Half of farms could go bust after a no-deal Brexit, claims shock report
PUBLISHED: 12:32 15 August 2019 | UPDATED: 13:15 15 August 2019
More than half of UK farms could go out of business as a result of a “disastrous” no-deal Brexit, according to farmers campaigning for a second EU referendum.
The shock analysis comes in a new report by Dr Séan Rickard, former chief economist of the National Farmers' Union (NFU), coinciding with the launch of a new group named Farmers for a People's Vote.
The report, entitled "No Deal: The Door to the Decimation of UK Farming", warns of the consequences for the agricultural sector if the government takes the country out of the EU without a deal, and prioritises keeping down food prices for consumers ahead of protecting domestic farmers.
The report says the EU and all the countries with whom it has free-trade agreements would immediately apply tariffs and non-tariff barriers on food imports from the UK in the event of a no-deal Brexit. At the same time, tariff protection on most agricultural imports from the EU would be slashed or reduced to nothing.
The combination of an adverse trading environment and the removal of basic payment subsidies - only a proportion of which will be made up by enhanced environmental payments - will render the majority of farm businesses unviable by the mid 2020s, says the report.
The findings echo the concerns of farming leaders in East Anglia, who have repeatedly warned of "catastrophic" consequences for the region's agriculture if Britain was to leave the EU without a deal, including potential supply chain disruption, labour shortages and an inability to compete with cheap, lower-quality food imports.
Dr Rickard said: "The campaign to leave the EU was based on the idea that the UK would quickly secure a comprehensive new trading relationship with Europe and that leaving would have only positive impacts on UK farming. But today the reality looks very different.
"Boris Johnson has made it very clear that his over-riding priority as prime minister is to take the UK out of the EU by October 31, if necessary with no deal, no matter what the cost to the country's economy and security.
"Many industries will suffer but the industry that would suffer the most serious economic shock will be agriculture.
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"It is impossible to project the exact number of farmers who will go out of business. What we do know is that over 40pc of them will have no net income if the basic payment is removed. If at the same time the government removes all tariffs and so depresses prices, these two factors combined will render over 50pc of farms in this country unviable. The possibility of any compensation from the government going anywhere near offsetting this is remote because so many promises have been made to so many other sectors and not all can be fulfilled.
"British farmers will be caught between increased competition from third countries importing produce to the UK, and increased difficulty and cost when exporting to our biggest market, the EU. Free trade agreements to reduce those barriers will take many years to negotiate.
"Coupled with the loss of the Basic Payment Scheme of support payments by 2022, the driving down of farm revenues means that more than half of farms could go out of business."
A Defra spokesperson said the temporary tariff regime which the government would introduce in the event of a no-deal Brexit took a "balanced approach to support the UK economy as a whole".
She added: "We have been very clear that once we leave the EU on 31st October 31, we will replace the [EU's] Common Agricultural Policy with a fairer system of farm support and our new trade deals must work for UK farmers, businesses and consumers.
"As we have said before, the cash total for farm support will be protected until 2022, even in the event of a no-deal Brexit. We will also intervene to provide direct support to boost some sectors in the unlikely event this is required."