A ‘no deal’ Brexit would significantly boost prices for most farmers, except those producing sheep and barley, according to a new study.
Researchers at the Agri-Food and Biosciences Institute (AFBI) found producer prices in the dairy industry would increase by 30 per cent if the UK fell back on to World Trade Organisation (WTO) rules.
Pig farmers would also benefit, with an 18 per cent hike in prices, followed by beef producers at 17 per cent. Producer prices in the poultry sector were projected to increase by 15 per cent, with shoppers paying more for all products.
For the net exporting sectors, the story was different, with prices for sheep and barley farmers dropping by 30 and 5 per cent respectively.
Unilaterally reduce tariffs
The paper also modelled the future prospects of farmers if the Government were to unilaterally reduce tariffs on imports after Brexit – the ‘free trade’ approach.
It read: “This scenario has a depressing impact on UK prices and output values across all commodities, particularly in the beef and sheep sectors, where international competition is very strong.
“We project a large increase in imports in these sectors from the rest of the world and significant downward pressures on UK prices and production.
“Producer prices in the beef and sheep sectors are projected to decrease by 45 per cent and 29 per cent respectively, with reductions of 12 per cent, 9 per cent and 10 per cent in producer prices for the pig, poultry and dairy sectors respectively.”
Finally, the researchers looked at what would happen if the UK were to achieve its goal of an ‘ambitious and comprehensive’ free trade agreement with the EU.
In this scenario, they found the impact on producer prices varied across commodities, but the changes were ‘relatively small’.
Nick von Westenholz, the NFU’s Brexit director, said: “On the face of it, the WTO default scenario looks positive for some – but by no means all – farmers, at least in the short-term.
“However, it is worth noting this would be a highly protectionist outcome, with high tariffs applied to many agricultural goods.
“No Government will tolerate the subsequent rise in food prices for long, and we could expect a swift response reducing tariffs, leading to the unilateral trade liberalisation scenario which looks pretty grim for farmers.”