What are the early implications of Brexit for farmers?


No industry has more at stake following the Brexit vote than agriculture. Julie Liddle at Robson & Liddle discusses some of the most immediate questions.

Consequences of a devalued sterling

The vote to leave the EU will profoundly impact British agriculture in years to come, but some effects are making themselves felt already.

The weakness of sterling against the US dollar will have an immediate influence on competitiveness. In one sense, this is positive news because UK agricultural produce will be more competitive in the export markets.

However, we import almost twice as many agri-food products, such as fertiliser and agri chemicals, from the other EU countries than we export and a weak pound will make imports, from continental Europe, more expensive.

Uncertainty over future of CAP subsidies

Some commentators say the removal of Common Agricultural Policy (CAP) subsidies and their replacement with a potential UK-based model requires careful consideration – sooner rather than later.

Organisations such as Agra Europe argue that the removal of CAP payments will be deeply damaging and only the super-efficient top 10 per cent of UK farms will prosper without CAP subsidies.

Against this, the pro-Brexit organisation Global Britain insists no farmers should suffer financially, pointing out that the £12.3bn paid by the UK into the EU budget in 2014 could be used to support farmers in a post-EU Britain.

Theoretically the UK could introduce its own version of the CAP, but delivering such a scheme would not be straightforward and we agree that early thought should be given to the options.

Meanwhile, a short term downturn is expected to hit the British economy, meaning public funds will come under greater pressure and bodies such as the NHS will be prioritised, possibly at the expense of agriculture.

Rental values and land prices

Land prices and rents are also expected to be affected by uncertainty around ongoing EU payments. Rental values will need adjustment if payments decrease and, although land prices are less directly influenced by subsidy, broader uncertainty may well result in a drop in values.

Impact of migrant labour regulations

Farmers are being advised to urgently assess any reliance on migrant labour and identify contingency measures that may be needed. British agriculture employs 35,000 migrants permanently and many more on a seasonal basis, which means sectors such as horticulture could be heavily impacted.

It seems likely that migrants already living in the UK will be allowed to stay, although farmers may face extra regulatory costs related to carrying out background checks. Where new migrant employees are concerned, the process will probably be even more complicated.

Opportunities as well as challenges lie ahead

Farmers should keep in mind that change also brings opportunity. Hopefully the opportunities are many for example, if land prices were to see a short term decrease this could create options for farming businesses to expand through acquisitive growth.

For advice on any rural land and property issues, call Julie on 01768 254 354.