COVID-19 Arrangements

COVID-19 Arrangements

In reaction to the ongoing COVID-19 situation, The Andersons Centre have put in place policies to enable our staff to work from home. All our consultants continue to work and be at the service of existing and new clients.

Our landline will be manned from 9am to 5pm Monday to Friday and all our staff are available on their direct mobile contact numbers and via email. Scheduled webinars will continue as planned.

Please do not hesitate to get in touch with anybody as required.

Spot Light on: Future Farm Policy

Defra has published a policy statement outlining its plans for farm support in England.  This is to accompany the Agriculture Bill as it enters the Committee stage in Parliament.  A summary is given below.

The plans for the ‘Agricultural Transition’ as set out in the original Statement of September 2018 remain unchanged.  Direct payments (i.e. BPS) will be phased-out starting in the 2021 year, with 2027 being the last year any will be made.  The phasing process is still unknown with only the first year’s deductions being set (see table).  Again, these are unchanged from what has been announced previously.  A few new points emerge from the document;

  • deductions in future years will depend on the funding required for other elements of the Government’s plans.
  • delinking of payments from land will occur during the Transition.  This will happen from 2022 at the earliest.  Once this is done, there will be no link between land occupation and payments, and entitlements will disappear – there will just be a right to support for the business or individual claiming in a reference period.  There will be no requirement for that business to carry on farming.  A consultation is promised on the mechanics of delinking
  • when delinking occurs, there will be no link between land and subsidy, so the cross-compliance regime will end at this point.  Defra plans to bring in an alternative regulatory regime.
  • the option to allow the delinked payments to be capitalised into a one-off lump sum is still being considered.

As Direct Payments are phased-out, various new schemes will be introduced.  The main replacement for the BPS in England will be Environmental Land Management (ELM).  The shape of the new scheme is becoming clearer, it contains strong echoes of the previous Environmental Stewardship (ES) scheme with an entry level, broad-and-shallow, tier and higher level options.  Underpinning the scheme is the idea that land managers will only be paid for ‘public goods’.  Six key categories of public goods have been set out; clean air, clean & plentiful water, plants & wildlife, beauty heritage & engagement, hazard protection and climate change, with the latter two coming more to the fore than previous schemes.  The current plan is for ELMS to be based on a three-tier model;

  • Tier 1 – a broad (and shallow) offer available to all farms. Likely to have a menu of options and be managed online.
  • Tier 2 – this will require more intensive management from farmers. It is likely that a whole-farm plan will have to be drawn up (possibly by accredited advisors).  The focus will be on rewarding farmers for positive management such as biodiversity, flood management, carbon storage, landscape heritage etc.
  • Tier 3 – this aims to get groups of landowners to work together to deliver widespread change.

As well as annual payments there will also be capital grants available.  Payment rates are yet to be set.  However, unlike previous EU schemes they will not be limited to ‘income foregone’.  Therefore, payments may be set at more attractive levels.  Pilots will start in 2021 continuing through to 2024, the intention is for the scheme to be rolled out in full in 2025.

Aside from ELM, the policy Statement sets out other initiatives which may be available for farmers and foresters, these include; advice, a change to farm regulation, farm diversification via the UK Shared Prosperity Fund, animal health & welfare, and productivity support.

Just from this brief summary, it is hopefully clear that Defra has big plans now that it is free to set English farm policy.  Although it will not all happen overnight, there is still a large shopping list of initiatives.  There will be a question of whether Defra (and the wider Government) has the capacity to deliver them all, and deliver them well.  

A Monthly Briefing for UK Farmers – March 2020

  • The window for Countryside Stewardship (CS) applications in England opened on 11th February, for agreements which will commence on 1st January 2021.  This covers Higher Tier, Mid-Tier, Hedgerows & Boundaries Grants and the Wildlife Offers. The deadlines for each scheme are set out below.  The schemes are now being run under domestic legislation rather than EU rules, however there are no major changes, although the new UK regime should make record keeping and inspections less onerous.

