Deals sounding a bit like putting lipstick on a pig

Comment Brian Henderson

The past week seemed to throw up a startling number of opportunities for the nation’s farmers, with the announcement of several possible trade deals with countries outside the EU.

The likelihood of increased beef trade with the Philippines was seen as a major opportunity worth a possible £34 million to the UK’S red meat industry, with that market billed to grow by ten per cent over the next five years.

And, in a real “putting lipstick on a pig” story, UK farm minister, George Eustice was proclaiming a great future for Britain’s pork producers after a £200 million deal had been secured to sell the bits of the pig we’re not too keen on to China, itself the world’s largest producer of pigmeat.

There was even news of a deal to sell deer antlers to Asia for use in Chinese traditional medicines.

So you might be forgiven for thinking that things in the farming sector were jogging along quite nicely, thank you very much, as we approach the big, bad, Brexit bump.

But… It has to be said that the scramble to highlight some of these deals smacks a bit of desperation, especially when such announcements from government departments are set against the backdrop of the cataclysmic effects which Brexit is likely to have on many sectors of the industry.

And despite endless exultations that the country (both at UK and Scottish level) has chalked up yet another series of record food and drink exports, a report produced last week confirmed that walking the

0 Pig parts will be sold to China in a £200m deal Brexit trade deal tightrope will be an extremely precarious business for the farming industry.

You would have to weigh up the benefits of selling a few lorry loads of pigs’ trotters to the Chinese against the very real possibility of a price drop of more than a third in the sheep sector – and balance getting a toehold in the Philippine market against the risk of Scotland’s suckler beef industry collapsing to half its current size.

For these outcomes were seen as distinct possibilities in the independent report by the Agri-food and Biosciences Institute in Belfast which, in cohoots with analysts at the University of Missouri, quantified some of the possible impacts of alternative trade agreements on UK agriculture once we quit the EU.

The three possible postbrexit scenarios looked at trade deals which focused on either: a) a bespoke free trade agreement with the EU; b) the adoption of the World Trade Organisation (WTO) default Most Favoured Nation (MFN) tariffs; and c) a policy which saw the UK adopt unilateral trade liberalisation which would allow food imports to come into the UK, tariff free.

The “have our cake and eat it” trade deal which the UK last week proposed for its dealings with Europe – the sort of naively hopeful bespoke deal which would see us retain most of the benefits of single market membership without the drawbacks - unsurprisingly saw the least disruption to agriculture.

Even here, though there were likely to be additional costs to all sectors such as those inevitably thrown up by import and export checks, delays and the extra paperwork and administrations costs.

On the WTO deal with the default tariffs, it’s no surprise that stuff which we export a lot of would get a kicking, while stuff which suffers a lot of competition from imports might actually reap considerable substitution benefits. So, while grain might suffer a small reduction, the sheepmeat sector would bear the brunt, with the report predicting a possible 30 per cent drop in price.

Beef, poultry, dairy and especially pigmeat, however could all face a substantial boost in prices and output, especially in the processed sectors – because imports would be far dearer.

However, this could have impacts on the price of food – and if the UK moved to scenario c – unilaterally liberalising trade and letting imports flood in, there could be a considerable and devastating reversal of fortunes for those sectors.

While all sectors would face challenging times under this scenario, Scotland’s suckler beef industry would likely be hardest hit – with output predicted to fall by more than 50 per cent.

And, no matter how much lipstick you put on the pig, you’d struggle to paint a pretty food export story on top of that.