Contrasting those two is a good way of illustrating how taxes and subsidies affect the way that people combine the three factors of production: land, labor and capital.
Commercial farms
- Land is highly subsidised (CAP payments, inheritance tax breaks etc).
- Capital is lightly taxed/lightly subsidised (VAT refunds for new equipment and income tax deductions for capital allowances)
- Labour is heavily taxed (income tax and NIC)
Allotments
- Land is heavily taxed i.e. the local council charges a vast multiple of what a farmer would be prepared to pay per fraction of an acre.
- Capital is more heavily taxed (VAT on new equipment and no income tax deductions)
- Labour is not taxed as all as allotment gardening for 'own use' counts as a hobby.
The results are immediately obvious if you just look at them.
Commercial farms use a lot of land, a fair amount of capital (tractors etc) and as little labor as possible per unit of food produced. When did you last see somebody actually working in a field?
Allotments use as little land as possible, barely any capital (it's all bits and pieces held together with twine) and a lot of labor per unit of food produced. A lot of them maximise their growing area by building frames for climbing plants, cloches and so on.
(Some commercial farms tend more towards the allotment model, i.e. the farmers who grow things like mushrooms, tomatoes and strawberries in polytunnels which have to be hand picked, but let's not get bogged down in that.)
Ergo, to maximise food production and employment (for a given land area), we should get rid of farm subsidies and collect taxes from land instead of from labor and capital. Again, I cheerfully admit that very few British people want to work on farms, that's a cultural shift that has taken place over the last century or so, but so what? If demand for farm labor increases and wages go up accordingly, who's to say the cultural shift can't be reversed slightly?
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The other wrinkle here is that farm land is barely worth taxing as its value is so low compared to developed and urban land (perhaps 1% of the total land value), plus it's difficult for a non-expert to value (unlike urban land).
But at least we could e.g. scrap the farmland subsidies and the VAT refunds and exempt farming wages and profits from income tax, corporation tax and national insurance (assuming that the current subsidies and taxes approximately net off, which I think they do, so that the farming industry as a whole is not a net loser or winner in the short term).
The only real argument for taxing agricultural land at a nominal amount (£20 per acre per year, let's say) is to discourage the use of very marginal land, which can then be re-wilded (The George Monbiot argument).
Debate Magazine
