SCOTLAND’S FARMERS ARE FACING A
POST COVID-19 BREXIT BREAKDOWN
Farming is never easy and rarely profitable. Modern family farms are a full-time, twenty-four-seven job. The self-isolation which we have all endured during the coronavirus pandemic, is an everyday occurrence for farmers, in what can be a lonely and challenging profession. In a bid to make ends meet, many farms diversified into agri-tourism, letting self-catering holiday cottages or providing B & B, running farm shops and other rural attractions. But the coronavirus has devastated this sector, hitting farm finances for six. The closure of the entire hotel, pub, restaurant and café sector led to many dairy farmers losing their market overnight and having to pour milk down the drain. Now, the lethal combination of the pandemic and a potential cliff-edge Brexit could cause a meltdown in rural Scotland.
Farmers were amongst the most important key workers during the lockdown, but many felt that they had been ignored and forgotten. Their reward for ensuring a constant supply of healthy, nutritious food, produced to the highest animal welfare and environmental standards in the world, could be betrayal, as Britain’s floodgates are thrown open to cheap imports from around the globe. Farmers and landowners, far from benefiting from new worldwide trade deals promised by the arch-Brexiteers, could see their markets decline sharply as competition from sub-standard produce expands and subsidies disappear. Land values will plummet.
Under the Common Agricultural Policy (CAP) many British farmers received 60% of their income from EU subsidies via the single farm payment. For most businesses it was the difference between survival and collapse. Direct CAP payments to Britain averaged £2.88 billion a year. Last year these subsidies were worth around €200 a hectare (£58 an acre), an average of £22,700 per UK farm. Only the super-efficient, top 10% of farm businesses could survive without them. Most farmers have thin margins, if they have any margins at all. But in England, direct financial support for food production is to be phased out from next year and replaced over a 7-year transition period by an ‘Environmental Land Management Scheme’. In Scotland, the SNP government intends to cut and paste exiting CAP schemes until 2024, during which time it will implement what it calls a ‘stability and simplicity’ approach. Of course, all of these schemes depend on the post Covid-19 availability of funding. With the country facing a recession to end all recessions, according to Chancellor Rishi Sunak, there is no way that current subsidy levels will be maintained by either Westminster or Holyrood.
The European Commission estimates that UK land prices will fall sharply if subsidies are reduced and will fall by 30% if they are totally abolished. For farmers who have taken out bank loans against the value of their land, a loss of value could be fatal. New subsidy schemes have been designed to put greater emphasis on the environment, removing support from food production. This is a grave mistake. The one clear message that we surely should have learned during the pandemic was the need to have a guaranteed security of food supply during a time of crisis.
During the protracted Brexit campaign, we were told that the EU’s protectionist policies discriminated against cheap food imports and forced up food prices for British consumers. In other words, those who supported Brexit wanted cheaper food. That means throwing open UK markets to cheap food from Africa, Australia, North America, Brazil, and Argentina, causing chaos for UK farm gate prices, a further fall in land values and widespread bankruptcies. It also means importing food produced to hygiene and animal welfare standards that would be illegal right now in Britain. The UK is currently 60% self-sufficient in food supplies, a vitally important factor during a time of crisis. A tsunami of cheap food imports would see food self-sufficiency plummet.
Donald Trump has assured Boris Johnson that America will sign a trade deal with the UK very quickly following Brexit. Trump typically stated that the deal would be great for both Britain and America. What he means is that Britain will have to open our doors to vast imports of American hormone treated beef and chlorine washed chicken, loaded with antibiotics, all currently banned under strict EU regulations. Not only will such imports destroy our own markets for high quality farm produce, it will also sit uneasily with British consumers.
Although agriculture is a devolved subject dealt with by the Scottish government, trade relations are reserved to Westminster, where the International Trade Secretary Liz Truss is in charge of negotiations with the Americans. She said in May, “We will never undermine our high domestic environmental protection, animal welfare and food safety standards, ensuring that in any agreement British farmers are always able to compete.” But when Conservative MP Neil Parish tabled an amendment to the government’s landmark Agriculture Bill, calling for future trade deals to prohibit imports of food into the UK not produced to the equivalent standards of farmers and producers here, it was defeated by 328 to 277 votes. Now Woody Johnson, the US Ambassador to the UK has stated “American agricultural products are safe, nutritious and delicious. These products should absolutely be included in a US-UK free trade agreement.” With the Trump administration currently pumping billions of dollars into US farm subsidies, they are desperate to open new markets.
If no extension to the current transition period is agreed with the EU before the end of June deadline, a hard cliff-edge Brexit becomes more of a reality. That will mean we will have to apply World Trade Organization (WTO) tariffs on exported produce going out of the UK and we will need to set our own schedule of tariffs on imports coming into the UK. Import tariffs would be hugely damaging to British agriculture by setting a low or zero tariff rate on cereals, eggs, pork, fruit and veg and some dairy produce, placing producers at a major disadvantage and undermining efforts to negotiate new trade arrangements. It would also expose those sectors which have some level of tariff protection, such as beef and lamb, by uneven application of import and export tariffs as well as exposure to unfair competition. Let’s avoid a cliff-edge Brexit at all costs and protect our farmers and consumers from second rate imports. They deserve our support.