With Brexit less than a year away the agricultural industry is preparing itself for a new era. For most areas of the economy the government seems to be planning on maintaining continuity after Brexit, but for those involved in the agricultural industry change could be on the cards. Farmers across the country are hoping that the new agricultural policy will focus on the individual needs of this country, rather than the wider needs of a whole continent, which will make it more responsive to demands of agricultural businesses.
Support from the European Union to end
Since 1973, farmers across the UK have been subsidised by rural payment schemes and protected from foreign competition through import tariffs because the UK joined the European Economic Community and benefited from the Common Agricultural Policy. As the UK prepares to leave the EU, the government needs to decide whether to mimic the support currently received or to allow market forces to influence the sector. It is clear that these changes will become a defining moment for the UK agricultural industry.
How are the current subsidy payments decided?
In 2016, the government paid £3.1bn to farmers, which accounted for more than 50 per cent of most farms' income. Despite the subsidies, 26 per cent of farming businesses in the UK failed to break even. Over three-quarters of the current payment system is based on the amount of land owned, with a small percentage based on maintaining the environment and improving economic diversification. A number of polls conducted by the European Commission have found that people in the UK would rather subsidise animal welfare and the environment than increase food production.
A shift in rural policy
Over the last 70 years, farms have been seen as an essential part of preserving the UK countryside. However, agriculture today only accounts for a small part of rural employment and many farms have changed considerably in their production methods. As an increasing number of farmers turn to large polytunnels, robotics and heavily fertilised arable fields the rural landscape is changing. UK farmers are no longer able to feed the whole nation, so instead of focusing on production it is likely rural policies will steer farmers towards the preservation of the countryside.
Post-Brexit plans from the UK government
The current approach to farming subsidies is due to end in 2022 and government plans are still somewhat uncertain. Some clarity came in February when Defra published the findings of its consultation on health and harmony, which outlined how subsidies will protect the food system as a whole. A spokeswoman for Defra confirmed the government was committed to matching the £3bn a year for farmers, with a long transition period to allow a period of gradual adjustment.
It is expected that innovation and conservation will be encouraged to enable profitable farming businesses to grow without harming the environment. According to Michael Gove, the secretary for the environment, food and rural affairs the government will begin to move towards subsidies for farms which enhance the natural environment through an increased focus on conservation.
Why is there a growing uncertainty within the industry?
Removal or changes to the protection provided by subsidies and import tariffs is a leap into the unknown. Many people within the agricultural industry believe the current subsidy system is unfair, as it seems to provide those farmers with already high levels of wealth with increased support rather than supporting struggling farms. The Queen is a famous recipient of one of the largest subsidy payments, based on the amount of land she owns. Public finances are stretched and import tariffs are uncertain, so it is uncertain whether the government will be able to provide the level of support farmers currently receive.
Which businesses will be affected?
The removal or adjustment of subsidies will have widespread impacts across the industry, but there are certain sectors of agriculture which will be heavily impacted. The beef, lamb, dairy and sugar-beet farmers current receive a large percentage of the subsidies available and benefit from protection from the EU's tariffs. These sectors are particularly vulnerable to competition from farms in Australia, New Zealand and the US, which are all looking to arrange trade deals post Brexit.
Opportunities for the future
Brexit represents a real opportunity for farmers to change the course of their businesses. New Zealand is a country which famously transformed its agricultural industry following the removal of subsidies in the 1980s. An entrepreneurial culture within the New Zealand farming community quickly led to the country becoming known across the world for its wine production and dairy production. Although the UK does not have the same close access to the large Asian market, there are many lessons which can be learnt for both the farmers in the UK and the government.
The impact on employment
As the future subsidy plans are uncertain, it is difficult to predict how the changes will impact employment. The biggest changes are expected to impact seasonal opportunities which are filled by many workers from across the EU. Farms will be able to recruit from the EU until December 2020 but following that date there will be an increase in demand for seasonal workers here in the UK.
It is expected that farms will need to consolidate and increase levels of mechanism, which could reduce the demand for low-skill permanent jobs. Although, it is thought that opportunities will arise for those in the industry which are qualified in areas such as agricultural engineering, agronomy, veterinary services and farm management. As farms will need to continue to find new diversification opportunities, many farm workers may find their roles change significantly with an increased focus on industries such as tourism.
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