  • Further information and the new manuals are available on the GOV.UK website at . With the BPS starting to be phased out from 2021 and the ELM not being fully rolled out until 2025 (see later article) is it worth having another look at what the CS can offer? * also includes Wildlife Offers paper application
  • The 2020 BPS application window in England is expected to open online on 12th March, with those who still wish to make a paper claim receiving their application forms shortly after this date.  The Land Use screen is already available for those who wish to check the information is correct ahead of their application. However, note that the mapping update work is expected to continue until around 10th  In Wales, the Single Application Form (SAF) 2020 was available from 2nd March, guidance and information is available online.  The deadline without penalties is the usual 15th May.  A reminder that RPWales must be notified of the transfer and lease of entitlements by 30th April (15th May in England), for them to be used for a 2020 claim.
  • The Government is consulting on what tariffs to impose once the Brexit Transition Period ends on the 31st This is key for UK farming, as it sets the level of protection the industry has from low-cost agricultural imports from the rest of the world.  For the past 40 years, UK farming has benefited from the EU Common External Tariff (CET), but after Brexit, the Government has to implement its own trade policy.  The consultation can be found at –  
  • The Government’s plan for a post-Brexit immigration scheme look set to cause problems for farming and the wider food chain.  Free movement of labour for EU citizens will end on the 31st December 2020.  From that point, potential immigrants from the EU and the rest of the world will be treated in the same way.  There will be a points system that will require immigrants to speak English, have a job offer, and that job to pay more than £25,600 p.a. This threshold can be lowered in some cases i.e. if the job is in a ‘shortage occupation’.  It seems unlikely that any farming jobs will be included on this list.
  • George Eustice has been promoted to Secretary of State for Environment, Food and Rural Affairs.  Mr Eustice was previously a junior Minister (Minister of State) in Defra, responsible for agricultural matters.  Victoria Prentis has been appointed as the new Parliamentary Under Secretary of State for Defra and will take on Mr Eustice’s agricultural role within the department.
  • The AHDB has released its latest version of the Nutrient Management Guide; RB209. The main changes to the revision include new recommendations for the use of Phosphate in arable crops.
  • At the time of writing Defra had not announced any derogation to the three crop rule.  It is worth reiterating that fallow land is classed as a ‘crop’ and that spring and winter varieties are also treated as separate crops based on the variety grown and not the date when sown.  In addition where a crop has been planted but subsequently fails it can be counted as the original crop (field records will need to be kept if evidence is required on inspection).  Lastly, for those who will struggle to get anything or very little drilled, there are also exemptions to the Crop Diversification rules; where more than 75% of the arable area is left fallow (or is used for temporary grass or planted with leguminous crops) the three crop rule does not apply.

Farming News Update- February 2020

  • The Agriculture Bill returned to Parliament on 16th January. This will set the framework for agricultural policy in England for the foreseeable future. The legislation is largely the same as in the original Agriculture Bill published in September 2018 – which ‘fell’ with the end of the previous Parliament prior to the General Election. Generally, it gives Ministers broad powers to undertake certain activities, without necessarily setting out in any detail how those powers might be used. A Policy Statement, similar to that which was published alongside the original Bill, was expected this time too. It might have provided more information on matters of detail. However, it has not yet appeared – it may be published when the Bill enters the Committee stage in Parliament. One point that can be taken from the Bill is the Agricultural Transition will happen, and looks certain to begin in 2021 – the NFU had been calling for a year’s delay. Therefore, the BPS will start being reduced from next year.
  • The Government has announced the 2020 BPS will be fully-funded at 2019 levels. In addition, it has also reiterated its Election promise to ‘match the current budget available to farmers in every year of this Parliament’ (due to end in 2024). Importantly, this simply guarantees the ‘pot’ of money (presumably at current prices rather than in real terms). It does not mean the BPS will remain at the same level in England. Budgets for 2020 can use 2019 payment levels, but funds will gradually be diverted away from the BPS during the 7 year Transition (starting in 2021) to fund the Environmental Land Management (ELM) scheme. The funding guarantee applies across the UK, so the devolved administrations also know how much money they have when designing their support systems.
  • After 47 years and a month of being a Member State, the UK formally exited the European Union at 11pm (midnight CET) on the 31st January. Whether it actually signifies the delivery of the promise to ‘get Brexit done’ is another matter. There is much to be decided as the 2nd leg of the negotiations on the Future Relationship take centre stage. For agriculture, what we do know is that until the end of the year at least, the UK will enter a Transition Period where its trading relationship with the EU will remain effectively the same.
  • It is now possible for English farmers to transfer land and/or entitlements in preparation for this year’s BPS claim via the online system. In order for entitlements to be available for the 2020 BPS claim they must be transferred to the correct business by midnight on 15th May 2020.
  • The Countryside Stewardship (England) Regulations 2020 have been published. This will allow applications to be made to the scheme under our own domestic legislation now we have left the EU. The application window is expected to open in February. With the new Environmental Land Management (ELM) scheme not expected to be available for a few years yet, and the BPS transition period starting in 2021, land managers may want to look at what the Countryside Stewardship can offer.
  • Claims for Round 2 of the Countryside Productivity Small Grant can be submitted now, the deadline for submissions is 31st May 2020. Make sure claims include all the information and evidence required as detailed in the CPSG Round 2 Handbook otherwise payments will be delayed.
  • We have had a few inquiries whether the three crop rule under Greening will be relaxed because of the wet weather. It does not appear that there will be a ‘blanket’ relaxation. RPA has released guidance, see In the main, it simply reiterates the different ways claimants can meet their crop diversification requirement. If you think you may have difficulty meeting the 3 crop rule contact one of our consultants.
  • The Glastir Entry and Advanced Support Scheme, is available to those whose 2019 claim will not be fully processed by the opening of the payment window (31st January). The scheme will pay up to 50% of the anticipated Glastir Entry & Advanced claim value (excluding capital works). This is an opt-in scheme which means claimants need to apply by 14th February 2020 if they wish to receive a support payment. Payments under the scheme are expected to start during the week commencing 24th February.
  • The application period to transfer or lease entitlements in Wales is now open. The deadline for applications is 30th April 2020 for entitlements to be in place for the 2020 BPS claim.
  • The Farm Business Grant in Wales will open from 2nd March to 10th April. Farmers can choose from about 80 items which have been deemed to improve the competitiveness of their business and also make it more environmentally friendly. Grants of between £3,000 and £12,000 are available.

