Over £246 million (€288 million) is lost annually through unsustainable farming practices, the study found.
It suggests that without a system of tax breaks for the industry to reinvest in sustainable practice, and a government led coalition to direct changes, the natural value of UK land could continue to shrink while production costs shoot up.
Green Alliance, a London-based organisation that aims to promote sustainable development, said this is the result of dysfunctional economics in the food system.
“Largely it is because of concerted pressure to drive down costs and increase production, resulting in intensification of agriculture at the expense of the long term productive health of the land,” it said.
The agri-food sector contributes around £109 billion (€127 billion) to the UK economy every year, but the majority of profits are acquired by supermarkets and other retailers, it says.
Whilst food prices have dropped by almost a quarter since 1980, the share of profits paid to farmers fell by 15% between 1988 and 2015.
The ‘Sustainable Food Pact’
The report advises two essential plans to begin reversing the crisis and restoring environmental and economic wealth to British agriculture.
First, the creation of a shared agreement amongst the entire food industry in the form of a sustainability pact which would set shared targets for improving the quality of agricultural eco-systems like soil.
The report also suggested that defining and prioritising different targets could be dictated largely by the Natural Capital Committee (NCC), an independent body dedicated to ensuring the UK’s ‘natural wealth’ is used sustainably and efficiently. The NCC has not pledged any official support to the idea so far.
Meeting these targets would require mandates and enforcement by the government above all else because, as Green Alliance stated: “Voluntary initiatives in the farming sector have frequently underperformed without a regulatory driver, adequate monitoring and clear objectives. Pre-competitive collaborations of this kind have been good at identifying what needs to change and how; but they have been patchy at best when it comes to delivery.”
For this reason, Green Alliance recommends the government setting expectations for specific targets and levelling regulations and penalties against companies which are non-compliant, or fail to meet targets.
William Andrews Tipper, head of sustainable business at Green Alliance, told FoodNavigator: "The organisation needs to have teeth, and we aren’t saying what the specific targets or outcomes should be yet, but we believe a profitable food industry is absolutely compatible with sustainable agriculture, just not with the agricultural system we have today.
"There is a crisis in the UK environment, and there is a lot of recognition of this but without real stimulus nothing will really change. Placing all the responsibility on small and dwindling public money and the farmers who are actually in control of the natural resources will not work as they are not in a position to help – the knowledge and expertise isn’t there and neither is the money.
"Policy currently has very little to say about food sector companies who are generating a lot of money from this natural value should be contributing to restoring and maintaining it. They are the ones with the means and the know how, but nothing is forcing them to act."
Nestlé has voiced its support for the study's recommendations, 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.”
Tax breaks and Brexit
Britain's vote to leave the EU will mean an entirely new set of agricultural policies as the EU's Common Agricultural Policy (CAP), which currently controls how land is used and subsidised, will no longer apply.
Tipper said: "The extent of the change in environmental policy in our leaving the EU mean we have huge freedom to redefine what we want from UK land the way to achieve this. This is a moment of huge disruption and opportunity and because all the tectonic plates are shifting a lot of things that were lost are now up for grabs."
The introduction of a 'natural capital allowances' would grant breaks to businesses for income and corporation taxes and allow investment in technology and research that would restore the land.
Farm incomes are down and debts have risen by almost a third, says Green Alliance. The loss of income in the farming sector has prevented proper investment into sustainable practices and resulted in widespread destruction of soil.
Reduction in soil depth, increased fertiliser costs, decline in yields, the need to replace carbon in the soil all contribute to the estimated annual loss of a minimum €288 million – when the costs of managing resulting issues like flooding and drought are included, this figure would be much higher, the report said.