It was evident that Brexit would overturn the economic landscape European countries had developed since the EU’s creation. However, there was little consensus amongst economists and industry experts alike about the extent of Brexit’s impact on agriculture and the UK economy.
Now that Brexit has happened, its economic impact is beginning to take effect, and UK’s agriculture industry is one of the first industries to experience the changes. While the current changes are expected to be temporary, they allow us to picture the factors that will come into play in the future.
How Brexit is Impacting Agriculture
EU and the UK finalised Brexit with no deal, and they failed to solve future trade relationships. Since then, UK’s agriculture industry has seen the following changes:
1. Increased Red Tape
Free trade was always one of the most attractive parts of being a part of the EU. Countries within the alliance had easy trade access and limited to no bureaucracy in trade relationships. However, UK’s exit from the Union has changed this reality for most businesses.
Any transfer of goods from the UK to an EU territory needs to be accompanied by thorough documentation, approvals, assessments, etc. Even after fulfilling these requirements, unforeseen circumstances or additional approval requirements for individual countries can delay the process.
These changes heavily impact agriculture and livestock because the procedural requirements make it difficult for vendors to keep their products fresh.
2. Incidents of Food Wastage due to Approval Delays
The increase in red tape and bureaucratic requirements have resulted in several cases of food wastage already. Paperwork and approval delays have led an entire day’s stock of agricultural products to waste, resulting in the loss of a day’s worth of revenue for the farmer or business.
Such incidents have been understandably devastating for the agriculture industry in the UK and have presented the need for developing better trade policies with the EU.
3. Reduced Workforce
In addition to free trade, the EU also allowed free labour movement for countries within the EU. Agriculture industry in the UK benefited extensively due to this policy, and immigrants comprised a substantial percentage of labour in the industry.
Despite Boris Johnson pushing for liberal policies for people employed in businesses within the UK, the agriculture industry has seen a massive drop in immigrant workers. The shortage of workers in the industry has become a critical concern for farmers, who are understaffed and overworked.
There are also concerns about maintaining production at the original levels if the industry cannot attract local and immigrant workers.
4. Higher Supply Chain Costs
The introduction of the bureaucratic process, additional quality controls, inspections, etc., increases the time and the cost of the transaction. These higher supply chain costs will inevitably result in a price increase for UK products, making them less competitive in the EU nations.
However, the same applies in reverse, so there will likely be a general increase in agricultural and livestock production costs since these industries are the most affected.
5. Uncertainty about Farm Payments
UK farmers received approximately €4 billion annually before Brexit due to the EU’s Common Agricultural Policy (CAP). With UK farmers no longer entitled to CAP benefits, there is speculation about finding financial support in the current circumstances.
There is a discussion about the countries within the UK developing a similar system to support agriculture. However, with the COVID-19 pandemic taking centre stage, the likelihood of such a system developing soon seems far-fetched.
Thus, Brexit’s impact on agriculture and farming will push the industry further back. UK farmers will continue to face difficulties until existing trade inefficiencies are driven back, and the industry sees an increase in the workforce.
6. No Changes in Grain Exports
Surprisingly, Brexit has not affected grain exports between the countries. Since grain has a longer lifespan than most fruits, vegetables, and meat, it can withstand a longer trade cycle than before.
In addition to the existing conditions, experts have made some future predictions about Brexit’s impact on agriculture.
1. Expected Losses for Sheep Meat Industry
90-95% of sheep meat from the UK is exported to EU countries. However, given the existing bureaucracy and the inefficient supply chain, the exports are likely to suffer. There is a lack of clarity about the extent of resultant losses in income since we don’t know how trade relationships will play out once the pandemic subsides.
2. Higher Costs for Local Produce
Labour shortages, lack of CAP subsidies, and higher cost of operations are likely to increase the cost of local produce. Additionally, the existing procurement conditions will also add costs to the crop from EU countries in the UK market, meaning the overall food cost will increase.
The only upside of the events at the moment is that the combined force of Brexit and the pandemic have increased the demand for locally sourced beef. Supermarket beef is locally sourced, while restaurants rely on imported beef for their products.
Due to lockdowns, people have been eating out less, and the local beef industry has benefited as a result.
3. Better Incentives for Agriculture Workforce
Finally, to offset the labour shortage, the agriculture industry and the UK government might introduce incentives to join the workforce. Agriculture will play an essential role in the UK achieving self-sufficiency post-Brexit, and strengthening the local industry is the best way forward.
In short, Brexit’s impact on the agriculture industry has been half parts intriguing and concerning. There is still time before the full effect becomes evident, but the agriculture industry needs a strong workforce irrespective of the results.
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