Land Use: Policies for Net Zero

The way land is used in the UK will have to see a ‘transformation’ if the country is to meet its target of Net Zero emissions by 2050. This is the conclusion of the Committee on Climate Change (CCC), the Government’s independent advisors on climate change, in their first ever report into land use which was published on the 23rd January. As the dominant user of land in the British Isles, farming would be at the forefront of these changes.

The key recommendations in the report for farming, and the wider food sector and consumers are;

  • Low-carbon Farming Practices: such as controlled release fertilisers, improving livestock health, and slurry management
  • Afforestation and Agro-forestry: increasing UK forestry cover from 13% to at least 17% by 2050 by planting around 30,000 hectares or more of broadleaf and conifer woodland each year.  In addition, 2% of the agricultural area should be devoted to agro-forestry (planting trees, whilst maintaining the agricultural use).  Additional hedgerow planting is also recommended.
  • Peatlands:  restoring at least 50% of upland peat and 25% of lowland peat.  This equates to 7% of the UK’s land area.  Although there might be some agricultural production, it is likely to be very low intensity grazing at best.
  • Bio-energy Crops:  increase the growing of energy crops by around 23,000 hectares each year so that by 2050 they comprise 3% of total land use.  The report states that energy crops are faster growing than new woodland, but also cautions that the negative impacts of energy crops need to be managed.
  • Reducing Meat and Milk Consumption: (i.e. beef, lamb and dairy) by at least 20% per person.  The report implicitly recognises that this might be the most contentious recommendation.  It states that such a reduction would bring consumption within healthy eating guidelines, and can drive sufficient release of land to support the proposed changes in tree planting and bioenergy crops.  It calculates that, alongside expected population growth, it requires around a 10% reduction in cattle and sheep numbers by 2050 compared with 2017 levels.  Then the report points out that this compares with a reduction of around 20% in numbers over the past two decades.
  • Reducing Food Waste: the 13.6m tonnes of food waste produced annually should be reduced by 20%

In terms of how to achieve this shift, the report suggests there should be a mix of legislation, public funding and better information, advice and training.  With regards to legislation, this might include regulating enteric fermentation from livestock and steps such as a change in the diet of cattle to reduce methane emissions.  The report suggests public funding should be used to incentivise farmers to plant trees and take up lower-carbon farming practices as well as for non-carbon benefits such as helping to prevent floods and for recreational purposes.  In respect of changing diets, it suggests the first stage should be relatively ‘soft’ through persuading consumers and the wider food chain to make changes.  A second stage of regulation or pricing needs to be considered if this does not work.

The report recognises reducing emissions should not be done by producing less food in the UK and increasing imports, it goes on to state that the UK is a ‘relatively low-greenhouse gas producer of ruminant meat’.  The report outlines methane emissions are a key factor for the farming sector (unlike most other sectors, where CO2 is the biggest issue).  It also addresses how methane emissions are assessed, and equated to CO2 – there is increasing debate on this subject.

Methane has a far greater global warming effect than CO2.  However, CO2 emissions raise the concentrations in the atmosphere for thousands of years, whilst methane has mostly disappeared after approximately 12 years.  It is argued methane-induced warming is dependent on whether the emissions are sustained or new emissions.  Like much in the climate change sphere, it seems the measurement and statistics are open to interpretation, without an agreed methodology.  This may provide some comfort to the livestock sector that it is not as bad as it has been painted.  However, it would be dangerous to cling to this too closely as a reason to continue unchanged.  Society will expect farming to do its bit and many of the policies outlined in the CCC report will be part of that change.


UK Government’s Backstop Alternative

After weeks of speculation interspersed with non-papers, the UK Government formally tabled its proposals on an alternative for the Backstop on 2nd October. In his accompanying letter, the Prime Minister stated that he believed the proposals were a “reasonable compromise” and represented a “broad landing zone” in which a deal could take shape. Whilst a draft legal text of the new Protocol on Ireland / Northern Ireland was also presented to the EU Commission’s Task Force 50, this document was not made publicly available. Instead, a 7-page explanatory note has been published by the UK Government and is accessible via:

