News that Tim was taking over the Agriculture brief sent me back to his article in Liberal Democrat News last week. It was a campaigning piece - his aim is to make the liberal democrats "the party of choice for UK farmers". And that is a great idea as far as I am concerned. One of the things I have found annoying over the years is our failure to communicate to farmers just what our policies are. There is a hugely important trade press for the farmer sector and we have many ways to get into it.

But (telephone) canvass farmers in many areas and you will find they don't know where we stand on the big issues like CAP reform. This is partly because we don't have a very clear or informed stance on these issues (and I will come back to this on my Euro blog). The big problem is that we haven't been great communicators. Tim can change that.

Sadly, Tim got a few things wrong in that article though.

He kicked off with the bold assertion that "if you want to see hard evidence of the failure and unfairness of the free market, then you need look no further than rural Britain" (meaning farmers, in practice).

This isn't my sort of language, and the idea that farmers operate in a "free market" seems pretty suspect to me. According to DEFRA statistics (sorry, no link to this) all the key categories of farmers except dairy farmers received (on aggregate) EU subsidies that exceeded Family Farm Income in 2003/2004 (the most recent year I have to hand). The situation is rather different for pig and poultry farmers who essentially fall outside the CAP. But a classic farmer with fields and a tractor was surviving (nominally at least) thanks to public subsidy.

Dairy farmers seem exceptional in terms of subsidy income - but this is because the support mechanism for dairy was the quota system - a massive scheme to restrict output (and thus maintain prices) across the EU.

So I find the whole idea that farmers are in the free market a little odd.

The second point Tim got wrong came in his second paragraph where he wrote of "the conclusion of the Office of Fair Trading (OFT) that there had been price-fixing and collusion between major supermarkets and the big dairy companies and that this price-fixing had led to profiteering to the value of �270 million at the expense of consumers and farmers".

This is a myth gaining credence in all polticial parties. But in fact the supermarkets were fined for getting together to pay the farmers more. This is from the Times report:

J Sainsbury said it would pay a �26 million fine to the OFT, which it said would help bring the investigation to a conclusion.

"We are disappointed that we have been penalised for actions that were intended to help British farmers, but recognise the benefit of a speedy settlement with the OFT," Mr King said.

"The price initiatives in 2002 and 2003, which were widely and publicly reported at the time, were designed to help British dairy farmers at a time of considerable economic pressure and public debate about whether farmers were getting a fair price for their products," he added.

In a statement, Asda said: "Everyone at Asda regrets what happened, particularly as we are passionate about lowering prices. Our intention was to provide more money for dairy farmers, who were under severe financial pressure at the time."

There may be scope for demanding more from the supermarkets (and changing the law) because this is not normally the way they behave. It is a relatively easy policy to explain at least. But if we are really going to face up to the realities of the predicament of farmers, we are going to need a critique of the impact of the (old) CAP and an understanding of the structural problems facing some parts of the industry.

Production-based subsidies (all but gone in the UK) encouraged farmers to produce more and so guaranteed a supply to wholesalers. Their impact can perhaps best be see with sheep production. Sheep farmers increased the number of animals they kept (the subsidy was paid per ewe of breeding age) leading to an overall increase in the national flock of about 50% between accession and the end of the millenium. And prices responded just the way they do in economics textbooks. Arguably the result was overgrazing in large parts of upland Britain.

The current situation seems to be that farmers are responding to the change in the subidy by reducing the number of animals they keep. This might lead to increased prices in the medium-term, but in the short-term destocking also serves to depress prices. The moral is that intervening in markets can cause as many problems as it solves.

But I don't seek to argue that going back to the market will solve the problems faced by all farmers. Arable farmers seem to be doing well out of the freedoms provided by a decoupled CAP and rising world prices. UK Dairy farmers have failed to gain anything much from the movement on world prices.

And some upland sheep farmers now seem to be only slightly linked to the business of food production. The main function of those Herdwick sheep that moved the hearts of the nation during the big BSE crisis is to keep the Cumbrian mountains clear of scrub and trees and to appeal to tourists - their owners are often tenants of the National Trust. They are not part of free market agriculture at all. They are in the entertainment industry.