In a Farmers Weekly poll last week 98 per cent of respondents had the view that the government does not have farmers’ best interests at heart.
Considering that the overwhelming majority of farmers usually vote Tory, this is a resounding condemnation of government policy. The combination of government positions on the Agriculture Bill and the International Trade Bill have brought farmers to the conclusion that they have been betrayed by the government.
Although many farmers have been shocked by the situation, I predicted this outcome last year, saying that Brexit could lead to a triple-whammy for farmers. Firstly, they faced losing Common Agricultural Policy (CAP) payments already proposed in Gove’s draft Agriculture Bill. Secondly, they could lose access to their main export market in the event of a bare bones or no deal. And thirdly they could be exposed to imports from low cost producers with access to methods that are illegal here in the UK.
Thus far all three scenarios are on track to become reality. This would render farming uneconomic in the UK, with the exception of a few niche sectors.
The first whammy – loss of financial support
Many opposition politicians, as well as environmental commentators find little wrong with the proposals of the Agriculture Bill to replace the Basic Payment Scheme (BPS) with the Environmental Land Management Scheme (ELMS). Indeed, it looks like a good liberal principle to pay farmers public money for public goods. Not surprisingly we Liberal Democrats looked into it ourselves over 20 years ago when (Lord) Paul Tyler was our spokesperson in the Commons.
However, we quickly came to understand that the scope for such reform, although possible in part, was severely limited. During the General Agreement on Tariffs and Trade (GATT) negotiations leading to the 1993 agreement, the EU and others conceded to the big agricultural exporters (The Cairns Group) that environmental payments could not exceed their cost. These big exporters had suspected that we would cheat by paying farmers large environmental subsidies by the back door. This is exactly what Gove proposed in his original draft. The proposal explicitly broke World Trade Organisation (WTO) rules, which still includes the 1993 GATT agreement.
Subsequent drafts of the bill have made clear that the ELMS payments will comply with WTO rules which means that farm incomes will not be supported. UK farmers will continue to operate in competition with EU and US farmers, who will continue to see their incomes underpinned by public funds.
Income from UK farming without subsidies would support only around a quarter of the current workforce. Hence the government expectations of a surge in environmental outputs from farming would need to be delivered at cost by a severely depleted workforce. The ‘best case scenario’ for farmers is a fudge by which entry level ELMS looks suspiciously like BPS, which had already been reformed to include environmental conditionality. These details are still to be determined.
The second whammy – loss of tariff-free access to the EU
The second ‘whammy’ is the loss of tariff-free access to the EU market, as well as the absence of non-tariff barriers. Without a trade deal we will recourse to WTO tariff levels which will render our exports profoundly uncompetitive. Some of these tariff rates are in excess of 50 per cent. Even if a deal is signed, the vast majority of international trade deals exclude agriculture, or include only a limited range of commodities with quotas at reduced tariffs. Hence the status quo of untrammelled access to the EU market is almost certain to be lost.
Our sheep sector is most at risk to the loss of the export market as the UK has been the major lamb producer of the EU. However, beef is also at risk as we export to continental Europe at the same time as importing from Ireland. Cereals are also affected as we export 3 million tonnes in an average year to southern Europe. These commodities are not going to find alternative homes in world markets making a contraction of the industry in the UK inevitable.
The third whammy – full US access to our agricultural market
Finally, the third whammy is the most topical right now, as the International Trade Bill battles its way through parliament. The House of Lords has introduced amendments to require imports to meet the same rules and standards as home produced food and to refer each individual trade deal to parliament for scrutiny. My fear has always been that the agenda of many Brexiters was always to take us out of the EU marketplace in order to position us into the US marketplace. Hence a trade deal with the US allowing them full access to our agricultural market with the UK gaining greater access to the US market in financial services was always their plan.
My colleague, Liz Webster has been fighting this through her organisation of protests via the new group ‘Save British Farming’ and her efforts have been rewarded by the current parliamentary stalemate.
Farmers have been betrayed by the Tories.