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Is the price farmers will pay for Brexit really worth it?

PA - Credit: Empics Entertainment

It is one of the great Brexit paradoxes: farmers voted in high numbers to leave the EU, yet no other group benefits as much from European largesse

The referendum unmasked great divides in modern Britain, young and old, north and south, Scottish and English, but none felt as stark as urban versus rural. We all know the story by now: city dwellers, particularly in wealthier areas, voted Remain while the surrounding countryside was a sea of Leavers.

As ever, things are never quite so simple. An analysis by the Country Land and Business Association (CLA) found that of 10,782,320 rural English voters, 55% voted Leave, whereas of 483,638 rural Welsh voters, just 51% went the same way. The lesson then must be that the correlation between rural living and voting leave is a complex one.

But what of that central figure in rural life, though: the farmer? Polls conducted by Farmers’ Weekly suggest that farmers tended to be pro-Brexit, but dig a little deeper and the picture gets muddier.

Unsurpisingly, food production sectors that receive less support from the EU’s common agricultural policy (CAP) were the most likely to vote for Brexit. Against this, though, farmers polled in Scotland and Northern Ireland voted to leave by more that 50% despite the highly subsidised nature of the industry in these countries, not to mention the Remain vote among their general populations. It should also be noted that the Farmers’ Weekly polls were of self-selected respondents, which could have a dramatic impact on the results.

The National Farmers’ Union (NFU), the UK’s main agriculture lobby, supported Remain – though it did not campaign on the issue. In April last year it issued a qualified statement saying its governing council ‘on the balance of existing evidence available to us at present, the interests of farmers are best served by our continuing membership of the European Union’.

First among reasons for this stance was that farming in Europe is heavily subsidised, with direct farm payments under the CAP supporting the majority of UK farms.

Farmers received £2.1 billion in direct payments under CAP in 2015, as well as rural development aid, accounting for 55% of farm income per acre. Some calculations are even more stark: writing in The Times last August, science correspondent Oliver Moody noted that ‘the average farm made £2,100 from agriculture and £28,300 from subsidies’, though this figure included payments other than the CAP.

But that was then and this is now. Today, the NFU is lobbying the government for the best possible deal for agriculture – and that means fighting to keep what they stand to lose. An NFU spokesman told The New European it wanted to see continuity in support for agriculture, with the development of a domestic equivalent, after the CAP is taken off the table: ‘The government has stated that it wants to deliver a smooth exit from the EU and that it wants to ‘avoid a disruptive cliff-edge’, acknowledging the potential need for phasing in any new arrangements. We believe it is crucial that transitional arrangements are agreed at an early stage to ensure continuity and certainty for farm businesses when we leave the EU. We envisage moving towards a new domestic agricultural policy over a period of years.’

In the NFU’s sights is one-time Tory leadership candidate and prominent Brexiteer Andrea Leadsom. In her role as secretary of state for the environment, food and rural affairs, she is under pressure to deliver for the industry. She has promised the government will continue same level of financial support currently enjoyed by farms – until 2020. After that, she says, a domestic successor to CAP will be created which, so she says, will work for British farmers, rather than the entire EU. How this can be achieved is yet to be explained.
But Leadsom has already promised a cut in regulations, which she hopes will boost the agriculture sector. In a speech in January – which could have been regurgitated from the referendum campaign trail – she said: ‘By cutting the red tape that comes out of Brussels we will free our farmers to grow more, sell more and export more great British food.’

Critics were swift to point out that such ‘red tape’ was carefully designed to create environmentally-sustainable farming and a countryside that benefits all. For instance, one specific plan announced by Leadsom – an end to the ‘three-crop rule’, a measure designed to promote biodiversity on larger farms – was described as ‘environmental irresponsibility’. British farmers have also noted that, in fact, Britain’s animal welfare standards are voluntarily higher than the EU average, so just whose red tape will be getting snipped is not entirely clear.

Even more embarrassing for Leadsom, who was speaking at the Oxford Farming Conference, was that when the audience was asked to put up their hands if they felt her department was ready for Brexit, not a single arm was raised.

And with such low confidence in the department responsible, there is evidence of wider fears about where the government’s Brexit strategy might lead for the sector, even among those who voted Leave.

Yorkshire farmer Peter Snowdon shares this dim view of the current administration: ‘I don’t think agriculture is high on their agenda, so I think they will sacrifice agriculture for a trade deal.’

An ardent Leaver, Snowdon voted for Brexit, but was surprised to find he found himself hesitating in the booth. The European ideal was, he says, positive, but he was not impressed with how the EU had turned out. He also sees farmers voting against their immediate economic interests as ‘a triumph of principle over economics’.

His attitude is, in many ways, typical of what might be described as a farmer mentality: fierce independence and resistance to interference. He owns his own land and doesn’t like being told what he can do with it by anyone – and, in recent decades, that has meant the EU.

