The debate around Brexit continues to intensify even as the deadline approaches. Both prime ministerial candidates made it the central issue of their respective campaigns, and businesses everywhere, in all industries, are bracing for the potential fallout of a no-deal exit from the European Union. As one of the country’s major industries and a key provider of jobs, agriculture is likely to be one of the sectors most affected by a change in the UK’s trade relations with the EU. From questions around funding to the accessibility of scientific research, here are six ways the agriculture industry will be affected by a no-deal Brexit.
1. Import tariffs and subsidies
One of the most immediate effects of a no-deal Brexit would be the imposition of import tariffs, something that no company currently contends with thanks to the single market. The NFU leader, Minette Batters, recently suggested that government aid would be necessary to prevent British farmers from being relegated to third party status, with many of their exports priced out of the market.
The most damaging cost of Brexit in terms of finances is likely to revolve around farming subsidies. The government has highlighted a provisional solution for tackling the loss of revenue, but the overwhelming impression given is that a no-deal Brexit will see farming subsidies fall. There are some who do not view this potential loss as a bad thing, with the argument being made that EU farming subsidies have historically favoured wealthier landowners over smaller, rural farmers and that the primary beneficiaries have been city financiers who have been able to turn agriculture into a speculative honeypot. It is important to stress that none of the proposals put forward by the government to change the current system demonstrate a clear willingness to rectify this.
In July 2018, LSE Consulting, on behalf of Arla Foods, published their findings on how a no-deal Brexit would affect the UK’s dairy industry. A number of different variables were discussed, but one of the overriding messages to emerge from the report was the need to maintain “frictionless” trade and allow the unfettered access of skilled workers, such as veterinarians. If either of these two factors was jeopardised, consumers would experience a marked increase in prices as a result of increased demands on the supply chain. And while the increasing demand for home-grown dairy products would certainly allow some farmers to grow their businesses, the fact remains that the UK has the second-largest dairy deficit in the world, and so depends upon dairy imports, mainly from the EU.
The main issue confronting cereal producers in a no-deal Brexit is the level of uncertainty that they will face. There is simply not enough information yet about what the government’s plan will be to manage the loss of subsidies, increase in surpluses and falling demand. In the short term, the average farmer will likely see a drop in the value of their goods regardless of no-deal legislation, however, it is possible that the government’s decision not to impose tariffs on cereals will offset this. The new English Agricultural Policy may provide support in the form of public funding, but in the long term, a loss of revenue seems the most likely option for cereals in a no-deal Brexit.
Perhaps the most immediate effect of a no-deal Brexit on agriculture will be difficulties with recruitment, beginning with farm labour. Just over one per cent of seasonal workers in the UK are British; the other 99% come primarily from the European Union. Agriculture recruitment has become a struggle in recent years, as the growing economies of traditional sources of cheap labour such as Poland and Lithuania have meant more workers are choosing to stay in their home countries, forcing farmers to look further afield. The potential end of free movement could spell disaster for those farmers who rely on a steady stream of migrants looking for farming jobs. But the pain will not only be felt at the lower levels; access to essential services like trained vets or food scientists will also be reduced. Service providers will suddenly experience a significantly reduced workload, leading to the loss of associated roles such as agricultural marketing jobs, surveyor jobs and agricultural education jobs.
There is even concern that a change in practice will lead to mass layoffs. The Northern Ireland beef industry, already operating on the slimmest of margins, could find itself wiped out by an influx of cheaper beef from the Republic.
5. Food standards
The British public takes pride in promoting the quality of its produce on the world stage. With brands like the Red Tractor providing a literal stamp of approval on those suppliers who grow organically and ethically, there is much to be said about the progress that the UK has made over the past couple of decades in raising the bar when it comes to food standards.
Much has been made about the potential new trade deals that an exit from the European Union opens up, including with countries such as the United States. The danger this presents is a situation where British farmers are expected to maintain consistently high standards while at the same time the market is flooded with cheap imported food sourced from poorly regulated suppliers.
A no-deal Brexit presents something of a mixed bag of results when it comes to the meat industry. On the one hand, the loss of access to European markets could lead to huge surpluses, necessitating the mass slaughter of thousands of animals. The UK is the world’s second-largest exporter of lamb, with 40% of the product being bought by France. Without that demand, many farm and related businesses could go bust. However, the potential for more open trade deals with the rest of the world could present its own sets of advantages. UK beef exports to non-EU countries have increased recently, and in order to compete with cheap Chinese beef, suppliers have adapted, focusing instead on selling premium cuts.
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