Farmlytics

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Brexit and Farming

The UK will hold a referendum on its membership of the EU on the 23rd June. If the UK votes to leave the EU and ‘Brexit’ occurs, the implications for UK agriculture and its supply industries will be profound.

Since joining the ‘Common Market’ a significant two-way trading relationship has developed between the UK and the EU in agricultural trade, with the UK’s biggest export markets being the Irish republic (£3.4 billion), France (£2.1 billion), the Netherlands (£1.3 billion) and Germany (£1.2 billion). The largest EU agricultural exporters to the UK are the Netherlands (£4.9 billion) France (£4.2 billion), the Irish Republic (£3.8 billion) and Germany (£0.7 billion).

Three studies have offered insights on the likely implications for UK agriculture.

A report written by Professor Allan Buckwell, and commissioned by the Worshipful company of farmers highlights the degree of uncertainty in the process. It concludes that the long-term implications would depend on the agricultural policy environment that replaced the CAP, and that a more resilient agriculture could emerge from the process. Failure to secure an agreement on access to EU markets could however lead to UK exports being subject to the EU Common External Tariffs (which average 14.8%, but range from 0% to 197% ).

Alan Mathews points out, that should the UK leave the EU, but remain within the single market (the stated aim of the leave campaign), then this would still require additional paperwork (for rules of origin purposes), sanitary and phyto-sanitary checks (depending on whether mutual recognition agreements were negotiated in the withdrawal phase), as well as lorry delays at cross-channel ports and the Northern Ireland border. He also states that there could be additional costs associated in producing for two different markets, should over time UK rules differ from those of the EU.

A study for the Yorkshire Agricultural Society (YAS) concludes that the impact of Brexit on farming, is also very much dependent on what happens during the negotiations after a vote to leave the EU.

The single farm payment makes up a significant proportion of many farmers incomes, and the YAS report claims that there is likely to be some reduction in direct payments in the medium term – due to increased political scrutiny of farm subsidies; and that the reduction in the regulatory burden on agriculture is not likely to be as much as many farmers might hope. Many farmers are entirely dependent on these direct payments, however it is possible however that there will be increased Rural Development and Environmental support.

The main UK farming unions, and much of the farming establishment support the remain side, however some opinion polls suggest some grassroots farmers at least plan to vote for leaving. Brexit would result in winners and losers, and whilst there are significant risks to UK agriculture, farming represents less the 1% of UK GDP. Agricultural trade between the UK and the EU is likely to continue if some form, but on very much different terms to what it does today, and changes to UK agricultural trading relationships and policies could be significant. Exit negotiations could be long and complex, with the end result and the wider impacts on the industry not immediately apparent.

 

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