers, with over 80 per cent of farmers receiving £1.3bn in Single Farm Payments to date. That’s approximately £15,116 per recipient. Not quite a banker’s bonus, but welcome all the same. Organicduck tweeted from Devon, ‘Hurrah and thank you RPA. Maybe off Christmas shopping or maybe pay off some overdraft.’ Payments are also well advanced in Wales and Scotland.

The average amount paid to about 107,000 English farmers is about £15,300 a year. However, the watchdog found there were substantial overpayments totalling between £55m and £90m but the data was so unreliable the auditors were unable to find out the precise sum. £280m has been set aside to pay Brussels penalties for administrative errors and late payments to farmers, but a further £43m of overpayments are likely to be irrecoverable.

What the report brings out is the high transaction costs incurred even in a supposedly simplified system of subsidies. It is estimated to cost £1,743 to process each farmer’s claim for cash, a rise of 20 per cent in four years.

It is argued that some of the problems arise from the payment system chose by Margaret Beckett, at one time in charge of Defra. The devolved regions opted for a simpler system based on historic payments made to farmers. In Scotland the cost of administering payments is £285 per farmer. However, one reason for choosing an area farmed system was to try to break away from the ‘to him that hath shall be given’ aspect of the subsidies system.

Of course, some might think that we would better off by phasing out subsidies altogether.

I replied that if the concern was food insecurity, then it’s worth remembering that the immediate impact of scarcity is to drive up prices. When prices go up, farmers have a very clear incentive to produce more. That’s how a market works. And we have seen this occur over the past two years. As prices have gone up so have crop plantings. I then explained that since the EU’s farm subsidy programmes are almost entirely de-coupled from production, meaning that farmers get the taxpayer-funded aid regardless of whether they produce anything, the dominant effect is price, not subsidy. Subsidies are an income support policy for farmers, just as they are defined in the EU legislation. They do not have an impact on food production. (I know there are those who would say there is always some production impact from giving money to farmers, in general it’s accepted that decoupled payments have the least production impact possible.)

If we can rely on market prices to stimulate farmers to produce the amount of food to meet the society’s needs, what should be the role of government? My view is that aside from any rural economic development policies which may have an agricultural angle, the state should reserve its interventions to securing the long-term sustainability of the land and the broader ecosystems that are required for productive farming (water, pollinating insects, soil) and a pleasant environment. This means making investments in conservation and in limited cases where it can be shown to provide value for money, paying farmers to follow certain kinds of land management practices. It could also mean toughening regulation to prevent over-exploitation of resources in the short term that might limit the future productivity of the land (e.g. mining water, destroying wildlife habitats).

As the BBC’s own Future of Food documentary series argues, the challenge for agriculture now is nothing compared to what it will be in 50 years time, when the effects of climate change, water depletion and peak oil will be much more acute. Farmers, like any businessmen, think mostly short term, at the outside a 5 to 10 year time horizon. Governments need to take the responsibility to think longer term, safeguarding the productive capacity of farm land for the next half century or century. And that means holding the line against the rise of traditional productivist thinking, old or new.

George Alagiah travels the world to reveal a growing global food crisis that could affect the planet in the years ahead. With food riots on three continents recently, and unprededented competition for food due to population growth and changing diets, the series alerts viewers to a looming problem and looks for solutions.

George joins a Masai chief among the skeletons of hundreds of cattle he has lost to climate change, and the English farmer who tells him why food production in the UK is also hit. He spends a day eating with a family in Cuba to find out how a future oil shock could lead to dramatic adjustments to diets. He visits the breadbasket of India to meet the farmer who now struggles to irrigate his land as water tables drop, and finds out why obesity is spiralling out of control in Mexico.

Back in Britain, George investigates what is wrong with people’s diets, and discovers that the UK imports an average of 3000 litres of water per capita every day. He talks to top nutritionist Susan Jebb, DEFRA minister Hilary Benn and Nobel laureate Rajendra Pachauri to uncover what the future holds for our food.

It’s a solid analysis, identifying climate change, oil-dependency and water depletion as the biggest challenges facing the world as it tries to feed a growing population. Perhaps too much is made of the virtues of self-sufficiency as compared to trade and comparative advantage.

If you’re in the UK you can watch it on demand on your computer anytime over the next three weeks, via the BBC iPlayer. The next epsisode will look more closely at fish.

Western Europe’s temperate maritime climate produces one of the longest and most suitable growing seasons in the world for wheat, Mr Atkin explained. While the soils in eastern Europe and the former Soviet Union are often of equal or better quality, climatic and weather constraints temper output. In addition, there is considerable yield volatility in other parts of the world, where occasional crop failures need to be factored in. This is partly why UK what production costs per tonne are lower in Australia, Brazil and Canada.

