Farmgate prices could be hit if the UK fails to gain access to the single market
A ‘hard Brexit’ from the EU could reduce farmgate lamb prices by about 17.5 per cent, according to farm business consultants Andersons.
Speaking at a Brexit seminar, Michael Haverty, senior agricultural economist, said: "Where the UK produces a surplus of a commodity then the farmgate price is likely to fall if we do not have access to the single market."
"If we retain single market access, there will probably be little effect at all," he said.
Currently the UK exports about 40 per cent of its lamb into the EU, which could mean the sector would be one of the hardest hit if European trade is affected by an exit.
He presented different options for the future of UK trade and farming, including a soft approach with single market access and a ‘hard brexit’ where the UK had to trade with the EU imposed tariffs on British goods.
There could also be issues with trade agreements potentially allowing imported products, such as Australian lamb and Latin American beef, access to the UK market.
But he also highlighted potential benefits for the sector.
"Lower prices could mean an opportunity to replace New Zealand lamb on the UK market.
"If prices were reduced, it would make lamb more appealing to consumers," he said.
"And more sheep farmers may also leave the industry, which would reduce supply and support the price."
Despite this, he estimated the farmgate price would have to fall by about 17.5 per cent to continue to sell lamb to France at the same price with tariffs.
Mr Haverty did predict a ’deal would be done’ between the EU and the UK but it would be a bespoke deal as using the same model as countries such as Norway or Switzerland would not fit the UK.
However, he warned there could be a transition period where the UK had similar access to Turkey, before the deal was fully agreed.
"But I would say it is more likely than not we would get good access to the single market."