As the 2021 United Nations Climate Change Conference (COP26) enters its second week, Joe Spencer, partner at MHA, a network of independent accountancy firms, is warning that a UK carbon tax could result in swathes of farmers going out of business and urges the government to seek an alternative solution.
“The introduction of a carbon tax could be a severe blow to UK agriculture. Such a measure may profoundly decrease margins across the sector, especially for growers, and put businesses at huge risk at a time when they need support from the government most.
“Amid suggestions that the UK could take the lead and be the first country to adopt a carbon tax unless this tax was agreed on a global scale, UK farmers would undoubtedly feel a disproportionately negative impact compared to their international competitors. The result would drive up consumer prices for UK products, thereby boosting demand to import produce from outside the country, as well as undermine the ambition of UK farmers to grow sustainable, low carbon food while protecting the countryside.
“What’s more, although research has shown that 90% of British consumers would be happy to pay higher food prices to ensure UK farmers receive a fair return for their produce*, it’s highly doubtful this sentiment would persist if price increases were to cover a carbon tax rather than going back into farmers’ pockets.
“The agriculture sector can – and should – play a pivotal role in tackling climate change, however, it is important to prevent irreparable damage to businesses. As such, the UK government should be considering other avenues to ensure agriculture is more sustainable in the country, such as providing education, support and access to sustainable farming practices and potentially incentivising green alternatives with specifically targeted tax reliefs.
“Part of the government’s strategy should also address the distorted public perception of agriculture’s contribution to climate change, such as challenging false media claims on agriculture carbon emissions and working with industry leaders like the National Farmers Union and Country Land and Business Association on educating the wider public to improve understanding of the issues and reinforce the importance of the food sector.
“It is only by a joint and supported approach by the sector and the government that we can make a difference in solving the pressing climate issues we face while at the same time ensuring the livelihoods of farmers are not jeopardised.”