A Federal Future for Farming?

Stephen Hornsby, a partner at Goodman Derrick LLP, comments on Michael Keating's recent paper on the policy making implications of Brexit for agriculture in the UK. 
 
In his recent report, Repatriation of Competences in Agriculture after Brexit, Professor Michael Keating puts his finger on some very sensitive issues – very sensitively. Put more baldly, the most important issue raised by the report is whether any meaningful devolution of economic responsibilities is possible in a UK internal agricultural market – however defined - post Brexit. To judge from its proposal to hang on to repatriated powers in agriculture post Brexit pro tem, the UK government has given a clear steer on its direction of travel. This is clearly and understandably unpalatable to the devolved administrations as it runs counter to the devolution settlement in spirit if not in terms.
 
It is easy to see why the Westminster government has taken this position; but much harder to see how the difference with the devolved administrations can be resolved. Suppose post-Brexit, the Scottish government were to wish to give greater subsidy to its sheep farmers (quite rational from its perspective) but that the subsidy results in cheaper prices being offered for Scottish lamb than Cumbrian farmers can match in markets in say Newcastle and that it causes them financial loss.  What remedies are available here?  The report mentions this scenario in general terms but does not rush in with solutions where angels dare to tread.  So what solutions are there?  Are any of them not actually foolish?
 
Assuming that doing nothing is not a solution, and that the imposition of internal border controls in a unitary state (for now anyway) would indeed be foolish. The simplest solution would be for the UK to regain the perceived loss of control by reversing the devolution settlement – if politically possible – or, alternatively, denying or reducing the financial wherewithal that enable such subsidies to be granted by the Scottish parliament. This would obviously cause a major political row, which Westminster may wish to avoid. An alternative (less foolish solution) might be provided by an “all-parties-committee style approach” but the interests of the parties here are so divergent that resolution may be difficult. Some kind arbitration mechanism would be necessary, probably with an independent element.
 
The only real option (ironically) is for the UK to establish the equivalent of the EU Commission Competition Directorate post-Brexit with supra-national jurisdiction over these matters. Perhaps the Competition and Markets Authority could take this on role.  The EU Commission has had substantial experience of regulating state aid schemes in all sectors including agriculture. Within member states the EU Commission has also had some experience of issues arising from competition between areas of the UK in receipt of substantial regional aid from the EU and neighbouring areas that are not and who complain of unfair competition. This experience could be built on nationally and the intensity of regional aid could be subject to independent objective regulation with appeals available to interested parties to a UK court on a supervisory basis.  
 
What is more, even though the Prime Minister has announced that she envisages that the UK may enter into a treaty with EU on competition matters, agriculture will not be included since on any realistic scenario the UK will be leaving the CAP. Therefore, the UK will be in a position to regulate producer organisations under its own competition law and impose conditions on their operation. In any event, EU competition law has itself been used to restrict the exporting activities of producer groups outside the member state where they are  based (see German milk producers decision of 1985) so there is no conflict with principles that place a high priority on overall market stability.
 
Of course, it will be objected that this is a kind of federal solution; but then surely this is where this scenario from the agricultural sector logically leads?  For it is only in this way that some meaningful economic responsibilities can be devolved within the United Kingdom post Brexit.

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