UK farmers must seize the opportunity of Brexit to ramp up productivity and become more competitive, industry leaders have been told.

Former New Zealand agriculture minister Sir Lockwood Smith suggested his country had wasted more than a decade failing to adjust to the loss of its key export market when the UK joined the European Economic Community in 1973.

See also: Brexit-proof your business, farmers urged

It wasn’t until the New Zealand government abolished farm subsidies in 1985 that farmers finally upped their game and embraced the technology needed to become more efficient and productive, he told a Westminster Forum meeting in London.

Held on Thursday 21 September, the forum brought together policymakers, politicians and industry leaders to discuss ways of supporting UK agriculture and driving innovation in the food sector.

Sir Lockwood said he wasn’t recommending “for one moment” that the UK should abolish subsidies overnight. But he said that the UK could learn from New Zealand’s experience. Subsidies distorted market signals and stifled innovation, he added.

“I am not going to tell you what to do because there is no way I should – but I want to share with you a couple of my experiences,” said Sir Lockwood, who also served for four years as New Zealand’s High Commissioner to the UK until retiring earlier this year.

No incentive to innovate

Acknowledging that many British farmers fear tariffs as high as 30-40% on exports of livestock products if the UK leaves the EU customs union, Sir Lockwood said Kiwi farmers had faced a similar situation – but with much higher tariffs.

“We thought we had to subsidise our farmers because we couldn’t expand our business to the UK or Europe once you joined the EEC because of tariffs up to 300%,” he said. But those subsidies protected farmers from the market with the result that there was little incentive to innovate.

From the years between 1973 and 1985, when New Zealand agriculture became heavily subsidised, market signals became progressively distorted – and so did any link between scientific development and economic gain. As a result, productivity increases during that period were “almost nil”.

Only in 1985, when subsidies were abolished, did price signals begin to flow properly again – encouraging farm businesses to respond to supply and demand, said Sir Lockwood. The result since has been a tremendous increase in output, he added.

Productivity increase

From 1993 to 2016, productivity in the New Zealand dairy industry – measured in terms of kilograms of milk solids per hectare – has increased 62%. Much of it is due to improvements in the genetic value of dairy cattle. But it is also down to better pasture management.

New Zealand’s sheep industry – the most heavily subsidised sector – has seen a similar increase in productivity. Without subsidies, sheep numbers have halved, but they are being farmed more efficiently and productively.

There were 70 million sheep in New Zealand during the days of subsidies, said Sir Lockwood. Today, there are less than 30 million – yet the amount of sheepmeat being exported has remained remarkably level – equivalent to an increase in productivity of 161%.

“In terms of productivity – which is one of the issues you’re looking at – it is that simple: if you want to improve productivity in agriculture in this country, you have to deal with the subsidies and protectionism.”

Opening markets

Tearing down barriers is also important when it came to food security, he said. There is no way the UK will be self-sufficient in food post Brexit – which means that two-way access to imports and overseas markets will be vital to feed the nation.

Open markets should be welcomed, not feared, added Sir Lockwood, who said he agreed with Defra that sourcing food from a diverse range of stable regions around the world – as well as domestically – enhanced food security rather than diminished it.

“That message is absolutely correct today too,” he said. “There is no question about that.”

British farmers who think they would be swamped by New Zealand or Australian food exports once the UK left the European Union are mistaken, said Sir Lockwood. “Less than 1% of the food consumed in the UK comes from New Zealand or Australia,” he claimed.

“You can pour all the money you like into research and technological change. But over time you’ve also got to get rid of the barriers to the economic signals coming through to farmers so they can respond to the marketplace.”