Farming News - How will British farming perform outside of the EU Customs Union?

How will British farming perform outside of the EU Customs Union?

12 Feb 2018

The European Union Customs Union (EUCU) helps to limit financial and administrative trade barriers to encourage economic collaboration and make it easier. It is the largest in the world in its economic production which holds considerable negotiating power. However, according to Downing Street, Brexit will see the UK ‘categorically’ leave the EUCU to sign its own trade deals after Brexit.

In doing so, Brexit looks to be a defining moment for British farming, with both sides of the Brexit debate forecasting potential setbacks and opportunities.

What does Brexit mean for the food and farming sector?

The EU’s chief Brexit negotiator Michel Barnier said barriers to trade will be ‘unavoidable’ if the UK leaves the EUCU. There are certainly many people within the farming community who are extremely concerned. The Farmers' Union of Wales has said the evidence supporting the need for the UK to remain in the EUCU after Brexit is ‘incontrovertible’, with the Welsh First Minister Carwyn Jones calling it ‘economically daft’ to leave. Both want access to the EUCU until a comprehensive free trade agreement is established, stating that it critical for rural Wales.

The recently leaked government paper found that the agriculture industry would face substantial barriers after Brexit, even if the government achieved a strong deal, although Brexiteers dispute this saying that this is overly pessimistic and not taking into account the possibility of negotiating strong trade deals with Australia and the US respectively.

The authors of ‘Brexit: Agriculture and Trade' said agricultural issues will be a problem in trade negotiations and stated that the interests of both producers and consumers need to be equally considered. From a more positive viewpoint, new negotiations have the potential to open up new markets for UK farming.

More focus on the environment

After the government payments to the farming industry end in 2022, Michael Gove plans for subsidiaries to been given as a reward for evidential environmental conservation. Subsidies would be awarded to farmers who help the environment by making planting trees as part of their routine and creating more wildlife habitat and woodland.

Michael Gove said the incentive for doing this is that most modern farming has some objectionable methods and the UK lost self-sufficiency in food a long time ago. The end to EU subsidiaries could help smaller farms (currently large landowners receive more).

Not only this, but the concept is that a healthier environment will boost visitors to the countryside. However many farmers and environmental campaigns want to restrict development in rural areas, rather than encourage it. Potentially there may be a move towards increased local control over decisions concerning such communities, but it remains to be seen whether authority will be re-distribute in this fashion.

Brexit cutting the foreign workforce and the supply of labour to British farms

Farmers who grow a large amount of fruit and vegetables often rely on a foreign workforce to harvest their crops. Post-Brexit, these workers will need to go through the process of gaining a permit.

Not only this, but the government could set an earnings threshold and restrict migrants bringing family with them while working. This could put many workers off coming to the UK. Unfortunately, these unskilled labour jobs simply don’t attract many applicants in the UK to fill in that deficit. Fruit has already been reported to be rotting in the fields due to a lack of pickers since the Brexit referendum.

Alternatively though it is likely that should this gap in the labour market remain open, then this will be taken into consideration when assessing the level of migration into the country. Those willing to provide their services in this regard could be given preference and fast-tracked through immigration due to the demand for their skills, with the reduction of EU bureaucracy enabling such flexible border policy.

Will British goods remain competitive?

Some talk about more the UK prospering with more competitive export prices, however unless we can remain in the single market any benefits from international trade will be encompassed by red tape.

Extra tariffs added by the EU on UK imports would increase the prices, swallowing up any competitive advantage.

The combination of reducing protection against imports and removing or redirecting subsidies could hit the farming industry hard.

Sheep, dairy and beef farming are protected by some of the EU’s tariffs, currently taking advantage of subsidies and will be vulnerable when in competition with giant farming exporters such as Australia and New Zealand.

To protect themselves, many farmers have been starting other businesses on their farms. B&Bs are starting up in large farmhouses, attracting tourists and shooting parties. Glamping has become popular on farmland with people willing to pay a lot of money to stay in a pod, teepee, treehouse or traditional gypsy caravan.

Cheshire has an ice cream farm theme park and other farm parks are becoming more and more popular around the country, offering days out along with child-care facilities and on-site nurseries.

These ventures do not rely on subsidies and create more jobs, with Brexiteers believing this will therefore encourage more innovation. However many farmers understandably think that it is a lot to ask of an industry to refresh itself after so many years of neglect. You can’t create an entrepreneurial culture from thin air.

Ultimately, the UK may be forced to import more food from the rest of the world if the advantages of EU trade agreements with third countries are to be kept during the transition period. Meat producers in particular are concerned that industry standards are not to be lowered for the sake of a deal.

However should we refuse to compromise on the quality of produce that the UK has long been known for across all industries, then this reputation may still endure separately from any political disturbances. Regardless of price fluctuations, there will always be a market for British goods with the ‘national brand’ so to speak providing a competitive edge that few others can match.

Why the Irish border is difficult to police, and what this means for agricultural trade across both sides

Livestock and food currently passes freely across the Irish border, which is essential for farming trade. Post-Brexit, Northern Ireland and the Republic of Ireland may need a policed land border for customs and immigration regulations as Northern Ireland leaves the EU, but the Republic of Ireland does not.

If the UK does not secure a deal with the EU, then agriculture and food will be significantly impacted.

Since the vote for Brexit, the Irish border has often been compared to Norway and Sweden, but that border has only 80 crossings as opposed to the Irish 275. Not only this, but the border police from Norway and Sweden can cross back and forth, but the Irish politicians and the UK police don’t appear to want this style of arrangement.

A Norway-style EU trade agreement for the UK simply won’t cover many areas of agricultural production, so food processing firms and Irish dairy farmers will face consequences - although there is some hope that border checks will be workable with countries banding together.

There is no doubt that in being outside the EUCU trading risks may increase, borders will have to be tougher and the costs of many goods will be higher. Any solutions the government provide, what they choose to prioritize and how British farming reacts to the changes are fundamental to the future outlook of farming in this country.

But despite the obstacles in the near-future, it must be remembered that the UK does have a great deal going for it just in terms of resources and expertise. Approximately 70% of the nation’s land alone is given over to farming, so it’s not as if we would be seeking to develop a whole new industry from scratch. Opportunity does exist to make Britain a more modern and adaptable farming nation with such great change ongoing, but will require a level of planning that plans for many possibilities, and not just the desired result.