A Brexecutive Briefing on the agri/food sector…
Under the Common Agricultural Policy or CAP many British farmers currently receive 60% of their income from EU subsidies via the Single Farm Payment. Agriculture will be particularly sensitive to the eventual shape Brexit takes. The sector has drawn comfort from a government pledge to guarantee annual EU subsidy payments once the UK leaves the EU, though this extends only to 2020. There are growing signs of political pressure to cut those subsidies post-Brexit. The European Commission estimates that land prices would fall by 30% if farm subsidies were totally abolished in the UK and they would fall sharply if subsidies were reduced. For farmers who have taken out bank loans against the value of their land, a loss of value could be fatal. 18% of farms have current liabilities that exceed current assets. They couldn’t possibly survive. Ironically, tumbling land values and a rash of UK farm sales will attract buyers from the EU. Britain’s determination to sever connections with Europe’s farmers may in fact have the opposite effect. Brexit may see great swathes of British farmland fall into the hands of French, German, Dutch and other EU competitors.
The Brexiteers claim that the EU’s protectionist policies discriminate against cheap food imports and force up food prices for British consumers. In other words they want cheaper food following Brexit. That means throwing open UK markets to cheap food from Africa, Australia, North America, Brazil, and Argentina, causing chaos for UK farm gate prices, a further fall in land values and widespread bankruptcies. UK food self-sufficiency would plummet. BREXIT is plainly an agrarian minefield.
Less well known is the fact that Britain’s food-processing industry is surprisingly big, and 60% of its exports go to the EU. The UK hosts the headquarters of 17 of the world’s 100 biggest food and beverage conglomerates, more than Germany, France, Switzerland and the Netherlands put together. Even if the UK falls back on Most Favoured Nation Status after it leaves the EU, the question would have to be asked: “Will Britain be able to continue to trade tariff-free with Europe or would UK lamb, beef, wild fish, farmed salmon, whisky, and other key farm exports face a tariff barrier?” B2Brexit’s agri-food specialists can help you to answer this question and the many others that will be posed by the UK’s withdrawal from the EU.