The profitability of the common UK farm might fall by as a lot as half after Brexit, new analysis suggests.
The report, by the Agriculture & Horticulture Improvement Board (AHDB), says the “worst-case situation” would lower common farm earnings from £38,000 a 12 months to simply £15,000.
The evaluation tries to mannequin the results of cheaper imported meals, lowered subsidies and costlier labour.
A authorities spokesman mentioned the report was based mostly on extremely unlikely situations.
The UK is because of depart the European Union (EU) in March 2019.
Some formal negotiations with the EU began in June, however to date, it’s utterly unclear how commerce between the UK and the EU will change if the Brexit timetable is met.
In reality, the particular negotiations over a future commerce deal haven’t even began.
However they are going to be significantly important to the agricultural and horticultural industries due to the subsidies that are acquired beneath the EU’s long-standing and extremely controversial Widespread Agricultural Coverage (CAP), which was as soon as notorious for creating so-called lakes and mountains of over-produced wine and butter.
The AHDB analysis checked out three potential outcomes of Brexit:
- “Enterprise-as-usual”, with commerce preparations staying a lot the identical and subsidies persevering with. Common annual incomes may rise to £41,000
- Diminished subsidies and tariff-free entry to the UK for overseas producers. Common annual incomes fall to £15,000
- A “cliff edge” Brexit with commerce based mostly on World Commerce Group (WTO) guidelines, and tariffs alongside a giant lower in subsidies. Common annual incomes fall to £20,000.
“Underneath the three situations outlined within the report, modifications within the UK’s commerce relationships will impression farmers’ backside line when the UK leaves the only market, whether or not or not a free commerce settlement is negotiated with the EU,” mentioned the Board.
“Coverage choices additionally depart sectors the place direct assist has been a key a part of farm revenues, akin to beef, lamb and cereals, significantly susceptible.”
Presently the CAP offers UK farmers £three.1bn a 12 months which, on the face of it, will disappear after Brexit, although the UK authorities has assured to take care of “general” farm subsidies or funds on the identical stage till 2022.
AHDB, which is a statutory physique funded by a levy on the agricultural trade, mentioned Brexit would inevitably have a “dramatic instant impression” on farm sectors which rely most on subsidies for his or her earnings.
The results of Brexit is not going to be uniform, although, and the place will probably be complicated, relying on the sector and situation being modelled.
Dairy and pig farmers could profit from rising costs, the report says.
However, vital exporters akin to cereal producers and sheep farmers would undergo decrease incomes as a result of elevated value of exporting merchandise to the EU.
And the place companies depend on migrant staff, greater employment prices as a consequence of extra stringent immigration restrictions will even push up farmers’ prices dramatically, particularly in horticulture.
A spokeswoman for the AHDB mentioned there have been considered between 50,000 and 80,000 folks from the EU working in UK agriculture and horticulture, in each everlasting and seasonal jobs.
Some sectors, akin to abattoirs and meat processing, rely virtually fully on overseas labour, she mentioned, with some potato growers already experiencing labour shortages this 12 months and a few summer time fruit growers anticipating a labour scarcity subsequent 12 months.
A spokesperson for the Division for Surroundings, Meals and Rural Affairs mentioned: “This report relies on hypothetical and extremely unlikely situations that don’t replicate the federal government’s negotiating place.
“Outdoors the EU and free from the forms of the Widespread Agricultural Coverage, our farmers will be capable of give attention to rising, promoting and exporting extra incredible produce.
“We’re dedicated to getting the absolute best deal that enables us to proceed to have tariff-free frictionless entry for items and providers into the European market, and we are going to strike new commerce offers all over the world to assist farmers benefit from the rising urge for food for Nice British meals.”