Wednesday, 26 October 2011

See, I did remember something from college...

Wind the clock back 20+ years and I'm sitting in a lecture room in the North Block at Seale Hayne College, in true agric style probably nursing a hangover from the night before. My memories have become hazy with time but something that we were taught on that winter's day in Devon sticks vividly in my mind, the law of comparative advantage. Unlike some of the other theories of economics this law made perfect sense to me at the time and still does.

This law purports to the ability of an individual (a firm, or a country) to produce a particular good or service better, or at a lower marginal cost, than another. Our lecturer explained it in farming terms: western UK has a comparative advantage to produce milk and meat because it can easily grow lots of grass, whilst the drier east is more suited to growing cereal crops. I know it's not quite that simple, but the principles are right and we're increasingly seeing the law in practice. 

Take Scotland. According to a Scottish Government report on Less Favoured Area (LFA) support, "the capability of Scottish farming is severely limited by climate, topography and soils, with the result that only about 11% of farmland is cropped". On paper, with 85% of Scottish agricultural land classified as LFA, the country shouldn't have the vibrant farming and food industry that it does. But it has.

And what's more, the Scottish Government, led by Alec Salmond (also fondly known up here as 'Wee Eck') is firmly behind farming. And why shouldn't he be? Despite Scotland's agrarian failings on paper, it has some real gems up its sleeve - loads of summer sunshine for fruit and grain fill, an abundance of grass for the world's most renowned beef to graze, a vibrant whisky industry quite literally at the end of the farm drive and some of the best scenery in the world for those predisposed to diversify into B&Bs or 'Glamping'.

OK, so I may be biased towards the land of my forefathers, but there is more. The Scottish Government gives financial and political backing to farmers. For example, 95% of Scottish SFPs are made in or before December. The Scottish Rural Development Programme (worth £680 million over six years) has its critics but it has enabled some Scottish farmers to invest in the future of their businesses with dirty water stores, new sheds and food processing facilities to name but a few projects.

There is an Agri-Renewables Strategy pending which will allow farmers to benefit from developing renewable projects on their land. And there is active communication between Ministers, the industry and farmers which has resulted in the likes of a derogation for sheep EID in Scotland and emergency funds for the rebuilding of sheds after the dreadful snows of last winter. 

Maybe some will scoff at my rose-tinted view of Scotland, but I think the country's a good place for farmers and farming. We have developed a great reputation for beef, potatoes, vegetables, soft fruit and barley - but importantly a chain to buy that produce and add value to it. Scotland is the perfect place for renewable energy having Europe's largest wind, wave and tidal resource; farmers can play a part in this. We have majestic scenery and a history that has tourists flocking. And we have policy makers willing to support us.

So, looking back to my beer hazed memory of that economics lecture, my belief in the law of comparative advantage is steadfast. Its practice is alive and well in Scotland.  But what I've learned in the 20 intervening years is that that advantage is nothing without the infrastructure to make it work for you.  What I've also learned is that you have to make the most of the advantages that you've got - even if all you have is mountains, wind and a few old castles!

No comments:

Post a Comment