Losing agricultural regulations could outweigh EU tariff costs, says thinktank

Britain can jettison hundreds of costly agricultural regulations which have pushed up food prices, offsetting the extra costs of European Union tariffs, according to a report by a free market thinktank.

A study by the Institute of Economic Affairs argues that Brussels has fallen victim to intense lobbying by pressure groups which benefit from tighter rules on food standards, animal welfare and the environment.

These rules often have little benefit for consumer health or reduce risks, but “create deadweight costs”, it said.

The IEA said banning all synthetic pesticides currently allowed under the EU’s Common Agricultural Policy (CAP) could add as much as £7.5bn to the cost of food production should the UK remain within the EU. Behind the calculation is a move towards imposing organic standards on farmers, the report said, which would lower crop yields.

If all food were grown organically, it said wheat yields would halve, leading to a price rise of nearly 70%, potato yields would fall by 44% leading to a price increase of nearly 200%, and bean yields would fall by a quarter, leading to a price rise of more than 50%.

The report attacks Friends of the Earth and farmers’ unions for persuading EU officials to widen the remit of the CAP to include regulation of food production. It said the CAP had evolved into an “interventionist” and complex bureaucracy with “a remit that covers a multitude of areas, from biodiversity to food safety to environmental protection, all of which have led to a huge regulatory burden on the food industry”.

Mark Littlewood, the IEA’s director general, said he was concerned that official figures showed existing agricultural regulations were already costing nearly £600m every year in England.

“EU member states face staggering food price rises unless the march of increased regulation is halted. The UK is fortunate that it now has the opportunity to repatriate control of its farming regulations.

“It’s crucial that decisions stem from good scientific evidence, and pay attention to consumers’ interests and the potential crippling costs that overregulation can have in pushing up food prices and the cost of living.”

The report said consumers should be allowed to buy cheaper food, including genetically modified products, without the intervention of Brussels officials “captured” by special interest groups.

It added: “Since the 1990s, the growth of regulation and subsidies has gone hand-in-hand as subsidies have been increasingly tied to environmental requirements imposed on farmers. This leads to costs for consumers and taxpayers alike.

“One cause of the growth in regulation is the use of the precautionary principle. This is poorly defined. However, in general, it means that the benefit of the doubt is given to the protection against any possible harm at the expense of consumer, business or economic interests.

“The result has been a drift towards overregulation and a jettisoning of rational principles of managing and taking into account risk.”