Brexit could be a leap into the light for UK agriculture
March 3, 2016
Transcript of George Eustice's speech at the Farmers for Britain launch 23/03/2016
March 23, 2016
Dr Mary Abbott - Fear Cameron and Truss, not Brexit.
March 16, 2016
Dr Mary Abbott, former editor of Inside Track magazine, on why UK farmers shouldn't heed the scaremongering of the 'Remain' campaign:
David Cameron says UK farmers would suffer outside the EU, but is that true?
The Government paper “The Process for Withdrawing from the European Union” cites the impact of losing the EU’s subsidy schemes and preferential access to the European market if the UK left the EU without a successor agreement in place. Examination of these two aspects does not lead to Cameron’s conclusion.
Area and other payments
It seems extraordinary that the Government paper (and Cameron and Truss) seems to be saying that whilst we are in the EU they are happy to carry on with area payments to UK farmers – and contributing enough extra to pay for all the farmers in a further 10 EU countries1 as well - but that if we leave they will discontinue payment.
Various studies have shown that the UK population is not as hostile to farm area payments as the politicians. Worldwide there are subsidies for farmers from their governments.
The CLA has demonstrated that EU funding streams of less than £4 billion generate £10billion extra GDP by boosting output, employment and tax. This must surely be attractive to Governments in the future.
Loss of preferential access to EU market
If Britain withdrew from the EU and there were no free trade agreement in place the EU could apply levies to their imports from us. But this is only worrying for UK farmers if the same levies are not applied to our imports.
The levies are set by the World Trade Organisation and so long as we have not negotiated free trade agreements we should apply those tariffs to imports to our market too - to fail to do so would be to unilaterally disarm in the negotiations.
The figures below, mainly drawn from AHDB data, show that for the main commodities it is not UK farmers that have to be fearful but those in the rest of the EU.
In 2015 the UK exported 79,000 tonnes of lamb – most of which went to the EU.
We imported 93,000 tonnes of lamb – most of which came from New Zealand.
New Zealand has a 228,000 tonne tariff free quota allocation for exporting sheep meat to the EU. If the UK has left the EU those imports can be expected to be diverted to the rest of the EU. Were that to happen, the UK sheep meat market would strengthen.
The UK exported 92,000 tonnes of beef to the EU in 2015.
We imported 244,000 tonnes.
Applying the WTOs import levies will significantly raise our beef price as it will not be undermined by EU imports.
The main import/export product is cheese. The UK was a net importer from the EU of 334,000 tonnes in 2014. This is equivalent to 3,000 million litres of milk - 20% of the UK’s current output. If the UK were levying cheese imports there is scope for expansion of production.
Latest figures show net exports to the EU of 200,000 tonnes of wheat (only about 1% or so of production) and 500,000 tonnes of barley (about 7%). Some of this will be re-exported out of the EU and trade flows would undoubtedly have to adjust, and much of the barley could be for malting.
But, if the UK livestock sectors are expanding in response to Brexit, domestic grain demand will increase which will strengthen the market generally.
Vegetables and fruit
The same principles will apply to vegetables and fruit. Where these are markets that are wide open to competition from the rest of the EU, if the EU closes its markets with tariffs, the UK can do the same and the scope for home grown produce increases.
In summary therefore, if the UK left the EU without a free trade agreement, we would probably see some land use adjustment – more sheep and cattle, more dairy, more demand for cereals though perhaps less malting barley.
But it will be the farmers from the rest of Europe – Ireland and France in particular – who will be clamouring for a free trade agreement. And by that stage UK farmers may be less keen.
As a country we are becoming less and less self-sufficient in food. This has dropped from 78% to 60% in the last 30 years. The population is growing rapidly (currently at 65 million it is officially forecast to top 70 million in the next 12 years) and the farmed area is decreasing. Over the last 20 years it has dropped 5% from over 18m hectares to closer to 17m hectares. This is a market that the EU wants.
What we have to fear is that our politicians are so ignorant that they give away the advantages we have.