19 November 2016

King West

Agriculture post-Brexit

Agriculture is arguably the single most closely linked sector in the UK to the EU. Trade, labour supply and of course direct support will be the main theatres of debate and arbitration, which will shape the sector as it begins metamorphosis toward independence. The Agricultural industry in post-Brexit Britain is an interesting and presently unmapped proposition.

The ripple effect of the day the nation spoke on June 23rd 2016 will be felt for generations into the future. Whether that is positively or negatively is up for both debate and commentary for years to come. As we head toward March 2017, which at present is the ‘Save The Date’ message for invoking Article 50, negotiations are at the forefront of our minds.

Two exit strategies, potentially, exist for debate: a hard exit where not only does the UK exit the EU but also the single European Market, or a soft exit where a deal is struck that the UK becomes independent of Brussels but retains its position in the single market.

Labour is perhaps one of the most prevalent issues that will face farming sooner rather than later as well as being one of the most antagonistic issues facing the Prime Minister and her Cabinet. As the control of immigration was one of the loudest beats from the drum of the leave campaigners, Mrs May faces a serious quandary in this matter’s forward management. It is estimated that around 6% of the UK’s agricultural labour force come from Europe, plus an additional 67,000 (close to 18%) who are travelling seasonal workers from the European mainland. Following the Referendum, some East Anglian businesses are already reporting issues with finding the volume of temporary staff they require to survive.

With the Australian points system already rejected, a robust system is required that will support the needs of UK industry whilst appeasing the bequest of the leave voters. The former Seasonal Workers Scheme may be resurrected to go at least a part way toward managing the labour shortfall- if workers are prepared to travel to the UK instead of finding similar work where they feel more welcome. A long-term solution is thus far non-existent.

Subsidies from the EU account for around 75% of total income for farming across the UK. However, in a recent report, only 26% of survey respondents reported the maintenance of subsidies to be their number one priority. 55% highlighted the ‘trade not aid’ preference of negotiating a new trade agreement with non-EU countries and 48% stressed the desire to maintain tariff-free access to the single market.

The options for the UK as the future of agriculture is mapped out are voluminous. Decisions must first be taken as to whether primary importance is placed on safeguarding existing links with the EU, accounting for just under 50% of total exports in 2015 and 61% of agricultural exports, or if the opportunity is seized to look outwards and develop as a major player in the wider international marketplace.

Chancellor Philip Hammond has attempted to quell immediate concerns by committing to match Pillar 1 and 2 subsidies until 2020 but from
that point in just over three years time, uncertainty is the only constant. Environmental groups are campaigning for the future of direct payments to be linked to the achievement of environmental targets. Our recent column referenced the UK soil having just 100 harvests left unless we change generation-old habits and practices. Perhaps this is an opportunity for change to occur. DEFRA have long since vocalised their disinclination toward direct subsidies and thus are presumed likely to be in support of the environmentalists' viewpoint.

What happens in the future, after the negotiations have been conducted and our new agricultural landscape is drafted, will depend upon the flexibility and adaptability of all those concerned with, and in control of, the UK’s agricultural and land sectors. What we can be sure of is that the years ahead of us will be challenging on many levels. Throughout the progression of leaving the EU, King West will be monitoring changes, especially where relevant to rural issues, and will be reporting these. However, should you have any queries please do email or visit our office in Market Harborough. 

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