Article 50 – Brexit – What might it mean for farming?
Well, after a 9 month gestation period, Article 50 has finally been triggered, so commencing the one-way process which will culminate with the UK leaving the EU most likely at the end of March 2019. In theory, the two year negotiating period could be extended but this would require the unanimous agreement of the remaining 27 Member States, which seems unlikely. Anyway, 2019 would be the logical time to leave as it would be at the end of the EU budgetary and parliamentary period.
We are now in uncharted water as no country has attempted to leave the EU before and the Article 50 process is deemed to be irreversible. The multi-billion pound question is what will Brexit mean for UK agriculture? At present, no-one seems to have much idea, least of all Defra. Ever since the referendum the Ministers have been particularly tight lipped about what a UK agricultural policy may look like post Brexit.
In the short term, we do know that BPS style payments will continue until 2020 and that existing socio-economic and agri-environment schemes will be honoured, even when they extend beyond 2020. After that, there are three main areas of uncertainty:
- Funding
It would seem unlikely that direct, BPS style, subsidies would last long in the white heat of Westminster, where they have virtually no political support. The question is “how long will the taper period be?” in order to avoid the “economic cliff edge” to which Mrs May referred.
It does seem likely that some form of environmental support will remain, but how well will this be funded? The UK was the market leader in agri-environment schemes but has recently had to take a step backwards as the rest of the EU tried to catch up. There is now a real opportunity for the UK to create targeted schemes which will really benefit the environment.
- Regulation
Some say that our departure from the EU will allow for a “bonfire of red tape”. I say that this bonfire is akin to the crock of gold at the end of the rainbow. The easy option will be to transcribe all EU environmental & animal welfare regulation into UK law. Hopefully we will see a reduction in the complex rules surrounding any funding schemes, but I foresee few other regulatory benefits.
- Trade
Unfettered trade with the EU will be crucial for farmers in the North East, particularly for those in the lamb trade. In theory, this should be easy to achieve as we import roughly two and a half times more food from the EU than we export. However, will politics get in the way of common sense?
A further risk is that unfettered access to our agricultural markets could be bargained away while negotiating headline grabbing free trade agreements with non-EU nations. Could our market be flooded with Australian lamb and Brazilian beef?
In short, I see the immediate post-Brexit scenario being “less of the same” in terms of funding, “much the same” in terms of regulation and “anybody’s guess” in terms of international trade.
Hopefully, once the dust has settled, UK agricultural policy and the associated regulatory regime will be able to evolve in line with a beneficial international trading environment in order to deliver real benefits to the rural economy and the wider environment. Or is that just wishful thinking?
If you would like any further information or to discuss any rural related matter, please contact Tom Wills, head of the agriculture & estates department at Sintons.
