The market, and not policy, is the real driver of future success in the agribusiness sector

The battle lines are being drawn at the Oxford Farming Conference 2010. The annual 'get together' for the agricultural world had its standard political line up for the first morning: the Secretary of State was on first to tell us how wonderful DEFRA is and then, as usual, one of the opposition parties was there to tell us that they would pretty much do exactly the same thing, but they're nicer and more sympathetic about how they do it. They 'understand' farmers and consumers, you see. This year Nick Herbert had that mantle.

Hilary Benn is very excited. He has announced a new 'food strategy' which aims to promote more domestic production. Since DEFRA lost the 'sexy bit' of its portfolio (i.e. climate change) to Miliband towers down the road in Whitehall Place, it has grasped the food agenda with applaudable enthusiasm. Mr Benn's new strategy is all worthy stuff, and of course the UK should be producing products where we are globally competitive and have world leading technical knowledge and innovation. We produce the highest temperate crop yields in the world, and have genuine competitive advantage. However dovetailing the food production, environment and climate change debate requires more thought – producing more food with less environmental damage is a fine aim, but what does it actually mean? Similarly populist messages such as 'Buy British' need to be used with great care as with today's diversified diets, shopping and eating habits, they can only ever, at best, be delivered on in part.

The critical thing which successive governments have failed to realise is what our agribusiness and food industry needs is a regulatory and business environment that is conducive to entrepreneurialism and innovation across the whole agribusiness supply chain. Reforming the Common Agricultural Policy and eliminating production distorting incentives has been a fundamental part of this. Assessing technologies such as genetic modification on robust scientific evidence rather than whim must occur. Applied public funded research where there is genuine market failure should be supported. Of course more regulation has come and, whilst some of this is necessary, we must be careful not to regulate domestic food production to the extent that we simply export challenges overseas. The penny has dropped at DEFRA that, whether or not we eat more or less red meat in the UK, the effect on global climate change is so small that it is almost going to fail to register. Similarly, they've also worked out that cows produce methane whether they're in Basingstoke or Brasilia or Beijing. Where we should be focussing our efforts is on issues such as ruminant diet innovation to reduce the harmful belches and burps from our national herd.

Mr Herbert is out for the supermarkets. The ombudsman may be a good idea but history shows us that previous initiatives to control them have largely failed. It is also slightly depressing to see that supermarket bashing is again seen to be the answer to the agribusiness sector's woes. Let us not live in a detached little bubble. Initiatives such as 'grow your own' (via allotments) and local food have a great part to play in stimulating consumer understanding and interest in food. But let us not kid ourselves that the vast majority of food in the UK (and even more especially in other parts of the world) is going to be produced by large efficient agribusinesses, pass through processing and packing businesses in large rationalised supply chains and be retailed through a small number of globally powerful multiples. Some might not like it. But that’s the reality. The real aim must be functional and collaborative supply chains which look for efficiencies and consumer value up and down the chain (and not just within individual businesses) and having a 'referee' may not be the best way to do this. However, it is fair to say that until we break the deadlock of supermarkets just buying on price we won't get world class supply chains in the UK.

We've had fine words today from Nobel House and from Milbank. Another strategy has been launched and another ombudsman proposed. But as the dust settles and the great and the good leave Oxford for another year, I can't help wondering what the tangible benefits will be to UK Agribusiness plc. I may be proved wrong but I suspect the most efficient companies in the sector will do what they always have done – look for market opportunities and market signals and respond accordingly. The UK and global market opportunity is clear for all to see and those that want to seize it will do so. Policy and regulation will continue to play a part, but the market is the real driver of the agribusiness sector's future success.

For further information please contact Carl Atkin, via email or +(44) 01223 559 539