What does Brexit mean for UK Agriculture?
In short, substantial change and uncertainty.
EU laws and processes are intrinsic to the Agricultural industry in the UK and once the UK has left the EU, it is likely the UK Government, and various devolved administrations, will look to make changes to these laws and processes. It may take some years for a thorough overhaul but from the Agriculture Bill and subsequent government papers and consultations it is clear that, as expected, subsidy payments will be phased out and stewardship schemes become more focussed on the environment and “public goods”. On a more practical level, Brexit will affect the availability of migrant workers for agricultural businesses and the level of administration required to show compliance with EU laws when exporting goods. ”Deal” or “no deal”?
Speculation continues around the outlook following a No-Deal Brexit. Some sources suggest there may be food shortages as the industry adapts to the longer wait times and the effect of tariffs for imports and exports. Others caution of long delays at entry points into the UK such as Heathrow and Dover. There is already a shortage of space for storage and chilling within reach of the relevant ports.
If the UK leaves without agreeing a deal with the EU, the World Trade Organisation (WTO) rules will apply in respect of imports and exports. Any exports from the UK will be subject to WTO tariff rate quotas which may restrict the amount that UK farmers can export. For example, the standard tariff to export feed wheat into the EU is €95 per ton. The EU market price for feed wheat in July 2018 was €165 meaning that over 50% of the market price would be lost to tariff. Even if an exit deal is done, there will still be a trade negotiation to come which will have tariffs attached and uncertainty until then about profitability on agricultural produce.
The current Agriculture Bill suggests BPS payments will continue up to 2020 however concerns are being expressed by the ALA, CLA and other national bodies that a change in UK Government may affect this. What can I do?
If you are a farming business, you should be looking to put yourself in the best possible position for when the UK does leave the EU. Look at the things you can control:
- Review your ownership structure, ensuring terms are clear and agreed. Talk to your solicitor and accountant to ensure these are structured in the most tax efficient way possible
- Prepare your business to survive and thrive without BPS entitlements. This may be utilising grant funding to invest in technology, forming co-operatives with your neighbours or focusing on alternative markets, diversified land uses and added value for your products.
- Aim for flexibility in any contracts and tenancies. Look carefully at any renewals.
For more information on streamlining and structuring your farming business, please contact Gareth Williams
or Denise Wilkinson