Proposal Key Points

  • EU-Aligned Regulatory Zone: covering both agricultural and industrial goods would be created on the island of Ireland. This would include not just sanitary and phytosanitary (SPS) regulations and agri-food goods but would also include regulations relating to “all goods”, and is thereby intended to eliminate regulatory checks for trade between Northern Ireland and Ireland. Early indications suggest that this is being viewed positively by the EU as it directly addresses the problematic SPS issue which is relevant to over 40% of cross-border trade in Ireland. It also means that there would be an expanded range of checks on goods shipped from GB to NI as currently it is mainly live animals, plant and fertiliser products which are checked. However, the proposals also state that there would be “unfettered access” for NI goods entering GB.
  • Regulatory Zone Contingent on Consent from NI Institutions: to be given on an ongoing basis, before the end of the transition period and every four years thereafter to overcome what the UK Government sees as a democratic deficit if significant sectors of the NI economy are governed by laws over which it has no say. This would also include an ability to exit certain areas of regulatory compliance, or to withhold consent to laws becoming applicable. In such cases, arrangements would not enter into force or would lapse (after 1 year), and arrangements would default back to existing rules, although it is currently unclear which rules these would be (UK rules?, previous EU rules?). As the Northern Ireland Executive has now been suspended for over 1,000 days, this presents significant problems to the EU as it could theoretically give the DUP a veto over the application of the rules – something which is not available to other non-EU entities. Even if the Stormont assembly becomes functional again, what happens if gets suspended again in the future? Do decisions then fall back to the Northern Ireland Office or both the UK and Irish Governments as co-guarantors of the Good Friday Agreement? The EU is going to scrutinise this issue closely.
  • Northern Ireland to be fully part of the UK Customs Territory: it would no longer be part of the EU’s Customs Territory once the transition period is over. This means that all customs processes (including checks) to ensure compliance would need to take place on trade between Northern Ireland and Ireland. That said, the British Government is keen to point out that the vast majority of customs procedures (e.g. declarations) would take place electronically, with some simplifications, and any checks would be conducted at traders’ premises or other points in the supply chain, but not at the border. It is seeking a commitment from the EU to never conduct checks at the border in the future. In effect, any customs checks would take place away from the border in both Northern Ireland and Ireland, effectively establishing two customs border zones in each jurisdiction – one would be as part of the UK Customs Territory (NI) and the other as part of the EU Customs Territory (Ireland) as the map below depicts. This is highly problematic for the EU, especially Ireland, as in some ways it puts a degree of separation between the customs regime in Ireland and that of the remainder of the EU. It also raises multiple other questions over how unscrupulous traders would be identified as any price differentials created by varying tariffs or differences in VAT and excise would be quickly exploited by rogue traders, often with no registered business premises. It raises the prospect of mobile customs units becoming visible in the border region which could prompt a negative reaction by local communities.
  • Special Provisions for Small Traders: linked with the previous point, simplifications in customs procedures would have SMEs as a core focus in order to minimise the regulatory burden. This includes a trusted (authorised) traders’ scheme to make compliance easier when trading between NI and Ireland. It envisages “temporary admissions” to permit short-term movements of goods across the border (presumably to facilitate trade shows for instance). In addition, some small traders would be exempted from certain procedures and may even be exempted from paying duty altogether. There would also be additional support for traders in most need to assist them with compliance. These provisions present significant challenges. For instance, could larger firms simply create multiple companies so as to qualify for exemptions? From an EU perspective, particularly given difficulties that the UK has had in the past in dealing with VAT fraud, there would be major questions on whether such proposals are legally operable and would undermine the integrity of the EU Single Market. 
  • Future UK-EU Trading Relationship: is still envisaged to consist of a comprehensive free-trade agreement and much of the detail not mentioned in the Government’s proposals (e.g. how Rules of Origin would be addressed) would be dealt with after the UK formally exits the EU. Again, the EU will have major difficulties with this as it is unlikely to view such arrangements as a legally operable insurance mechanism to prevent a harder border emerging in the future on the island of Ireland.

Overall, the UK proposals represent a significant step forward, but it is highly questionable whether an agreement (definite landing zone) is in sight as a result of their tabling. A formal response from the EU is expected on 3rd October (afternoon). It is likely that this response will have as a core focus, the three key objectives of the backstop: preventing a hard border re-emerging on the island or Ireland, preserving north-south cooperation and the all-island economy, and protecting the EU’s single market and Ireland’s place in it. It is obvious that having separate customs regimes in both jurisdictions would constitute a hardening of the border. The proposals also raise questions for the competitiveness of the all-island economy and creates some discomfort for Ireland as part of the EU Single Market and Customs Union. Therefore, a lukewarm response is likely from the EU. That said, it will be keen for talks to continue and the UK proposals merit further discussion at least.

Ultimately, the EU is likely to call for closer customs alignment between NI and Ireland/EU. An indication by the UK that its tariff levels for sensitive products (particularly agri-food) would remain similar to the EU’s, but within an independent UK trade policy, would help. This would also help UK farmers to safeguard against competitive pressures from the world market, if tariffs were suddenly reduced significantly. 

This article is from Andersons’ AgriBrief Bulletin, a subscriber-based publication which provides readers with expert, concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry and what it means for you and your clients.

