Defra Secretary George Eustice has said the current ‘buoyancy’ of the UK sheep market may mean the sector will not need to be compensated in the event of a no-deal Brexit.
His comments came as the Prime Minister agreed with the EU to ‘go the extra mile’ and continue trade negotiations until the end of the year, after missing the self-imposed deadline to complete a deal by this Sunday (December 13).
The Rural Payments Agency (RPA) has already worked up two options for a no-deal compensation scheme in the form of a headage payment for ewes and a slaughterhouse premium.
But speaking to MPs on the Environment, Food and Rural Affairs Select Committee last week, Mr Eustice said Ministers had not set a trigger point at which they would intervene, because they would want to see how markets develop and watch farm incomes.
He was also keen to point out either scheme would only be used on a short-term basis, if they were rolled out at all, with Ministers working to open up alternative markets for sheep meat in the longer term.
“We could switch [the schemes] on very quickly, if we decided they were necessary,” said Mr Eustice.
“It is not clear at the moment that they will be necessary, because lamb prices are already some 20 per cent higher than they were, say, five years ago.
“The modelling which has been done, imperfect though modelling is, suggests you might, in the case of tariffs being applied, get a 20 per cent increase in lamb prices in Europe and potentially a fall in lamb prices here of 10 or 20 per cent.
“It might actually just take it back to normal historical levels.”
But Phil Stocker, chief executive of the National Sheep Association, said calculating a price reference point for the schemes by using prices from the last five years – as Ministers are thought to be planning – could leave farmers facing a 30 per cent drop in price with no support.
“This assumes the reference price was adequate to achieve a reasonable level of productivity, which we know it was not,” he added.
“We might expect a pretty robust discussion around the corner, given the sector has worked hard, in line with Government challenges, to improve its productivity levels.”