Perhaps no sector of the UK economy has as much at stake in the EU referendum than agriculture. Julie Liddle, director of Robson & Liddle, discusses some of the main issues surrounding the Brexit debate.
The EU is the world’s largest agricultural organisation, with agri-food exports amounting to €122 billion in 2014.
Within the EU, the UK imports almost twice as many agri-food products from the other EU countries than we export. Nonetheless, UK agricultural exports are substantial, with some 73% of our total agri-food exports going to other European member states. For example, 38 per cent of all UK produced lamb is sold in Europe.
The NFU has so far remained neutral in the debate. However, it has pointed out that EU membership gives the UK access to international trade agreements and this increased market access means the value of UK agri-food exports has more than doubled in the past ten years.
Could UK farms survive outside the Common Agricultural Policy (CAP)?
Direct payments from CAP to the UK will average £2.88bn annually between 2014 and 2020. In 2013, these subsidies amounted to €200 per hectare (£58 an acre) and represent 35 to 50 per cent of total gross income.
Some commentators say the removal of CAP subsidies would be catastrophic. According to a non-partisan report from consultants Agra Europe, only the super-efficient, top 10 per cent of UK farms could survive without subsidies.
However, Brexit campaigners, including Global Britain, insist no farmer in the UK should suffer financially as a result of a Brexit. Global Britain emphasises that the UK paid £12.3bn into the EU budget in 2014, which would not have to be paid if we left Europe, and this money could be used to support farmers in a post-EU Britain.
Possible impacts on land prices vary greatly
High value farmland is less likely to be impacted by a Brexit, with prime arable farmland attracting demand from investors looking to diversify and sustain capital values. In parts of the country farmland values have risen by as much as fourfold in the past decade.
The implications for the majority of farmland, though, is less encouraging and any reduction in financial support would be a severe blow to investors in land supporting more than one enterprise. Dairy, lowland beef and sheep farms are also expected to be adversely affected, with a Brexit likely to trigger a drop in support of around £30 an acre, according to a recent report in the Financial Times.
Question marks hang over the availability of workers
British farmers and growers need access to non-UK born labour to carry out year-round operations. Many UK crops are seasonal, which means enough workers must be recruited at the time when they are needed.
Figures from the Office for National Statistics (ONS) suggest that in 2014 there were 34,513 non UK-born workers employed in the agriculture industry, of which 65 per cent were born in the EU. Campaigners for a ‘stay’ vote argue that any restrictions on the recruitment of non UK-born workers would negatively impact the sector.
EU legislation affects non-EU countries as well as member states
Evaluating the full extent of EU law is challenging, but an estimated 40,000 legal acts are currently in force, as well as 15,000 court verdicts and 62,000 international standards.
Even so, countries like Norway and Iceland, which are not in the EU but are members of the European Economic Area (EEA), must still comply with EU legislation in order to trade with the EU.
For advice on any rural land and property issues, call Julie on 01768 254 354.