For further information, including a free trial, please visit:

Impact of a No-Deal Brexit on Farm Profitability

With the UK due to leave the EU on 31st October and the possibility of a No-Deal Brexit becoming more likely, The Andersons Centre (Andersons) recently conducted research on behalf of the BBC to assess its potential impact on the profitability of UK farming, 9-12 months after Brexit taking place.

To undertake this analysis, Total Income from Farming (or TIFF) is a useful measure to look at the farming industry as a whole. It is an aggregate, so hides differences between sectors and individual businesses, but provides a simple measure of the profit of ‘UK Agriculture Plc’. In technical terms, TIFF shows the aggregated return to all the farmers in UK agriculture and horticulture for their management, labour and their own capital in their businesses. To allow for yearly variations in weather conditions and exchange rates for example, a three-year average (2016 to 2018) was used as the basis for comparison.

Taking into account previous studies, some of which have been undertaken by Andersons, a top-level assessment of the impact of both a Brexit Deal and a No-Deal on the output of each farming sector was compiled in addition to an estimation of the effects of both Brexit scenarios on key costs which are incurred by UK farming. This assessment considered the potential impact of tariffs (including the UK’s March 2019 announcement on its No-Deal Brexit tariff schedule), non-tariff barriers and tariff rate quotas. Importantly, it was assumed that support levels to UK farming were kept constant as the UK Government has committed to farming receiving current levels of support until the end of this parliament (scheduled to be 2022).

Under a Brexit Deal scenario, a small decline in profitability (3%) is projected; however, under a No-Deal, an 18% decline is forecast.

Impact of Brexit on UK Farm Profitability under a Deal and No-Deal Scenario

Sources: The Andersons Centre and Defra

Like all top-level industry averages, there is significant variation within the overall estimate. For instance, where output is concerned, substantial declines are forecast for sheepmeat (-31%), whilst output for cereals, milk and beef production are also down. Some increases are projected for horticulture and intensive livestock (pigs and poultry) provided there is sufficient labour available for undertaking operations.

With respect to costs, some decreases are forecast for inputs which would be affected by the introduction of lower UK import tariffs under a No-Deal scenario. Examples here include animal feed, fertiliser and plant protection products. However, other inputs such as veterinary costs are projected to rise as it is anticipated that there would be a significant increase in demand for veterinary staff to assist with border inspection operations.

An 18% decline in profitability would equate to a hit to UK farming generally of almost £850 million. With many farms already struggling to break-even, the projected hit on profitability in some cases likely to significantly surpass the industry average, the viability of many farming businesses will be in jeopardy. Unsurprisingly, grazing livestock farms (particularly sheep) would be the most exposed given the output declines mentioned above, but a No-Deal would also result in a significant downturn for dairy farming in Northern Ireland, given its reliance on having its milk processed in the Republic of Ireland.

For further information on how a No-Deal Brexit could affect farming and to address the trade-related risks arising, Andersons is running a webinar on Thursday, 12th September to provide further information on how businesses can prepare. Further information is available via:

Impact of Trade Barriers on UK Beef and Sheepmeat

Beef and sheepmeat trade with the EU could plummet by over 90% under a ‘No Deal’ Brexit.  This is one of the headline findings of a study recently published by the AHDB in collaboration with QMS and HCC.  The report, complied by The Andersons Centre, looks at the impact of trade barriers on the UK beef and sheepmeat sector post-Brexit.  It examined two scenarios; a Brexit Deal and a No Deal Brexit.  Some of the main points include;

  • Trade impact under a Brexit Deal scenario is relatively small:  total exports would decline by about 1% in volume terms (imports 0.8% lower), driven by EU27 declines.  Sheepmeat exports to EU27 are forecast to decline by 1.5% whilst corresponding imports would be 3% lower. These declines are chiefly due to Non-Tariffs Measures (NTMs) – i.e. the increased trade ‘friction once the UK was not part of the Single Market.  There would be minimal changes to non-EU trade.
  • Significant upheaval under No Deal: trade with the EU27 would plummet (by 92.5%) due to the imposition of tariffs, TRQs and higher impact of NTMs.  Sheepmeat trade with the EU would be almost completely wiped out.  Substantial declines in trade with the EU27 would also ensue for beef – exports down by 87%, imports declining by 92%.  Somewhat better market access for beef compared to sheep, due to TRQs, would permit some UK-EU trade to continue.  The introduction of a new 230Kt TRQ for UK beef imports would cause non-EU imports to soar by over 1,300%.  This would lower prices and drive-up UK consumption by approximately 7%.  Sheepmeat imports from non-EU countries are not anticipated to change whilst consumption is projected to rise by 14% due to declining prices.
  • Price impacts: there would be small declines under a Brexit Deal scenario (-1 to -3% respectively).  Under No Deal severe price declines would be seen.  Sheepmeat is particularly exposed (projected 24% price fall under No Deal).  Downward price pressure for beef (-4%) under No Deal arises due to competition from lower priced world-market imports.  This would be exacerbated if significant volumes of Irish beef enter the UK barrier-free via NI.
  • Value of carcase meat output: under a Brexit Deal, output would decline by an estimated 1.7% whilst under a No Deal the decline would increase by nearly ten-fold (-11.7%) with sheepmeat output nearly 31% lower which would be devastating for incomes in the sector.  Growth in exports to non-EU markets under No Deal would be insufficient to compensate for the loss of access to the EU27.

