How leaving the EU may affect agriculture and farming
Many industries will likely have to adapt in the coming months, as the clock runs down to the end of the EU transition period. However, agriculture is one of the most contested topics.
Since the referendum in 2016, there has been differing opinion among farmers over whether the UK was better with or without the EU. Some felt the EU-led Common Agriculture Policy limited their production and left UK farms at an unfair advantage. Alternatively, others argued reduced trade with the EU could cause further damage to an already struggling industry.
Now that the deadline is set to 31st December 2020 for the new chapter in the EU-UK relationship, it is crucial to take stock of potential changes to agriculture and how businesses may find themselves impacted. As agriculture forms an integral part of the food supply chain, these changes will take on added significance.
In this guide, we have outlined the possible effects on agriculture post-EU and what this could mean for the industry.
One area that may impact agriculture is changes to the UK’s immigration policy. 20% of workers in the industry reportedly come from abroad. However, existing workers from the EU will need to apply for the right status under the EU Settlement Scheme in order to remain in the UK after June 2021.
Further, future recruitment efforts will need to be tailored to adhere to a new points-based immigration system. Under the policy, those wishing to enter the UK will need to achieve at least 70 points. To earn these points, individuals must speak conversational English and have a sponsored job offer over £20,460. They will also be awarded additional points for having certain qualifications, showing the emphasis placed on skilled workers under the policy.
This means that moving forward, agricultural businesses will need to create job offers that allow workers to clear the 70-point threshold. Unfortunately, in an industry that often utilises cheap and ‘unskilled’ labour, this might generate an employment gap.
A large proportion of employment in farming comes from seasonal workers – and EU nationals fill 99% of these roles. Under the new immigration policy, such work is only allowed through the Seasonal Workers Scheme, which is currently in a pilot phase. While the scheme has been created explicitly for horticultural roles, it has limited spaces.
The government extended the scheme to 10,000 roles for this year’s harvest – though some have argued this is not enough. However, with the project still in its early stages, it is vital for further development to grow the capacity of the scheme and allow farmers to access the seasonal labour they need year-round.
Livestock and animal products
Should the UK leave the EU without a deal, the way that livestock and animal products are imported into the country will change, with importers needing to abide by the Import of Products, Animals, Food and Feed System. This would apply to live animals coming from both the EU and other countries, as well as animal by-products not intended for human consumption, feed and germinal products. These products will also need to be subject to veterinary checks before they are moved between countries.
Under the IPAFFS, any goods of this nature would need to be pre-notified by the importer and accompanied by an export health certificate. This change applies on live animals and high-risk animal by-products (ABPs) from 1st January 2021, though low-risk ABPs will not be affected until 1st July 2021. This gives a phased approached to changing import requirements, which may be welcome news to farmers having to adapt to the new rules.
Once full checks on ABPs come into place in July, goods will need to additionally be passed through a border control point where they can be documented and physically checked. If the products do not have the correct documentation or fail to pass checks, this could lead to delays on them entering the country.
If you are exporting livestock and products of animal origin to the EU after 1st January, you will equally need to have the right measures in place. Unlike imports, there will be no phased approached, so full checks will be required on all relevant products. Steps required include an export health certificate, checks at border control posts that can accept your goods in the destination country and compliance with HMRC customs requirements. Your import agent in the EU will also need to give the border control post appropriate notice about the arrival of your goods.
Again, failure to meet these requirements could lead to the delay or even refusal of livestock and other animal products into their destination country. As such, it is essential to make sure you have taken the appropriate action before the end of the year to minimise disruption.
With free trade no longer accessible between the EU and UK, it is feared British farming will suffer the consequences of decreased trade. This is mainly in response to increased tariffs, which would increase the costs of exports to the EU and make it less likely for customers to choose British suppliers. This is especially apt if the UK were to leave without a deal and World Trade Organisation rules were to come into play.
Currently, exports account for about 17% of income in meat processing. However, under WTO tariffs, products like lamb could increase by 39 to 91% in price. As a result, meat processors would struggle to sell their products abroad. And, if they experience falling demand, they will be less likely to buy meat supplies from farms, putting agricultural businesses at financial risk.
Due to the concerns, many industry bodies have called for the government to refuse a no-deal scenario. But, with limited time left to agree on a deal, the likelihood of a no-deal has increased.
It is worth noting, however, that even if the UK does no longer has access to the free trade of the EU single market, the government are working towards deals with many other countries. Depending on these deals and what is agreed, it is possible that meat and other agricultural exports could be directed towards these countries to fill the void left by the EU. This could prove a valuable lifeline to farms in the event the EU trade does drop, particularly given the high quality and availability associated with British-grown meat. Last month, the UK became eligible to export beef to the US, marking a step in the right direction.
Another point of contention has been potential changes to food standards and how this may affect farming. Under current standards, farmers need to adhere to set rules about hygiene, as well as the use of chemicals and pesticides, to ensure food safety when their products reach the dinner table.
The EU has set out many of the current standards, so the UK will not necessarily need to abide by them once it ceases to be a member state. However, many standards are now underpinned in UK law, which should keep standards up across businesses.
The debate around a UK-US trade deal has flagged some issues with standards. In the US, there are fewer restrictions on chemical use in food, which allows producers to use hormones to create more sizeable meat at lower costs – such as poultry. Chemicals like chlorine can also be used to remove bacteria.
Under existing EU standards, these would not be allowed for sale in the UK – but, the US has tried to change this as part of a US-UK trade deal so that their products would be able to export to British customers. This would mean amending current standards.
While the government has not confirmed this would happen, if low-cost meat from the US were to enter the UK, it could detract from sales for British farmers who absorb higher costs by not using chemicals in their processes. Alternatively, it would mean they would need to adapt their strategies to match the lower prices of the US.
Notably, many supermarkets have already come out to say they would not wish to sell chlorinated chicken, which could illustrate public backlash against such products. As such, it is likely high-standard British meat will continue to be in demand.
The Agriculture Bill
One of farmers biggest frustrations with the EU was the Common Agricultural Policy. This policy sets out to offer financial support to farmers across the EU, as well as create a level-playing field for agriculture across countries. However, complaints about the policy have been against the limits placed on output, failure to protect the environment and unfair distribution of funding.
Once the EU transition period ends, the UK will no longer need to abide by the CAP. Instead, the government has proposed the Agriculture Bill. Under the bill, the CAP payments would be gradually phased out and replaced with a system that rewards farmers for the way they serve the public – such as improved environmental impacts and animal welfare, as well as giving people access to the countryside. It also aims to increase productivity and offer protection against market conditions.
While the bill was praised for its green-focus, it was equally criticised for not offering enough detail about how British farming would receive security against the threats of leaving the EU. However, it could provide the reform to the CAP that many farmers have rallied for.
The bill is yet to be passed, with amendments still being considered. If it were to be passed, it would be introduced on a phased, seven-year approach – giving the agricultural industry plenty of time to adapt to it.
The issue of farming and the UK’s relationship with the EU is a complex one, particularly with no confirmation of whether a deal can be agreed between the two sides. However, the potential impact is far-reaching, with not only farms affected, but also food processors and providers, such as supermarkets and restaurants.
As such, it is essential that the agriculture industry does what it can to prepare now, which means following published guidance, supporting any EU staff employed and keeping up to date with government news.
If you are a business and are worried about how you may be impacted – whether you are an agriculture enterprise, food manufacturer or otherwise – we are here to help.
Our team of expert advisors can offer tailored advice for your post-EU preparations, including details on how you may be affected and what you should do now to mitigate the risk to your operations.