No Brexit deal is worst scenario for our farmers

Anne Gray warns the UK government that the rural sector needs time to adjust

It wasn’t long after last summer’s EU referendum that the phrase Brexit means Brexit swiftly entered the general lexicon.

Whilst this sentiment received a mixed reaction from voters, in one sense it did provide a degree of impetus to business – including the Scottish farming sector – that it quickly needed to get ready for the realities of the post-eu world.

Now, just over 16 months from the Brexit vote and as talks continue on a departure deal, the term “no deal is better than a bad deal” is the one that circulates with more regularity – and makes food producers sit up and take notice.

Three different post-brexit scenarios for agricultural commodity price and production have been highlighted in a recent report by the Agrifood and Biosciences Institute in Belfast and University of Missouri.

The report was commissioned by the four agriculture departments in the UK and it looked at consequences for everyday food items such as beef, pork, lamb, poultry, bread, cereals, milk and other dairy products, and of course our beer and whisky trade which relies to a large extent on homegrown barley.

The three scenarios it considered were a free trade deal with the EU, World Trade Organisation Most Favoured Nation tariffs and trade liberalisation, so reducing import tariffs to a minimum.

It is clear from the research that, for stability’s sake, a deal is preferable. The UK consumer would be likely to see some increase in prices, but within a level that is probably tolerable for most households – between 0 and 3 per cent.

At Scottish Land & Estates we have said that farming needs to change, to be more focussed on the market and less so on public subsidy, but that it needs time and support to make this change. A deal we believe would be one of the things that would allow measured change to happen, rather than a cliff-edge.

The WTO tariff scenario, on the other hand, shows both price increases and decreases. The increases range between 15 and 30 per cent for products such as beef, pork and dairy. Since we know price is the key determinant in food choices, increases are very unlikely to be tolerated by the consumer. The items that come down in price include lamb, wheat and barley, and they do so because these are products we produce more of than we need for domestic consumption. It is believed that if tariffs are too high to make export sensible, then our own domestic market would be flooded with what would otherwise go abroad and the price would consequently be reduced.

In time it is likely that production would adjust where it can. For Scottish farmers however, with much of our land only suitable for sheep production, change within farming may not be possible and the harsh reality may be that our farmers are forced to do something else with their land – or go out of business.

The third scenario is that the UK government cuts tariffs substantially and allows cheap food imports. There are reasons why this may happen such as a wider trade deal that brings benefits overall to the economy but sees farming sacrificed, or because it is preferable for the consumer than price hikes under WTO rules. However, it is difficult to see how any farmer but the very specialist, high end producers could prosper.

Given the three structures outlined above, Scottish Land & Estates is urging the government to recognise that a deal offers stability and time for Scottish farming to evolve to the new post-eu landscape.

We recognise that talks in Brussels cannot be conducted of the needs of just one sector but it is vital for Scottish agriculture that the immediate and potentially harsher consequences of ‘no deal’ are recognised. Some may argue that no deal is better than a bad deal but for Scotland’s rural economy there will need to be significant work from government to cushion the change if such a scenario comes to pass. Anne Gray, senior policy officer (Land Use & Environment) at Scottish Land & Estates.