This article appeared in the latest issue of South-East Farmer:
Many farmers breathed a sigh of relief when a last minute
trade deal was agreed between the UK and the EU, avoiding the threat of tariffs
and quotas on agricultural exports. Of
course, this would have affected some sectors more than others, notably those
farming sheep. Such enterprises exist
within the south-east of England, but they are more characteristic of remote
hill farming areas in all the four nations of the United Kingdom.
I must admit to having a personal interest as my brother-in-law
and nephew are sheep farmers in a remote part of Wales. They have merged three farms in order to run
as lean and efficient an operation as possible. However, the whole enterprise is reliant on
selling sheep for meat and the price they receive is influenced by the 40 per
cent or so of total output that goes to mainland Europe. The price received for wool scarcely covers
the cost of shearing, if that, and rental income from properties and telephone
masts is very much secondary. The
suggestion made by one politician that sheep farmers could shift to beef
ignores the realities of production.
Farmers are generally enterprising and keen to keep input
costs under control. One farmer I know in
Yorkshire produces honey with a distinctive taste from the moors, but still
principally relies on his contract with a leading supermarket. The more general point here is that the
basic payment received by farmers under the Common Agricultural Policy is being
replaced by a smaller domestic payment that is being phased out more quickly
than some had anticipated, particularly for larger scale farms.
Other new forms of payment will be available, principally
the Environmental Land Management Scheme, although that is still being
developed and tested. Along with other payments,
it will fall well short of compensating farmers for the loss of the basic
payment which made the difference between profit and loss for many farm
enterprises. It will also involve form
filling to obtain, along with monitoring of outcomes, and is likely to be more
suitable for farmers in remoter areas.
This is not necessarily a bad thing from an overall policy point of
view, but it may prove challenging for, for example, larger scale arable
farmers in south-east England.
In areas like the south-east there are, of course,
opportunities for diversification that may not exist in remoter areas,
particularly those that are less suited to tourism. In this area as well, farmers have been very
innovative in the range of ideas they have put into practice. There can, however, come a point where one
is no longer running a farm business, but a farm that enhances other projects
such as wedding venues, restaurants, shops and petting zoos.
It is, of course, a personal business decision how far to go
down this route. A note of caution is
necessary for late adopters. Much of the
low hanging fruit has already been taken.
The capital costs can be considerable and the skills required can be
very different from decisions about what to plant, when to spray and when to
harvest. That said, many farmers manage
to both farm and run complementary businesses.
Agriculture was the dog that didn’t bark in the night time
in the very long legal text arrived at between the UK and the EU. Indeed, listening to the discussions during
the negotiations, one was left with the impression that fisheries were the
really vital sector despite the fact that it accounts for a smaller share of
the economy than agriculture. Fish did
enjoy considerable symbolic value in terms of ‘taking back control’.
There was an annex on trade in wine. This is not really my area of expertise,
apart from enjoying it and investing in one well-known business in the
South-East. As with most such
agreements, the devil is in detail, but I would have thought that at first
glance it was broadly acceptable to those growing grapes and producing wine in
England. [A subsequent article in the Financial Times refers to certification costs which could add £1.50 to a £12 bottle of imported wine. This, of course, could make domestically produced wine more price competitive, although factors other than price can play a big part in purchase decisions].
In simple terms what the annex says is that EU and the UK
should import and consume each other’s wine, although the flow is clearly from
the EU direction. The documentation
required is limited to a certificate which can be produced electronically. The self-certification is limited to eleven
relatively straightforward questions.
The agreement will be reviewed after three years, a shorter period than
for fisheries.
