With the result of the EU referendum now known and a new Secretary of State for Environment, Food and Rural Affairs, Andrea Leadsom in place, there is a lot of hard work required to make sure that Britain makes a successful exit from the EU and puts in place sustainable policies going forward, to ensure the future of British Farming.
Farming is the bedrock of the British food industry
The UK food and farming sector is worth £108 Billion
The Agri-food sector employs 3.9 million people
UK exports of food and non-alcoholic drink are worth £12.3 Billion
Of important concern to Farmers is the post Brexit replacement to the Common Agricultural Policy (CAP) and what support they will receive from the UK government going forward.
Currently UK farmers receive £3 billion a year under the CAP. Co-incidentally this equates to a 1% cut/rise in income tax. If the treasury are to produce this level of support it must come from somewhere. Given the option, it is not a foregone conclusion that the general public would vote for the farmers, and very serious consideration must be given to how farming presents itself in the public domain over the coming months.
Without support British farmers will no longer be competing on a level playing field with European farmers. The CAP will remain in place for at least 2 years and in the meantime the NFU and other farming organisations will be working with the government to formulate the best possible Domestic Agricultural Policy which requires less administration, but is on par with the EU. Public spending will be under pressure, however with an industry which is so important to the British economy it is essential that a policy for support is formulated.
What does farming need for a profitable and productive future?
- The best possible access to Europe’s markets
- Access to markets in the rest of the world, while ensuring we are protected from imports which are produced to lower standards.
- The necessary supplies of labour, both seasonal and full-time.
- Regulations and crop protection product approvals that are proportionate and based on risk and science not on emotive scaremongering.
- A simple domestic agricultural policy that guarantees competitiveness with European farmers.
What justification is there for any agricultural policy that supports farmers?
- The structure of food marketing has become such that producers face an unfair and unbalanced platform upon which to do business with processors and retailers. Monopoly processors and large supermarkets dictate the price of farming goods leaving producers in a very vulnerable position. Whilst retailers are keen to promote their “Fairtrade” status in relation to imported products they do not always apply the same principles in dealing with domestic suppliers.
- The UK should be concerned about the issues of long-term food security. We are already in the position of being only 61% self sufficient.
- It is inherently difficult for the market to factor in increased animal welfare and environmental benefits into the pricing structure for food. UK farmers are facing a large degree of regulation in these areas and they are unable to pass the costs up the food chain. Retailers appear to have little concern and farmers working hard to meet these standards have to compete for retail space with producers from other areas of the world who often do not have to meet the same standards.
- There is a general lack of awareness amongst consumers about the differences in quality of products that they are purchasing when comparing UK sourced and internationally sourced products. Beef sourced from, for example Brazil or Argentina will not necessarily have been grown under the same conditions and regulations as British beef. Effort needs to be put into ensuring that consumers are aware of these differences when purchasing their food.
What does this mean for UK farmers in the short and longer term?
For the time being, it is business as usual. Farmers will still receive support from the EU and their Basic Payments under CAP, however looking forward businesses will need to be structured to potentially function without support in its current form. We know not yet, how much, if any, support will be received from the UK government and in what form, so planning needs to be in place to cover all eventualities.
We at Minford will be working with our farming clients and their banks to ensure that they have the necessary funding in place to weather or alternatively take advantage of, what will surely be a turbulent period in farming history.
Please call our York office on 01904 414471 and discuss the opportunities/threats to your business. Our agricultural specialist Victoria Grant will also be at the Ryedale Show next week and can be contacted on her mobile 07538 495060.