As Brexit materializes the UK will need to develop its own agricultural and trade policies. The model the UK chooses will need to cope with a range of global challenges including climate change; rising risk of animal disease; downward trends in commodity prices; and shifts in demands from changing diets.

A new paper, The Implications of Brexit for UK, EU and Global Agricultural Reform in the Next Decade, written by Ian Mitchell and published today by Chatham House, assesses the models and policy options and concludes that significant opportunities for Britain lie ahead.

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Currently high-income countries adopt one of four models: sector protection; de-coupled subsidy; insurance; and market-oriented. For the UK, only a market-oriented model would enable the country to benefit from free trade and more diverse global outreach, while keeping the government’s promise to improve the environment for the next generation.

Applying the market-oriented model in the UK would present opportunities for lower prices for consumers, lift the economy’s productivity and make substantial budget savings to support the environment and public finances. It would also mean significant, and politically challenging, disruption for agricultural producers and the transition impact and the risk of residual rural social-economic problems would need to be actively managed by government in part through savings from reduced subsidies.

However, there is now an opportunity for the UK to lead international market-oriented policy reform, which would closely align environmental, climate, and agricultural policies and redesign subsidies to better achieve environmental commitments.  Globally, there is an absence of existing leadership on these issues and the UK has a significant opportunity to position itself as pioneers.

Ian Mitchell, Associate Fellow with Chatham House’s Energy, Environment and Resources Department and author of the paper, said, “There appears little prospect of meaningful reform to the EU agricultural model even though it still absorbs around 40 per cent of the EU’s budget. Successive UK Governments over the past two decades have made the case that agricultural policy should become more market-orientated – and the UK now has that opportunity to achieve that aim”.

A UK–EU trade deal is in both parties’ economic interest. However, if the two sides fail to strike a trade deal, then they will default to WTO rules. In that eventuality, most UK sectors would face reduced competition from EU producers and, with subsidies guaranteed by the UK government, likely increase their output accordingly to meet domestic demand. Given the complexity and time required to agree a comprehensive trade deal, and the economic self-harm to both parties of a ‘no deal’ scenario, a transitional arrangement would make sense. If the UK can strike a trade deal with the EU, it seems possible that this would include tariffs close to their current level of zero.

A copy of the full paper is available here Chatham House website