The biggest uncertainty faced by British farmers used to be the weather. Now it is the impact that leaving the EU will have on UK agriculture.
Britain’s family farmers are among those likely to be most affected by Brexit: UK agriculture receives some £3 billion a year in farm support from Brussels – amounting to 60% of the annual income for some growers and livestock producers.
With Brexit, all that will change – if not immediately, then certainly later. The government has promised to maintain farm support at current levels until 2022. After that date, Defra minister George Eustice wants farmers to “move away from the notion of subsidies”.
As with so much about Brexit, no one knows what this will entail. More than a year has now passed since the EU referendum – 12 months which have seen repeated calls from farm leaders for the government to “end the uncertainty” and say what the future holds for the sector.
True, the Queen’s Speech contained government plans for an Agriculture Bill pledging to put in place an “effective system” to “provide stability” to farmers and protect the natural environment after the UK leaves the European Union. But that was about all it said.
The biggest unknown faced by farmers used to be the weather. Now it is Brexit. Farming success or failure once hinged on whether it would rain or shine – and in what quantities. Now it depends on the sort of Brexit deal a weakened government can negotiate with Brussels.
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For many growers and livestock producers, the situation is increasingly worrying. Agriculture is a long term business: crop rotations and livestock breeding programmes are often planned years in advance. At the moment, that is impossible to do with confidence.
So what will this post-Brexit world look like? One thing is certain, farmers will have to do more in return for taxpayers’ money. The government is keen that post-Brexit farm support has wider public benefits rather than simply being a handout to people who own land.
Instead of income support or an annual direct payment to farmers, Mr Eustice wants to see farmers rewarded for improving productivity or delivering ecosystem services – paid to those producers who make a conscious effort to improve the environment and help wildlife.
Support for hill farmers, for example, focusing on upland management – planting trees to mitigate flood risk further downstream, perhaps, or looking after nationally important habitats such as mountain heaths, blanket bogs and calcareous grassland.
In terms of food production itself, support is likely to focus on capital grants and other financial incentives for on-farm improvements. The aim would be to boost productivity by encouraging farmers to invest in new buildings and other infrastructure.
At the same time, a system of crop insurance – facilitated by the government and funded at least in part by growers – would help cushion the impact of bad weather on harvest yields. Similar schemes already exist in other countries, including Canada and Australia.
Mr Eustice is also keen to reward livestock producers who improve animal welfare. Farmers who go above and beyond legal requirements when looking after their animals could expect to receive additional payments – although it remains to be seen what this would involve.
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How much will all this worth? That depends on how much the government is willing to spend – and how much it values agriculture. It also depends on the eventual trade deal – if any – agreed between the EU and UK.
The EU is the UK’s biggest food export market. Farm leaders have already warned that “free and fictionless” access to the EU single market is vital for UK agriculture to thrive. Failure to secure a satsfactory deal could see prohibitive tariffs imposed on UK food exports.
In 2015, over 95% of UK sheep meat exports – worth almost £300m – went to other EU countries. France is the main destination, accounting for 45-55% of all trade, according to the UK’s Agriculture and Horticulture Development Board.
Without a trade deal, fresh or chilled lamb carcases exports could be subject to a 46% export tariff, making it difficult for UK farmers to compete in overseas markets. At 84%, the export tariff on fresh or chilled beef carcases is even higher.
Then there is the question of overseas labour. UK farmers rely heavily on seasonal migrant workers, especially at peak times such as harvest. More than 75,000 EU workers are currently employed in UK horticulture – doing jobs that British workers are reluctant to undertake.
Recruiting overseas workers has become harder since the referendum. Earlier this summer, an NFU survey reported a 17% drop in the number of seasonal workers coming to work on British farms – leaving some businesses critically short of people to harvest fruit and vegetables.
Many of these overseas workers have stayed away because the slump in Sterling’s value since the referendum means they earn less in the UK. Others are staying away because – rightly or wrongly – they no longer feel welcome in Brexit Britain.
The government says it is monitoring the situation closely. So far, however, it has refused to heed NFU calls for the introduction of a seasonal migrant workers scheme which would allow overseas workers to enter the UK on fixed-term contracts post-Brexit.
Winners and losers
This might all seem unduly downbeat and pessimistic to Brexit supporters. And it is is perhaps true that leaving the EU could bring benefits for agriculture – heralding the advent of a dynamic farming sector that has been hamstrung by so much European red-tape for the past 40 years.
It is also perhaps true that hill farmers could gain from Brexit. Farming in some of our most environmentally sensitive and cherished landscapes, they are well-placed to deliver public benefits – so long as the government keeps its side of the bargain and rewards them for doing so.
Big arable farms are also better-placed than most. They have the economies of scale needed to produce food at competitive prices, grain can more easily be stored than meat or milk and growers use the futures markets to their advantage when cereal prices are in their favour.
The losers are likely to be the family farmers who fall between these two extremes. They are agriculture’s equivalent of Ed Miliband’s “Squeezed Middle” – the same sector of the population referred to as “just about managing”, or Jams, by Theresa May.
These family farmers are in a precarious position – and least well-placed to adapt to Brexit. Reliant largely on direct payments for the bulk of their income, they don’t farm in the uplands and they lack the economies of scale to make a living from the open market.
Located away from large urban areas, these family farms have limited opportunities to improve their incomes by cutting out the middle man and selling what they produce direct to the public at a farmers’ market or through a farm shop.
These farms also have limited opportunities to diversify into tourism, because they will most likely be located outside our National Parks, Areas of Outstanding Natural Beauty or other sought-after and popular rural destinations.
These family farmers face a stark choice: they must either get a job off the farm to replace the income they will lose from Brexit – or get out of agriculture altogether. Yes, leaving the EU could result in a leaner and fitter farming sector – but some people won’t be able to make that change.
This article was first published in the Summer 2017 issue of the Country Standard newspaper.