Tax relief for food businesses would release new investment to restore the environment and improve UK food production

Wednesday 8 February 2017
William Andrews Tipper William Andrews TipperHead of sustainable business0207 630 4528wandrewstipper@green-alliance.org.uk

The costs of UK food production are being pushed up by the poor quality environment of UK farmland. New government policies are needed to increase private sector investment in restoring the environmental health of farmland, says a new study by think tank Green Alliance. [1][2]

Unsustainable farming practices are reducing the efficiency of the UK food sector. Impacts on soils alone create almost £250 million of extra costs each year, mainly through increased fertiliser and tillage costs. [3]. The additional costs of dealing with the consequences of issues like water pollution and biodiversity damage, such as the loss of vital pollinators, mean the true figure will be even higher. Investment in restoring soils and other natural capital on farmland will not only create a healthier natural environment but support a more resilient UK food and farming sector.

Currently, most environmental protection policies are targeted at farmers and land managers, yet over 90 per cent of the money generated by the food sector (nearly £100 billion a year) lies with non-farming food businesses such as supermarkets and food manufacturers.

While it makes economic sense for all levels of the food sector to invest in the health of the land on which it depends, the report shows that government intervention is needed to remove barriers to this investment.

It identifies two ways the government can help:

• Introduce new Natural Capital Allowances
These would provide tax relief on capital investments in environmental restoration on farmland, as an extension of the existing capital allowance tax relief system for energy and water saving investments.

•  Broker a Sustainable Food Pact
In the same way that sectoral collaborations have worked for the pharmaceuticals and other industries, this would bring together UK food businesses in a precompetitive collaboration to reduce environmental problems on farmland. The government would set clear objectives around the improvements required, as well as the consequences for not delivering them, and support the initiative with expertise and resources.

William Andrews Tipper, head of sustainable business at Green Alliance, said:
“By running down our natural environment we have actually made our food sector more vulnerable and less resilient. Many within the sector recognise it is in their interest to move towards a more sustainable system, but they will need support from government to make it happen.”

Sue Armstrong Brown, Green Alliance associate, said:
“We need a new land use policy model to replace the Common Agriculture Policy, and this must harness the power of the food chain to deliver environmental goals. Finding ways to help the food sector restore and manage its own natural asset base is essential, because there will not be enough money in the public purse to do everything. The state needs to pay for conservation, but the food sector can and should come together to invest in sustainable production.”

David Fursdon, chair of the 2013 Defra-sponsored Future of Farming Review, said:
"The challenge for farmers is to manage the short term need to make a profit in what are challenging market conditions with the longer term goal of maintaining their assets in good condition. These include healthy soils, clean water and other sensible environmental outcomes. Farmers would love to do more but sometimes cannot afford to do so. I, therefore, welcome this report's focus on the need for farmers, food companies and supermarkets to work together to find solutions to environmental challenges that meet everyone's needs"

Anna Turrell, senior public affairs manager –  sustainability, Nestlé UK, said:
“As a food manufacturer we know that our business is dependent on preserving and maintaining healthy ecosystems which, in turn, provide us with the ingredients we need to produce our products. To ensure that the sector can continue to provide food for generations to come, we need to address the environmental challenges we face today. Healthy soils, clean water and the preservation of biodiversity are all critical elements to ensure the long term sustainability of our food systems.

“We believe that collaboration will be critical to achieving this, which is why the government has such an important role to play in supporting the creation of a collaborative space where farmers, manufacturers and retailers can come together to develop scalable, industry-wide solutions collectively.”

Jonathan Hughes, CEO of the Scottish Wildlife Trust, Global Councillor, IUCN, and co-founder of the World Forum on Natural Capital, said:
“Strong regulation will always need to be the bedrock of an effective approach to protecting the environment, but we have seen how natural capital accounting is transforming the way that businesses in many sectors think about their impact on natural systems and resources. Government policies need to be smart enough to capture this interest and translate it into badly needed private investment that restores our natural environment. Requiring the value chains that are contributing to environmental declines to take collective ownership of the challenge is a good place to start.”

ENDS

Contact
William Andrews Tipper, head of sustainable business, Green Alliance (available for interview)
wandrewstipper@green-alliance.org.uk 020 7630 4528

Notes:

[1] Natural investment: futureproofing food production in the UK is published today by Green Alliance.

[2] Green Alliance is a charity and independent think tank focused on ambitious leadership for the environment. Since 1979, it has been working with a growing network of influential leaders in business, NGOs and politics to stimulate new thinking and dialogue on environmental policy, and increase political action and support for environmental solutions in the UK.

[3] This figure was calculated by Cranfield University for Defra, 2011, Cost of soil degradation in England and Wales.

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