Post-brexit trade deals a mixed bag for industry

While the future of the UK’S sheepindustrydoesn’tlook particularly bright under anyofthelikelypost-brexit trade deals, the fortunes of other sectors of the industry will be highly dependent on the shape of these future trade agreements.

In a major report into the impacts of alternative postbrexit trade agreements on UK Agriculture, which was published by the Food and Agricultural Policy Research Institute (FAPRI) UK yesterday, the effects of three different outcomes were used to model the likely consequences for the various sectors.

The report found that, operating closest to world market prices, the grain sector was likely to be the least prone to fluctuations due to the trade deal negotiations – with any drops in output due to this factor likely to fall within the five to ten per cent bracket, regardless of the deal brokered.

The beef and dairy had the most at stake over the type of agreement which was finally adopted– with a reversion to World Trade Organisation (WTO) default Most Favoured Nation (MFN) tariff rules offering possible increases in output from the national herds of over 30 per cent, due mainly to considerable opportunities for import substitution.

Pigs and poultry could gain similar benefits under such a scenario - but the

0 PIG farms could benefit under MFN tariff rules sheep sector, with its heavy reliance on exports to the EU, could see output drop by more than a third under WTO MFN rules.

However if the UK government decided to take up a policy of unilateral trade liberalisation - which would allow the importation of cheap food – the report indicated that this could see productivity and incomes in the beef and sheep sectors in particular slashed to almost half their current levels, while the pig, poultry and dairy sectors would also suffer reductions.

The report showed that a bespoke “business as usual” agreement with the EU, which would allow frictionless trade to continue with the EU, would cause the least disruption - but there would still be additional costs for all sectors such as the import and export checks, delays and extra paperwork and administrations costs which were likely to be incurred.

The report’s authors said that with the Brexit negotiations in their early stages, the findings could only indicate the broad directions of change, and the outcome was likely to be a hybrid of several options.

The Scottish Government said that the study confirmed that the interests of Scotland’s rural communities were best servedbyscotlandremaining within the EU.

“This report clearly shows that failure to reach a deal with the EU, combined with taking a complete free trade approach, would disrupt every single sector of agriculture, with beef production in Scotland particularly affected,” said rural economy secretary, Fergus Ewing.

He added that even under the best case scenario, where the UK government secured a trade deal with the EU on close to Single Market terms, both farmers and consumers would still be worse off.

“Walking away from the EU with no deal would be disastrous,” said Ewing.