The possibility of Britain leaving the European Union raises all kinds of uncertainties. So when I sat down with a with a group of fellow academics to think about what it would mean for agriculture, we expected some surprises. We did not, however, realise just how complex and uncertain a picture we would produce.
UK farmers rely on subsidies from the EU’s Common Agricultural Policy (CAP) and have significant export markets in Europe which also influence domestic prices. For the consumer, however, the CAP pushes up food prices, due to tariffs applied to imports from outside the EU.
The National Farmers Union favours remaining within the EU, but a substantial number of farmers want to leave over concerns about what they perceive to be excessive regulation.
What’s at risk?
The biggest question mark relates to what would happen under the so-called Article 50 process, which lays down the procedure to be followed if a country wants to leave the EU. Negotiations would last at least two years, leaving farmers in an uncertain position which could also impact consumers.
The British government does not appear to have done any contingency planning for what would happen to agriculture in the event of a Brexit vote. However, EU subsidies to farmers would disappear and the UK government might not replace them in full. In the 2014 financial year the CAP resulted in €4.3 billion from the EU (about £3.5 billion) being passed to UK farmers.
This is a serious issue for farmers. Data that our “farmer-scientist network” team assembled shows that, for many of them – especially sheep farmers in upland areas – these payments are the difference between running at a loss and making a modest profit.
Of course, the subsidies wouldn’t be withdrawn overnight. This would be catastrophic for British farmers. However, we do believe they would be gradually reduced each year. The Treasury has always regarded subsidies as market distorting because they are not related to competitiveness and efficiency, and there is continual pressure to reduce public expenditure – after a Brexit, farming subsidies might be a relatively easy way to cut spending.
Subsidies tied up in contractual arrangements with national government agencies, so-called “pillar 2” subsidies, are less vulnerable. Deals such as the Countryside Stewardship agreements initiated in 2016, which provide incentives for landowners to restore wildlife habitats, manage flood risks or reduce water pollution, should remain in place for several years.
These subsidies have substantial support from domestic environmental and conservation lobbies and they are also viewed more favourably by the Treasury, which sees them as providing a public good. If Britain left the EU, these payments would probably be funded domestically.
Some farmers hope that withdrawal from the EU would reduce the burden of regulations and form-filling for everything from subsidy claims through to livestock movements or water pollution. Yet much of this admin comes from London rather than Brussels. National governments tend to award themselves more powers while transposing EU directives into local law, for instance, a process known as “gold plating”.
Plant protection has been an area of particular concern for farmers in recent years. The EU’s recent decision to ban three neonicotinoids, which are used to spray and protect crops, is a good example: despite concern that these chemicals are harmful to bees, the ban was made without what is regarded as sufficient field trial evidence. British farmers face difficulties growing their oil seed rape as a result.
The UK had its own system of plant protection regulation before it joined the EU, and its Chemicals Regulation Directorate still approves products containing active ingredients cleared at European level. The CRD could become a purely domestic agency, however it would still have to be guided by the EU. After all, firms would be reluctant to develop distinctive products without certain active ingredients purely for the UK market. Products that have been restricted by the EU could be used in the UK, in principle, but this would meet strong opposition from the environmental lobby.
You want how much?
As the EU currently imposes high tariffs on many agricultural and food products coming from outside, the post-Brexit tariff regime is of particular concern. At present the EU negotiates in the World Trade Organisation on behalf of the UK and other member states.
Whatever happens after a potential Brexit, UK farmers wouldn’t be able to return to the unfettered use of high levels of domestic support, export subsidies and import tariffs that currently insulate the EU’s agricultural production from changes in world prices. World Trade Organisation regulations wouldn’t allow it at the present levels.
Depending on any subsequent agreement with the EU, Brexit would place limits on the availability and use of labour from the EU. Not all of this labour is unskilled and seasonal, although it might be possible to restore a version of the seasonal agricultural workers scheme, which allowed Romanians and Bulgarians to work in the UK on temporary visas.
Bear in mind also that many other member states derive a greater proportion of their GDP from agriculture or have a strong cultural attachment to farming and food. This gives British farmers a measure of additional political protection from subsidy cuts for instance, as farmers and their representatives in other countries help fight their battles for them. Outside of the EU, British farmers would be on their own, without help from their European counterparts who would continue to receive CAP subsidies.
All told, it is difficult to see exit as beneficial to British farmers or to the UK food and drink industry more generally. It would create a period of considerable uncertainty at a time when farmers already have to cope with low and volatile prices, while it is unlikely that the regulatory burden would actually be reduced. And regulations are needed to protect the environment and human and animal health.