A crash in farm incomes is a problem for all of us – now is the time to act

If an industry sector loses 50 per cent of its income in a year there would be summits and crisis meetings. That is what has happened to Scotland's farming sector in the last year. Assuming a healthy, rural food-producing economy will always be there is not an assumption we should make.

The Scottish Government statistics on farm income drop show a 50 per cent reduction in the average income of Scottish farmers last year but does point out that this is after a couple of more successful years and is, relatively, not worse than before the pandemic. However, at least two of the drivers of the reduction this year are not going to go away.

One is the purchase price of Scottish agricultural crops. Supermarkets and food processing industries are collectively both monopolistic and monopsonistic. The 'big six' (Tesco, Sainsbury's, Asda, Aldi, Morrisons and Lidl) sell us more than 80 per cent of our groceries, but that also means that they are the purchasers of much of our agricultural output.

A monopoly is a single seller, and that means they can push sale price up. A monopsony is a single buyer, which means they can push their purchase prices down. The loser in this is the producer; farm incomes have been squeezed by aggressive supermarket price negotiations. If we maintain our current food system, that problem is not going away.

Neither is the other impact on farm incomes this year; adverse weather. We are now facing a future with more and more extreme weather events guaranteed. Growing food on our land will become increasingly precarious and is almost certain to face years of interrupted supply.

All of this would be concerning in any industry, but food production is not any industry, it is completely essential to human survival. This is why Common Weal pushes to treat food as part of the 'foundational economy', a part of the economy so important it can't be managed purely by the free market. This is why taxpayers provide large agricultural subsidies.

There is another reason farming must be protected; it is often the 'anchor industry' in rural areas, underpinning and driving the rest of the rural economy. That is a lot of Scotland's land area and a not insubstantial proportion of its population. It cannot be written off.

The kinds of steps that would be required to alter this system and its trajectory are big steps. Anything you try would almost certainly be against current economic orthodoxy (price controls, breaking up supermarket chains, tackling climate change, changing growing patterns). There are no easy fixes, but there are big consequences if we don't do something.

Common Weal believes we need a radical new approach. We would like to see a much wider range of distribution outlets for food – local cooperative food hubs, farmers markets (direct selling – these do not need to be expensive craft markets), much more effective public procurement of food for 'public kitchens' like schools and hospitals.

We think it is inevitable that global food supplies will be increasingly disrupted by weather and would strongly advocate weatherproof growing – indoor light-assisted grow is a technology which is now capable of producing a wide range of crops at competitive pricing, and in theory there is nothing that couldn't be grown indoors in Scotland.

Farming practice will have to change whether farmers like it or not – but it must be done with farmers and not against them. Land management practices can help to cope with changing weather patterns – for example, carefully planned tree planting can help deal with excessive rain (trees absorb a lot of surface water), if soil quality is better protected it can hold moisture longer and so on.

But fundamentally, as a society we pay far too much for housing but far too little for food. Cheap food is is not your friend – it is often highly-processed and so bad for health, it is often the result of an industrial process imported into Scotland which undermines our own food industry, and it makes food businesses unsustainable.

An externalities tax that captured the true cost of cheap food (mitigating the environmental damage, costs to the NHS on obesity and poor diet, the carbon emissions from transportation) would make good food more competitive since it would be taxed lower. If the money raised is recycled through a Universal Basic Income then people can make better choices and gradually move towards healthier food produced domestically.

Then we just need to get the price of housing done... Find out more in Sorted.