Moreover, post-farmgate costs needed to be factored in. These can be substantial if infrastructure is poor and costs-to-market are high, as is generally the case in Russia. Costs are rsing in places such as Russia and Romania faster tham in, say Australia and Canada, as land and labour costs escalate.

If UK wheat can compete on world markets, do large-scale arable operations in East Anglia really need subsidies to be viable? Of course, re-directing CAP payments elsewhere could simply subsidise efficiency. Introducing a measure such as a cap on payments to large farmers would disadvantage the UK relative to other member states. But this analysis does raise questions about whether blanket subsidies are still required.

He emphasised that agriculture should be able to look after itself. What it needed was imagination and drive, having the ideas about what customers want and having the energy and determination to see it through.

There was a possibility of big change in the next CAP reforms comparable to what happened in 1992 and 2000. However, he was concerned that we might not take the opportunity.

Trade liberalisation was in suspense. There was a real debate about going on about the extent to which we believed in international trade. Countries in Asia might think that the solution to their food security was to buy up land and rights to farm in Africa.

The 20th century trend in agriculture was for prices to fall in real terms, despite the growth in world population and income. However, this downward trend had slowed in the last twenty prices. Now we were in an era of more volatile prices. But if scarcity did produce systematically higher prices, what did that mean for policy? More support for farmers or less? It was hardly likely to lead to more support.

In seven out of the last eleven years farm income without support payments in the UK would be negative and even when positive was miniscule. The rapid removal of farm support would require structural adjustments.

Farmers thought that Pillar 2 was too bureaucratic and inaccessible to many farmers. For governments the administrative costs were high, there was the requirement for co-funding and the issue of whether benefits were discernible.

The status quo position on the Single Farm Payment was to cut, but how far and how fast. There was a wide distribution of payments among member states – Greece with its cotton and tobacco subsidies at one end with high payments and new member states like Latvia at the other. The distribution per beneficiary was even broader, although here the Czech Republic, Slovakia and the UK came out on top.

Would there be more uniform payments? What is the purpose of the payments? France favoured a basic husbandry payment. Which features of Pillar 2 could be dropped?

Putting the case for a food and environmental security policy, Professor Buckwell asked who is against food and environmental security? Who disputes that these are threatened? Europe faced the task of feeding its own population and possibly others as well.

The key point in food security was long-run production capacity – not letting good land to be built on or go under salt water. Knowledge and skills and research and development were also of key importance. One had to achieve food security as the key goal but without avoidable environmental degradation.

€53 billion (the CLA’s estimate of the total cost of the policy) was not an obscene amount to be spending. He was not saying that the current policy was right, but any policy would need a significant budget.

Agricultural economist Sir John Marsh intervened from the floor to point out that subsidies kept resources in use which were les than optimal. We needed to be specific about what it was were were trying to create. CAP was originally created because of what seemed to be a fairly straightforward relationship between food availability and consumption. It then became a social policy because there were farmers with low incomes. Environmental aspects was too broad a term. The measurement of value to the public as a whole was less well defined.

There was an interesting exchange between Professor Buckwell and Martin Haworth of the NFU revealing ‘differences of emphasis’ between the two organisations. Haworth quetsioned whether both food and environmental security were under threat. He didn’t agree that there was environmental degradation as things were getting better.

He disagreed with Allan Buckwell’s suggestion that one should work with green organisations. It was dangerous to form an alliance with environmental organisations as this involved accepting that agricultural production was part of the environmental problem. In the set aside debate, environmental oganisations had convinced themselves that the only solution was to de-intensify agriculture in the form of set aside.

Haworth told Buckwell, ‘What you are proposing is quite a dangerous way forward and not one we would support. We support the current architecture of pillar 1 and 2.’

The document says:

“Our main concern is to ensure that the CAP remains a common policy and that distortions between EU member states are eliminated.”

I assume that means endorsing the idea of a flat-rate per hectare subsidy payment across the whole of the EU, something which the new member states that joined since 2004 have long called for.

When it comes to the future of state support for farmers in ‘less favoured areas’ like uplands and places that are very cold, very hot or very dry, the manifesto takes an approach that appears to be a departure from previous NFU policy. It states:

“any proposed changes under the upcoming review [of LFA payments] must ensure that only active farmers facing legitimate hardship should be eligible”

In the UK as in many parts of the EU, a great deal of LFA money goes to a few very large estates owned by extremely wealthy people. It’s interesting that the NFU is arguing for payment limits or the means testing of LFA support. I don’t imagine this has gone down too well with the likes of the Duke of Buccleuch whose 270,000 acres of Scottish land, much of which qualifies for less favoured area payments, makes him the largest private landowner in Europe.

Read the manifesto and associated material over here.

Perhaps that is not entirely surprising as there has always been quite a close informal relationship between large-scale farmers and the Conservative Party. Unlike smaller farmers (who often vote for the Lib Dems or the Nationalists or even Labour), they are overwhelmingly Conservative voters. Many of them hold office in local Conservative associations.