Projected Impact of Trade Barriers on Domestically-Produced Beef and Sheepmeat (Farm-Gate Level)

Sources: Defra (2019) and The Andersons Centre (2019) *Baseline Figures derived from Defra data.

  • Similar Impacts at Farm Level:  Andersons’ Meadow Farm model projects a 27% decline in profitability (£68 per Ha versus the current £93 per Ha) under a Brexit Deal, but the farm would still be profitable provided it can maintain its current support levels.  Even with support unchanged, Meadow Farm starts to generate unsustainable losses under No Deal with a projected deficit of £45 per Ha, equating to a £7,000 loss.
  • Domestic Market Opportunities: could arise for domestic producers if trade barriers reduce the competitiveness of imports.  However, the proposed access granted under additional TRQs in the beef sector would diminish this.  There are also fears that future changes to standards might make imports more competitive, thus limiting domestic market opportunities even further.
  • Frictionless trade with the EU27 as a third country is not currently possible: and looks set to remain so for at least a decade as the required technology has not yet been developed, let alone tested.  Long-term, technology can contribute to reducing this via e-certification systems, but friction cannot be reduced completely.  Post-Brexit increases in trade friction are inevitable.
  • Most significant non-tariff measures relate to value deterioration: value deterioration (especially fresh meat) arising from border-related delays associated with physical checks and sampling (associated with sanitary and phytosanitary (SPS) regulations) is of most concern to industry and is the biggest contributor to non-tariff costs generally.  Its impact on frozen products is much lower but still a factor in terms of potential penalties imposed on delayed consignments.
  • Uncertainty about future border arrangements:  under No Deal centres particularly on trade on the island of Ireland which the UK Government has claimed would remain frictionless.  If there are also no checks on NI-GB trade, whilst any exports routed from Dublin to Holyhead would be subject to tariffs and regulatory checks, the potential for re-routing meat from the Republic of Ireland via NI and onwards to GB without any checks, could result in substantial volumes of Irish beef being placed on the UK market (beyond the 230Kt TRQ) by the ‘backdoor’.  If significant volumes enter the UK in this fashion, substantial price declines for UK beef farmers would ensue.
  • Disproportionate impact on Small and Medium-Sized Enterprises (SMEs): arising from higher operating costs, fewer loads dispatched and a lower propensity to avail of special authorisations such as AEO status (which confers a lower risk on operators from a regulatory authority perspective).
  • Inflationary pressures: particularly for farm-level imported inputs from the EU27 (e.g. fertiliser, medicines etc.) but also elsewhere.  These costs are unlikely to be absorbed by the supply trade and would be passed on to consumers and/or to primary producers (i.e. farmers).  Any meat price rises are likely to cause consumers to increase their propensity to substitute with cheaper sources of protein, thereby making it more likely that beef and sheep farmers would beat the brunt of price pressures.

The study concluded that a Brexit Deal based on a comprehensive FTA and close customs and regulatory arrangements with the EU would be far preferable to a No Deal Brexit, which could have a devastating impact, especially for sheepmeat.  Whilst developing overseas markets will be crucial to the long-term success of British beef and sheepmeat, close attention must be paid to protecting existing markets, specifically the domestic UK market and the EU27 export market.  The study also found that even if the UK had never entered the EU (or EEC) in the first place, it is highly likely that markets such as France would still be vital to the British sheepmeat industry due to proximity.  To minimise any upheaval post-Brexit, the report states that having a comprehensive mutual recognition agreement between the UK and the EU is crucial.

The report’s findings were similar to several previous studies; however, this study goes into significantly more detail on how non-tariff measures could affect the sector.  It also provides useful insights on the implications of a No Deal Brexit for carcase balance in the sheepmeat sector where it estimates that up to 22% of the annual UK lamb kill (3.1 million head) could be affected.  This would be a major challenge to a sector where approximately one-third of the lamb crop is exported each year.  If it wasn’t already clear, this report underscores the importance of a good Brexit Deal for the grazing livestock sector.  The report is available via: 


EU Agrees Mercosur and Vietnam Trade Deals

On 28th June, twenty years to the day that negotiations started, the EU and Mercosur reached a political agreement on a substantial free trade deal.  The EU estimates that, when fully implemented, the deal will reduce tariffs its exporters face by approximately €4 billion.  On a busy weekend for Cecilia Malmström, EU Trade Commissioner, the EU also signed the free trade agreement with Vietnam which had been largely negotiated in 2018.  Both deals are meant to send a message that, with the backdrop of the US-China trade dispute and the increased friction likely to result from Brexit, that the EU is open for business and keen to conclude trade deals with other global partners.   These announcements follow similar recent deals with Japan and Canada.  From an agri-food perspective, the Mercosur deal is attracting most attention as it could have significant implications for sectors such as beef, poultry and sugar.

