How Has Farming Changed Since the UK was Last Outside the EU?

UK farming will soon be operating outside the European Union for the first time since we joined the, then, EEC in 1973. In preparation for its round of Spring Seminars, Andersons the Farm Business Consultants have looked into the archives to compare UK farming 46 years ago with today’s sector. The table below shows some key indicators for the agricultural sector. (All financial figures are in real terms at 2017 prices.)

At the farm level, the industry is smaller in monetary terms and less profitable (although land values are much higher). However, the wider food chain has done an impressive job in boosting food exports and feeding households cheaply. Food self-sufficiency has not changed greatly. For those advocating a completely free-trade approach to food after Brexit, it is interesting that food self-sufficiency was close to 30% in the 1930s – the last time it was tried. The industry is also doing ‘more with less’, in terms of people, land and animals.

Clearly, UK farming is a very different industry to that of the early 1970’s. However, there is also an argument that being part of the Common Agricultural Policy for 40 plus years has held the sector back from what it might have achieved. The next decade or two seems set to unleash even greater change.

There is some trepidation about what the future might hold for farming. One of the ways to reduce uncertainty is to gain the best understanding of the current situation and possible future direction. Andersons are running a series of Seminars at thirteen venues around Great Britain in March, looking at the prospects for UK agriculture in greater detail. This includes the opportunities post-Brexit and the issues the sector needs to tackle, whatever sort of Brexit emerges. For more information please go to www.theandersonscentre.co.uk/Seminars

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No. of words: 444

Author: Richard King

Date: 13th February 2019

This news release has been sent from Andersons, the Farm Business Consultants Ltd, Old Bell House, 2 Nottingham Street, Melton Mowbray, Leicestershire LE13 1NW. For further information please contact Michelle Turnbull on +44 (0) 1362 688761 or +44 (0) 7904 436288.

Brexit Bills in Queen’s Speech

On 21st June, the Queen launched the Government’s programme, devoid of its most controversial manifesto commitments, which included eight Brexit Bills on:

  • Agriculture – to replace the CAP
  • The Repeal – of the European Communities Act 1972 and copy and paste the contents into UK law
  • Customs – to replace EU customs rules and allow the UK to impose its own tariffs (significant for agricultural exports and imports)
  • Trade – to operate our own trade policy (this may face opposition from soft Brexit MPs wanting to keep the UK in the EU customs union)
  • Immigration – to allow the UK to set its own immigration policy (vitally important for the fruit & veg, poultry and processing sectors).
  • Fisheries – to take control of UK fishing waters and to set fishing quotas.
  • Nuclear safeguards – to set up a nuclear safety regime (currently regulated by Euratom)
  • International sanctions – to allow the UK to apply its own international sanctions

Of particular interest to InsideTrack readers is the Agriculture Bill.  This is the first chance for a British Government to design a wide-ranging reform of agriculture policy since 1947 (the last substantive Agriculture Act).  It presents a once in a generation opportunity to shape and sustain a profitable farming sector without (we assume) CAP levels of direct support and EU border protection arrangements.

The Government’s says that:

“The Bill will ensure that after we leave the EU we have an effective system in place to support UK farmers and protect our natural environment. The Bill will:

  • provide stability to farmers as we leave the EU;
  • protect our precious natural environment for future generations;

We will see.

Hogan uncompromising on EU standards

The need to develop agri-food exports in non-EU markets is more important than ever for EU farmers to help to mitigate the risk posed by Brexit. That was the view expressed by Commissioner Phil Hogan at a recent global trade conference in Dublin.

Unsurprisingly, little was given away on what the EU’s negotiating strategy on Brexit might be as Article 50 has not yet been triggered. He did claim that an agreement on the terms of exit would need to be concluded before an agreement on the future trading relationship would be finalised. However, this does not preclude exit negotiations and trade negotiations proceeding in a broadly parallel fashion as indicated previously by Michel Barnier, the EU Commission’s lead Brexit negotiator.

Commissioner Hogan did pose the question whether British farmers and food standards would become “sacrificial lambs” on the altar of free trade for a global Britain? He was clear that the EU will not compromise its food standards in the pursuit of trade deals although there was also an acknowledgement that any potential trade deal between the EU and Mercosur would require careful management.

What appears implicit in Commissioner Hogan’s views is that if the UK wants a deal with the EU on agriculture, existing (EU) standards would need to be adhered to. If the UK pursues free trade deals with the US for example and permits hormone treated beef to be sold in Britain, could this mean that more rigorous checks are imposed for UK-EU agricultural trade?

Trump’s farming policy remains uncertain

A few weeks into the new US administration and the key word emanating from agricultural circles is ‘uncertainty’. There are concerns that Trump does not see farming as a key priority as evidenced by the length of time it took to appoint Sonny Perdue as agricultural secretary.

Added to this, there are mixed signals on support for the bio-ethanol and renewables sector. As reported last month, despite promises of support during the presidential campaign, Scott Pruitt, the head of the Environmental Protection Agency is a critic of biofuels. Furthermore, the administration contains numerous appointments with close links to the oil and gas industry. However, one area where farmers feel that Trump has sent clear signals that he will support them on is reduced environment-related regulation.

Trade is another area where there are major concerns. The US withdrawal from the Trans-Pacific Partnership (TPP) is seen as a significant, if not unexpected, blow as many farmers saw possibilities to export more soybeans, corn and pork to Asia. There is also anxiety over trade with China which is a major outlet for soybeans. If the US imposes tariffs on Chinese manufactured goods, then it is likely that the Chinese would react by importing soybeans from elsewhere.

There are also questions over the stance that the Trump administration will take on the next US Farm Bill, which is due to be put before Congress by autumn 2018, as well as migrant labour which was covered previously on InsideTrack.

From a UK perspective, the US has a major underlying influence on prices for arable commodities. The US biofuels policy supports grain prices globally. Any trade disputes will disrupt prices although this could also present opportunities especially as the UK strives to be a champion of freer trade.

The prospect of a bilateral US-UK trade deal should not be ignored. This is likely to be much less ambitious than the proposed US-EU trade deal (TTIP) which according to most experts has gone into ‘cold storage’. Market access for US beef to the UK under such a deal would be a key issue for British farming. If the US secures good access for hormone-treated beef, UK farmers would struggle to be competitive, based on its current production standards. Arguably, US beef could displace imports from the EU, especially Ireland which imports sizeable volumes of animal feed from the UK. Any significant decrease in UK and Irish beef output would have negative implications for UK feed grain prices.