Farming can withstand a Brexit

Growers will gain irrespective of referendum outcome.

Fruit farms: UK trade policy and changes in the UK farm subsidy regime post-Brexit would have little impact - image: HW
Fruit farms: UK trade policy and changes in the UK farm subsidy regime post-Brexit would have little impact - image: HW

British horticulture would be the farming sector best able to cope with a range of potential changes in trade access and state support following withdrawal from the EU in the wake of June's referendum, an extensive report commissioned by the NFU has concluded.

The report, prepared by LEI, an institute of Wageningen University & Research in the Netherlands, found that horticultural growers stand to gain no matter what trade or subsidy regime the UK government should choose to pursue post-Brexit.

Comparing a continued free trade arrangement (FTA) scenario between the UK and rump EU, a trade liberalisation scenario with the UK's external import tariffs generally lowered by 50 per cent, to a more protectionist "WTO" position of giving other nations only basic market access under the UK's World Trade Organization obligations, it found a typical horticultural farm would gain by amounts ranging from £20,000 under FTA, to around £40,000 under the other two scenarios.

So regardless of future UK trade policy, the difference in impact on horticulture would be "rather limited, with income expected to increase no matter the level of direct support", it said. By contrast the UK meat and dairy sectors would be hit hard under liberalisation, as currently the external tariffs are relatively high on these commodities.

This has geographical implications, it points out, with the impact of trade liberalisation being negative in all regions, particularly Scotland and Wales, with the exception of "England-East" (the East Midlands, East Anglia and the South-East), where "the share of field-crops and horticultural farms is high, both farm types (being) little affected by the lower prices in the trade liberalisation scenarios".

As UK horticulture currently has the lowest level of farm subsidy, averaging around £2,400 per business, changes in the UK farm subsidy regime post-Brexit would have little impact, it adds. With a halving of subsidies combined with a trade liberalisation scenario, "England-East" would again be "little affected by the reduction of direct income payments", it says.

Regardless of the subsidy regime chosen, a post-Brexit UK government would save billions on payments to farmers, it points out, as currently the UK pays in an estimated £6.4bn to the CAP budget, but gets back only £3.1bn in farm payments - so even maintaining these at the same level would bring a £3.3bn saving.

But it stresses: "There are other potential consequences of a Brexit for British agriculture that are beyond the scope of the model," including availability of labour, consequences for the pounds/EUR exchange rate, changes in input costs including land prices and machinery, changes to farms' regulatory burden and product approvals.

And it points out that, while forecast farm-gate price increases would be a positive for farms, food would become more expensive for shoppers. "At the level of the society this implies a loss of consumer welfare," is says.

Unlike its counterparts in Scotland and Northern Ireland, and the Farmers' Union of Wales, the NFU has so far held off urging members to vote one way or another in the referendum, confining its role to presenting the likely consequences of either outcome.

The union has just completed a series of regional member meetings to present its report's findings, after which the NFU Council "will decide whether the NFU takes a position ahead of the referendum on behalf of the industry", it said.

Its director general Martin Haworth pointed out: "In the past, our government has been a strong advocate of open and free trade. It has called for tariff protection across all farm sectors to be reduced and it has called for the abolition of direct support payments made through the CAP."

Speaking at the launch last week of a leaflet putting the government's case for retaining EU membership, to be delivered to every UK household, Defra secretary Liz Truss said: "The document makes clear why EU membership brings economic security, peace and stability. It also sets out that if the UK voted to leave, the resulting economic shock would put pressure on the value of the pound, which would risk higher prices."

Call for transparency - NFU continues to challenge British retailers

The NFU has urged major retailers to be up-front about whether they source UK fresh produce when in season. It calls on them to be "clear and transparent about their sourcing policies for own-brand food products", which include nearly all of the fresh produce they sell. "This will not only allow our farmers to produce for the market, but will make it easier for the public who choose to buy British," it says.

It wants to see British food clearly labelled with a Red Tractor logo or union flag so that customers can identify where the product is sourced, and is calling for retailers to sign up to its Back British Farming Charter and Fruit and Veg pledge to commit to fair relationships with farmers and growers.

So far only Aldi has signed the pledge. Besides sourcing an above-average 40 per cent of produce from British growers, it also stocks only British in 16 fruit and vegetable lines when in season, the highest number of any major retailer. The NFU says it was unable to establish such information for Sainsbury’s, Asda, Lidl and M&S, and has called for "as much clarity as possible".

NFU chief horticulture adviser Dr Chris Hartfield said: "The NFU continues to challenge retailers to build more sustainable supply chains, giving UK growers the confidence to invest. One way is by demonstrating conformity with the NFU Fruit and Veg Pledge and making a public commitment to support UK growers."

Meanwhile a poll of scientists by the journal Nature found that over four-fifths of those resident in the UK were opposed to Britain leaving the EU, with nearly half believing such a move would be "very harmful for UK science".

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