EU-Mercosur Trade Deal

The details of the Mercosur deal are complex.  In summary, the South American trade-bloc, consisting of Brazil, Argentina, Uruguay and Paraguay, would see tariffs removed on 92% of all its imports to the EU over a period of 10 years.  Focusing on the agri-food sector, tariffs will be cut on 82% of imports coming from Mercosur, with remaining agri-food imports subject to more partial liberalisation.  Notably, this includes beef where a quota of 99,000 tonnes will be permitted to be exported to the EU at preferential rates.  This will be implemented over a five-year period.  Additional volumes of imports will also be allowed of poultrymeat (180,000 tonnes) and pigmeat, (25,000 tonnes), with import restrictions on sugar and ethanol also eased.

From an EU export perspective, tariffs will be eliminated on 91% of its total exports and 95% of agri-food exports.  The dairy sector in particular will benefit from improved market access, with a quota of 30,000  tonnes for cheese, 10,000 tonnes for skim-milk powder and 5,000 tonnes for infant milk formula (Mercosur tariffs are currently at around 28% for dairy products).  These volumes will be phased-in over 10 years.   Whilst improved market access for dairy was welcomed in some quarters, market experts opined that demand for dairy products in the Mercosur market is quite lethargic and is hampered by high inflation, sluggish economic growth and a volatile political environment. 

Mercosur has also committed to protecting the Geographical Indications of 357 EU food and drink products.  The EU is also keen to point out that its food standards on Sanitary and Phytosanitary (SPS) matters would not be compromised in any way.  The EU-Mercosur deal also has a Sustainable Development chapter which commits both parties to upholding their Paris Climate Accord commitments

European beef, poultry, sugar and ethanol producers are expected to come under increased pressure from cheaper imports from South America as a result of this proposed deal.  The agreement has already attracted condemnation from the EU’s farming lobby with organisations such as Copa-Copega and the Irish Farmers’ Association (IFA) complaining that agriculture had been sold out to facilitate a wider deal.  Tellingly, the EU Commission also announced a €1 billion fund to help farmers to adjust to the market disturbances that could be potentially caused by the EU-Mercosur trade deal which indicates that there will be a significant impact on European farmers.

The feedback from the EU farming and food industry points to trouble ahead because, as our previous article on 26th June noted, the agreement thus far has only been at the political level and a number of hurdles remain.  Firstly, it will be translated into legal text before being put forward for ratification by EU Member States and the European Parliament.  Like the EU-Canada (CETA) agreement, there can still be several twists and turns in the process and the deal could be scuppered by a Member State or by a regional Parliament such as Wallonia.  Already, there is significant pressure being exerted on the Irish Government not to back the deal and it is anticipated that there will be similar calls elsewhere.

Any on-farm effects from this deal remain some way off, and in any case would be phased in over several years.  By the time this happens, the UK is likely to have left the European Union, so the impact of this particular deal might be negligible.  That said, the EU-Mercosur deal increases the competitive threat of South American products in European markets.  It is also likely to offer a template for any future trade deals between the UK and Mercosur which the UK is likely to prioritise post-Brexit. 

EU-Vietnam Trade Deal

This pact will eventually see duties removed on 99% of the EU’s imports from Vietnam.  Whilst the formal text has been approved by the European Commission, it still requires ratification by the European Council (representing the EU Member States) and by the European Parliament.  This is expected later this year.

From an agri-food export perspective, Vietnam with its population of around 95 million represents a fast-growing South East Asian market.  Its dairy industry is valued at approximately £5 billion and it currently imports 80% of this demand.  Average incomes have also been rising thereby driving demand for beef and pork products in particular, although the US and New Zealand account for the vast majority of these imports.

As with Mercosur, the UK’s pending exit from the EU means that it may not benefit significantly from this deal.  That said, much will depend on the length of the transition (implementation) period arising from the eventual Brexit deal and the UK’s access to third country market that have free-trade deals with the EU as part of this.  However, the South East Asian market is lucrative and the UK needs to prioritise the development of such markets as it resumes its independent trade policy.

This article is from Andersons’ AgriBrief Bulletin, a subscriber-based publication which provides readers with expert, concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry and what it means for you and your clients. For further information, including a free trial, please visit:

Arable Market Thoughts

It never rains, it always pours!  By early June, some were concerned about the dry soil conditions, by the end, the concern was flooding.  Most of the crops that had been flattened have picked up, but not all, increasing the risks of Fusarium.  Combinable crops now require sunshine to help them ripen with good quality and bushel weights.

The other thing that has fallen over this month (which we had been warning would happen) is the premium that the old crop wheat carried over new crop.  Sooner or later the two crop prices have to merge, and they did this decisively in June.  In fact old crop long-holders will be feeling frustrated by the chart clearly showing July 2019 futures values in January of £180 now being worth £145.  Also, new crop wheat prices have taken a sharp turn upwards, now clearly ahead of old crop.  This will encourage any buyers to take short term cover and close the gap.  Farmer sellers with adequate storage might be tempted to carry the grain over if it is in satisfactory condition.

