Brexit: What Future for British Agriculture?

Friday 26 January 2018

As 2018 has now begun, the deadline of March 29, 2019 is becoming inexorably closer. In just a little over a year, Brexit will officially take effect and the UK will become the first country to leave the European Union (EU) since its creation[1]. The implications are numerous, this exit implying a necessary renegotiation of the agreements, as well as an exit from common policies, and in particular from the Common Agricultural Policy (CAP). Everything is far from being settled today, and the future of British agriculture remains uncertain: an opportunity for some is also a disaster for others.

Created in 1962, the Common Agricultural Policy (CAP) is one of the oldest common policies of the European Union and has undergone significant changes in 1992, 2003 and 2013 to adapt to the evolution of the Union. Its purpose is to supply a stable source of healthy, sustainably produced food while providing farmers with a decent standard of living and setting requirements for animal health and welfare, environmental protection and food safety[2]. It does so through grants[3], for instance. The CAP (or rather, the absence of) is part of the Brexit equation as it raises many questions for the future: will these requirements continue to be met? What will be the impact for UK farmers who will no longer benefit from direct aid from the EU?

The United Kingdom covers an area of ​​248,530 km² of which 71.3% is agricultural land. For the 2014-2020 budget, € 28 billion is to be invested in agriculture and rural areas in the country, including € 22 billion for direct payments, making the UK the fifth largest beneficiary in terms of direct payments after France, Germany, Spain and Italy[4]. For British farmers, the date of Brexit should therefore mean the cessation of aids on which they have become accustomed to rely. Some fear that agricultural products will become less competitive, partly as a result of the loss of these aids, which may lead to higher prices, and partly due to the UK exit from the single market. Let’s keep in mind that the UK currently imports 40% of its food and that its largest trading partner, whether in terms of imports or exports, is the EU[5].

However, others see this as an opportunity to move forward. Michael Gove, State Secretary for the Environment, Food and Rural Affairs, believes that the CAP aid allocation system, based on the size of the farm, is absurd. "Paying farmers for the amount of land they own is unfair, inefficient and leads to perverse effects. The majority of public money goes to those who own the most private property.”[6] On January 4, 2018, the British government intends to compensate for the disappearance of European aid by continuing to financially support farmers for a period of five years following the exit from the European Union. This new system of national aid would no longer be based on the size of the farms but rather on the measures taken by farmers to protect the environment.

Of course, the real consequences for British farmers will depend heavily on the type of agreement that will be concluded between the EU and the United Kingdom; will it be a "soft" or "hard" Brexit? Or, as some people fear, a "no deal" scenario? An independent study[7] conducted in 2017 analyzed three scenarios for post-Brexit agriculture: Free Trade Agreement with the EU / Most Favored Nation (MFN) clause of the WTO / Unilateral liberalization. It concluded that in the case of a free trade agreement between the United Kingdom and the EU, the impact would be limited as this scenario would only result in a minor trade disruption. However, this impact would be more serious in the other two cases, particularly with the application of the high tariffs of the most-favored-nation clause, which means that a "no deal" could really prove catastrophic for the country’s agriculture.

In conclusion, if some actors such as animal rights associations or the fishing sector (in particular on the Scottish side[8]) see it as a great opportunity, as long as negotiations are underway, Brexit remains a real sword of Damocles over the heads of British farmers.



[1] A two-years transition period is now being discussed : https://euobserver.com/tickers/140370

[2] https://ec.europa.eu/agriculture/cap-overview/history_en

[3] https://ec.europa.eu/agriculture/cap-funding/beneficiaries_en

[4] https://ec.europa.eu/agriculture/sites/agriculture/files/cap-in-your-country/pdf/uk_en.pdf

[5] https://www.euractiv.com/section/agriculture-food/news/how-the-post-brexit-trade-deal-will-affect-british-farmers/

[6] https://www.theguardian.com/environment/2018/jan/04/farmland-could-be-turned-into-meadows-post-brexit-says-michael-gove

[7] https://www.afbini.gov.uk/sites/afbini.gov.uk/files/publications/FAPRI-UK%20Brexit%20Report%20-%20FINAL%20Clean.pdf

[8] https://www.afbini.gov.uk/sites/afbini.gov.uk/files/publications/FAPRI-UK%20Brexit%20Report%20-%20FINAL%20Clean.pdf

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