The National Farmers’ Union (NFU) in England and Wales is currently undertaking what it describes as “the biggest farming conversation for a generation” as it seeks to gather members’ views on future UK domestic farming policy post-Brexit.

One of their main principles is that future support given to British farmers must be on a par with that given to farmers in the EU. Weighing into the debate last week was the director general of the National Trust, Helen Ghosh. With a land base of 618,000, the National Trust is the UK’s largest farmer organisation. The most recent figures suggest it receives around £10m per year in CAP payments.

However, Ghosh is keen for change, suggesting that under the current system of wildlife habitats have been lost, soils depleted and the impact of drought or floods increased. Instead, she called for the phasing out of current direct payments to be replaced by something that delivers ‘‘public goods’’. “We may need some kind of transition period to get there but that means payments for goods that go beyond food production – for the wildflowers, bees and butterflies, for the farmland birds, for the water meadows and meandering rivers,” she said.

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She also suggested that finding solutions should not be left just to farmers and government to sort, and called for a debate that involves the wider public.

Government

The British government is yet to reveal much of its thinking as to how farmers might be supported in the future. However, earlier this year, Defra Farming Minister George Eustice was asked to give evidence to a House of Lords inquiry at Westminster into farm gate price volatility.

When asked about his vision for agriculture, he said the British government would want to continue with agri-environment type schemes. He also talked about encouraging welfare-friendly farming practices. But, as a possible alternative to direct payments, he referred to the development of futures markets and insurance-type schemes, which he maintained has the potential to mitigate risk for productive farmers.

“I am very keen to support the development of futures markets in particular,” he said.

Canadian model

On insurance-type schemes, he highlighted the Canadian approach as part of the ‘‘Growing Forward 2’’ policy. “I think the Canadian model is the closest we have got to an insurance scheme that works,” said Eustice. It was a point he repeated in discussions with farming leaders at the National Sheep Association event in Malvern last month.

That Canadian model is part of a wider CA$3bn farming and food policy set over a five-year period to 2018. It includes CA$2bn to support business risk management programmes where costs are shared between farmers and government.

These programmes include an agri-insurance programme to help cover production losses in crops, and AgriStability, under which a farmer can receive a payment if margins in one year fall below 70% of an historical base. It is designed to help protect farmers from market failure, production losses or increased costs.

This historical reference margin used in the calculation is either the average margin over three of the last five years (with the highest and lowest margins omitted) or the average of expenses over the same three years (whichever figure is less). Allowable income and allowable expenses are listed under scheme rules, and determined from tax information. The annual fee is CA$45, plus CA$4.50 for every CA$1,000 of reference margin protected, multiplied by 70%.

As an example, a farmer with a reference margin of CA$100,000, must pay a fee of CA$315 + CA$45 = CA$360 to participate in the programme in 2016. In this example, a payment is only triggered if the actual production margin in 2016 (income minus allowable expenses) falls below CA$70,000 (70% of the reference margin). AgriStability then pays out 70% of the difference between the actual margin and the payment trigger. If the actual margin this year is CA$60,000, the payment is CA$7,000 (70% of CA$10,000).

Distorting

Despite advocating the principle, Eustice also acknowledged that such a scheme has the potential to be market-distorting. “The challenge will be to set it in a way that provides some protection but not total protection, because you want people to read market signals,” he told House of Lords peers.