Globally, the wheat crop is overall healthy and abundant, with expectations from the International Grains Council that it will outstrip consumption to leave slightly higher stocks this coming season.  This has helped explain the price falls in the market.  Maize though, the main combinable crop in the world, is thought abundant but not likely to match annual demand, so stock levels are expected (by the IGC) to decline again this year.  This will be the third decline since 2016/17 from 363 to 284 million tonnes; a substantial fall.

Soybean stocks are also thought likely to return a small decline in physical stock level after the 2019/20 season, although only by 1 million tonnes.  This is a tiny change after such a sharp rise in stock from 25 million tonnes to the current 53 million in only six years.  The question of how much oilseed rape will be grown in the UK is concerning many; whilst we have reported the poor OSR conditions on many farms this year, we have not pointed out that other arable farmers are quietly very happy with the condition of theirs. Some has been grubbed and replaced, other fields are looking excellent.

Bean crops are largely looking good throughout the country, and with new crop reaching good prices, perhaps now is the time to book some in.  Currently, we would expect bean crops to outperform their overall dismal performance from last year.

This article is from Andersons’ AgriBrief Bulletin, a subscriber-based publication which provides readers with expert, concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry and what it means for you and your clients. For further information, including a free trial, please visit:

Milk Production

According to BCMS data, March saw births to a dairy dams reach 137,000 head, some 3% higher than the five-year average and the most calf registrations in the month of March since recording began in 2003.  There are a number of possible reasons for the increase and the rise is probably a combination of all of them.  Cows were in good physical condition when they came into season last year, having been housed longer due to the bad winter and being put out to pasture when the grass growth was improving but before the drought had impacted.  The increase may also be due to more businesses switching from all-year-round calving systems to spring block and also those already on a spring block system tightening their calving window.

The result has seen an increase in cows at the peak of their lactation during the spring flush.  UK milk production has been at record levels throughout 2019 so far.  Peak delivery may have been reached earlier than in recent years when a long-term high of 37.74m litres was delivered on 26th/27th April.  Throughout April deliveries were running about 4% above last year’s levels.  During the first quarter of 2019, cumulative production was 3.4% higher than for the same period in 2018.  The increase in production is seeing downward pressure being put on farmgate prices as processors are having to sell unplanned increases in milk deliveries on the spot market at 13-15ppl.

However, globally, milk production is tight and is expected to remain so throughout 2019 which appears to be helping UK farmgate prices to a certain extent.  Margins have been squeezed in Australia, the US and the EU through high input costs and low farmgate prices leading to a reduction in production.  In addition, demand is expected to remain strong from China throughout the year due to the impact of African Swine Fever in the country.  It is thought dairy cows might enter the beef market as the price of beef increases due to the demand for alternative protein sources to replace pork, thereby reducing milk availability in the country.  In the second half of 2019, UK production growth is expected to slow, due to a smaller herd and a drop in fertility, a knock-on effect from the hot summer last year.

This article is from Andersons’ AgriBrief Bulletin, a subscriber-based publication which provides readers with expert, concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry and what it means for you and your clients. For further information, including a free trial, please visit:

Cabbage Stem Flea Beetle

Many will have noticed there are considerably fewer bright yellow fields than last year, and some a much paler shade of yellow than their owners will have wanted.  Evidence suggests that in the UK a slightly lower amount of oilseed rape was planted last autumn than previous the year.  A considerable proportion did not have a good start, possibly in part as a result of the very dry soil conditions at the time, but also the concerns of Cabbage Stem Flea Beetle (CSFB).  This a meant an unknown quantity, but perhaps 8% of the national crop, written off before winter.

That which made it to the spring, is also in rather poor condition now, with another 5-10% being written off largely in the central and Western parts of England.  This will either be replaced with another crop or fallowed, or in some cases, left in poor condition, its owner resigned to the fact it will probably generate a poor yield.  It is concerning that reports are emerging that CSFB is having a damaging effect on the emerging sugar-beet crop too.  It is too early to speculate on yield impact, but we will continue to monitor this situation.

Ironically, reports from Lincolnshire suggest some bee-keepers are concerned there is insufficient OSR to supply enough nectar to produce honey from their hives.  Perhaps the loss of Neonicotinoids has had adverse impacts even on the insects that the ban was designed to protect.

What the impact of CSFB on OSR in the British farmer’s rotation in future might be is unclear, but many growers and agronomists have suggested their rotations and crop recommendations will not include OSR for at least three years.  The OSR area is in long-term decline; its area topped out in 2012 and has fallen every year since then apart from once.  In 2019 we could harvest the lowest rape area since 2004, and possibly the smallest crop since then too.

This article is from Andersons’ AgriBrief Bulletin, a subscriber-based publication which provides readers with expert, concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry and what it means for you and your clients. For further information, including a free trial, please visit: