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'This is a bombshell report' - Farmers urged to learn from high performers after warning on farm incomes post-Brexit

It follows a report from AHDB which suggests farm incomes could halve following Brexit



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High performers can provide lessons before Brexit

Farmers have been urged to learn from high performing units as they prepare their businesses for Brexit following a report which suggests farm incomes could halve after Brexit.


AHDB’s latest Horizon report, launched at its Grain Market Outlook conference today (October 11), sets out projections of different scenarios for profitability after Brexit.

 

Scenario


The first scenario, evolution, was a ‘business-as-usual’ option, where policy, regulatory framework and trading relations remain as close to the status quo as possible outside the single market.


The second scenario, unilateral liberalisation, suggested increased competition from non-EU imports, with a ‘Fortress UK’ scenario looking at what might happen if the UK was trading under WTO Most Favoured Nation tariffs.


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For the evolution scenario, dairy, pig and potato incomes would see rises, but cereal prices would drop.
While there was a rise in wheat price and greater value of wheat output, it was offset by decreases in barley and oilseed rape prices.


For the unilateral liberalisation scenario, large falls in incomes were expected in all sectors except pigs due to the removal of Pillar One support. Labour costs were also increased with restrictions to migrant labour.


In the Fortress UK scenario, pig prices were again the big beneficiary, while protections for domestic producers helped boost dairy incomes, offsetting increased labour costs. However, incomes for cereals and lowland sheep and beef farms became negative.


In less favoured areas and lowland farms, the pressure was on sheep enterprises across all scenarios, potentially pushing moves into greater beef production.

 

Profit


But under all three scenarios, the top 25 per cent of farm businesses continued to make profits.


AHDB market intelligence director Phil Bicknell said: “These farms are capable of generating positive incomes when lower-performance farms are making losses. This suggests taking steps to improve productivity and performance would enable farmers to mitigate potentially negative impacts of Brexit.”

Impact

 

“The three modelled scenarios are intended to contain a number of possibilities from Brexit and should not be seen as predictions,” said NFU EU exit and international trade adviser Lucia Zitti.

 

“We welcome this piece of work as it provides further evidence with regards to the impacts of Brexit on the agriculture sector and the potentially devastating effect that some of our farming sectors could face depending on government policy decisions.”

Bombshell

NP MSP Maree Todd said: “This is a bombshell report that exposes just how bad a Tory Brexit could get for rural Scotland.
“Scotland’s food and drink industries are flourishing, with our agriculture an essential part of our economy – helping drive our tourism and hospitality industries as well as putting food on family tables.
“Theresa May’s reckless approach to negotiations risks enormous damage to our economy. It’s time that the Tories put the interests of the country ahead of their party squabbles – and committed to staying in the single market.”

 

Disastrous

 

Former Liberal Democrat Leader Tim Farron said it showed how ‘disastrous’ a no deal scenario could be.

 

"The Government’s inability to make progress on negotiations is leaving farmers in the lurch and creating huge uncertainty,” he said.

"Farmers are unable to plan for the future and make informed business decisions because they do not know if tariffs will be imposed, what the cost and availability of workers will be and what level of support will be available.”

 

He added farmers needed the Government to commit the money received from the EU would still be there post-Brexit.

"This should involve farmers being rewarded for providing public goods, rather than on the size of their farm, so the money is distributed more fairly."

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