Herbert thus goes for a badger cull, even though the scientific evidence is contradictory and culling can actually spread Bovine TB by disturbing social groups of badgers. It is also unlikely to win the Conservatives friends among the well-organised badger lobby. I would not rule out culling in any circumstances, and it will be interesting to see whether the proposed policy experiment in Wales goes ahead and, if it does, what its effects are. Herbert is chair of the all-party group on badger TB and one would have hoped that he could have been a bit more cautious before trying to score a few partisan points over Hilary Benn, whatever the latter’s shortcomings.

What really concerns me is the following set of statements:

‘We need to re-address the balance of food production. Total self-sufficiency isn’t the right objective, but we do need increased production on the foods we can grow and rear domestically. We are a trading nation with important export markets and, while I’m not a protectionist, it’s madness to import food we could be producing … We should be maximising food production in a sustainable manner.’

Let’s try and deconstruct these statements:

1. Addressing the balance of food production. This is part of the current fashion for re-balancing the economy, but I am far from sure that governments should set targets for the share of the economy undertaken by particular sectors.

2. Autarchy is impossible (good), but we should maximise domestic production. How? At a cost to the taxpayer or to the environment?

3. It’s madness to import food we could be producing. Supposing that food is cheaper and of an equivalent quality or offers a better price/quality mix. The only way to keep that food out of the UK market is through protectionism which is what the CAP does at the moment.

4. How does one maximise food production in a sustainable manner? Of course, there are policies like Integrated Pest Management that need to be pursued, but there is something of a contradiction in this statement.

On the CAP, Herbert says,

‘I would rather make decisions here. There’s too much nonsense coming out of Europe and we need to minimise here.’

Of course, the Conservatives are Eurosceptic, but I have never heard them advocating withdrawal from the CAP (unlike the CFP).

To be fair, there is a possibility of greater co-responsibility in the post-2013 CAP. Member states might be able to vary the level of subsidy provided. The problem with that approach is that it undermines the internal market which is one of the major achievements of the EU. Herbert’s own answer is to have greater scrutiny of regulations in the Commons. There’s nothing wrong in that, but I don’t think it’s the answer.

More thinking needs to be done between now and the election.

A significant number of SFP claims are worth around half of what it costs to process them, although this should change after the implementation of the Health Check reforms which are intended to cut very small payments to, for example, ‘hobby farmers’. There were 14,465 payments under £400 in 2007 and 636 under £50. There were five payments made under £5.

It’s a classic example of deadweight loss at the expense of the taxpayer. And it isn’t helping farmers.

The UK Tenant Farmers Association recently held its annual jamboree and, fresh back from his half term holiday in Egypt, National Chairman Greg Bliss gave a speech. He used the occasion to share some observations about agriculture policy that I thought might be of interest to readers of this blog. For those who are not familiar with a dialect known as ‘farm union leaderese’ (which is rare, though it can be found all over Europe and North America) I have provided translations of the key passages.

“One of the Common Agricultural Policy’s aims and benefits was the stabilisation of markets which, when we moved to decoupling, was deliberately undermined. The slavish adherence by some, particularly within our own Government, to the ideology of the free market does, I’m afraid, produce negative consequences.”

Translation: “Back in the good old days, the Common Agricultural Policy was a racket that meant we farmers got high prices all the time, and consumers picked up the tab. These days prices are set by something I don’t quite understand but I’m told is called supply and demand.”

“I see part of the TFA’s role as to ensure a greater degree of pragmatism in policy development which answers the needs at the time according to the factors on display rather than forcing a predetermined ideology to fit the current circumstances.”

Translation: “The TFA will lobby agriculture ministers here in the UK and in Brussels to remind them that their job is a simple one: to keep shoveling as much taxpayers’ money to our members and maintain as many restrictive practices as possible.”

“The TFA understands the desire to maintain the wildlife habitats that have been created by set-aside. Our argument is that the best way to achieve that goal is to incorporate it as a voluntary element into the Environmental Stewardship Schemes already in place.”

Translation: “I don’t give a damn if the RSPB has got a million members. It’s my land and if I want to plough it up the ickle birdies, the squirrels and the fluffy bunnies can all go to hell. Get a life, get a tractor.”

“The TFA’s belief is that we should be doing as much as we can domestically to fulfil our existing and future food needs and this will require a revolution in Government thinking which has seen agriculture as part of the problem and not part of the solution.”

Translation: “It’s high time this country grew more of its own food. Let’s start by covering the countryside with plantations growing coffee and tea. I want to see our hedgerows bursting with bananas and mangoes and tenant farmers raising new harvests of cocoa, cotton and palm oil. It’s all about innovation and seizing new opportunities. All we need a new and fully-funded EU Tropical Products Development Scheme!”