Having got rid of the old boss, of course, he and other farmers will doubtless find frustrations with their new boss – the UK government. The sector’s scapegoat may be changing, but that does not necessarily mean an end to their grievances. In fact, it may well mean they multiply.

Snowdon is not blind to the problems that may lie ahead. ‘Short term, I think we [farmers] are going to suffer, but in the long term it’ll be for the good,’ he said. With farming there is a stewardship issue, and my father always said ‘the one thing that they can’t take from us is our land.”

The transition, when it comes, will be about more than just subsides. One major area getting under the skin of the British agri-food industry is imports – particularly from the United States of America.

Current EU food standards legislation effectively prohibits significant amounts of US produce due to the use of additives such as ractopamine and recombinant bovine growth hormone – both banned in Europe over health concerns – as well as unappetising production processes, including chlorine-washed and arsenic-laced chicken.

Fears were raised in January when Theresa May met with US president Donald Trump, telegraphing the desire for a US-UK free trade deal. And food came to the fore when the American Farm Bureau Federation’s Bob Young told Radio Four’s Today programme that any deal would see freer access to the UK market become a ‘top priority’. Young also said hormone-fed beef and chlorinated chicken were safe.

This, combined with Leadsom’s proposed bonfire of regulations, has set both food producers and consumers chattering. As shoppers start wondering about just what they will be eating two years hence, farmers are growing increasingly alarmed that their sector could be sacrificed in trade arrangements, to protect more lucrative – and noisier – sectors. The prospect of open competition with the massive US agri-industry is one that fills many farmers with rising dread.

In terms of what Brexit will mean for the bottom line – food prices – there are signs of alarm. Not only has the pound’s value declined relative to the euro, but there are other factors that may see prices rise at the tills. Harry Smit and John David Roeg, analysts for Dutch-based Rabobank, say that the amount of variables involved make predictions difficult, but that leaving the single market ‘is likely to increase the costs of sourcing food products’ and the cost of technology used in food productions. ‘Let’s hope for Britons they won’t head towards Norwegian or Swiss levels,’ they wrote in a report.

If prices do shoot upward, the feared imports may be the only option for retailers seeking to avoid collapsing sales, and Brexiteer Tory MP John Redwood has already suggested that ‘it would be wise to cut tariffs on various foodstuffs we could not produce economically’.

Incidentally, the currency fluctuations have had one short-term benefit, if rather selectively: CAP payments can be denominated in either euros or pounds, so even before Brexit, exchange rates mattered. In 2015, those who chose to be paid in euros were sitting pretty while those who selected pounds are faced with a six percent fall compared to 2014.

Amid all the uncertainty and apprehension, Brexiteers are still looking for silver linings. Robert Oluds, director of the pro-Brexit Bruges Group think tank concedes that food imports are a potential issue for certain subsections of UK agri-food. However, he says, British farming can survive after Brexit – and help consumers too.

‘The industry needs to become more competitive, but no doubt it will do as the CAP has made the industry less so. Food prices within the European Union are 80% higher than the world market so there’s clearly something wrong.

‘In the US large businesses can produce eggs more cheaply. It doesn’t mean that British egg production can’t become more productive without the EU distorting the market,’ he said.

But not everyone is so sure. Tim Lang, professor of food policy at City University of London and a member of the Food Research Collaboration group said the UK market would soon be wide open for low-grade mass imports.

‘Britain, basically, is a tiny little island, and it doesn’t feed itself. From producing 82% of our food in 1981 and 1982, we’re down to, optimistically, 61% now, and the low fifties in other statistics. In that context, of making yourself available to imports from the US, you’re opening yourself up to cheaper, mass scale meat production from there,’ he said.

Similarly, Wyn Grant, visiting professor of political science at the University of Warwick, who has been researching issues around food production, says that imports are likely to be a major issue post-Brexit, with farming being sacrificed in the name of a favourable UK-US trade deal.

‘I do think it’s a real risk,’ he said.

‘The UK wants a trade agreement with the US, and in order to get what it wants it will have to make sacrifices to get that.’

Grant says that there were three reasons that drove a Leave vote among farmers: ‘Some are very obsessed with the EU and interested in questions of sovereignty; there were also some smaller livestock farmers who thought the burden of regulation was too great. Then there were some large arable farmers who felt they wanted looser regulation of pesticides,’ he said.

They may get some of what they seek, then. But at what cost? In the end, says Grant, a premium must be paid for leaving the EU, whether in terms of competition from the US or cuts to subsidies. ‘We don’t know yet what the domestic policy will be, but I’m sure it will be less favourable. They’re certainly going to lose something.’

Jason Walsh is a foreign correspondent based in Paris.

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