What does Brexit mean for UK farming?

23 January, 2018
by: Cripps Pemberton Greenish

Contributing almost £30 billion a year to the economy, food andfarming drink is the UK’s largest manufacturing sector.  Farming, more specifically, is crucial to the food industry.  It contributes approximately £9 billion to the UK economy, provides almost 4 million jobs, supplies over 60% of the food that is consumed in the UK, offers important cultural and social services, and plays a vital role in managing the environment such as maintaining landscapes and providing wildlife habitats.

As such, farming regulations and policies must consider the role that farming plays in the wider food industry and must have regard for how changes in those policies can impact the wider economy.  Currently, the UK remains a part of the EU Common Agricultural Policy (CAP), part of which provides subsidies which provide significant support to gross farm income.  Given the importance of farming to the UK’s food industry, abolishing the EU CAP system following Britain’s departure from the EU without offering an effective and sustainable new regime could, some experts report, prove a real threat to food security in the UK.  

The situation post Brexit

The Environmental Secretary, Michael Gove, recently announced details surrounding the government’s plans for farming subsidies post Brexit and the withdrawal of the UK from the EU CAP.  Gove is critical of the current system and some existing UK tax breaks which he views as flawed.  Both, it is asserted, inflate the value of agricultural land which creates obstacles for farming enterprises and compromises profitability and competitiveness in world terms.  In his announcement, he indicated a shift towards what he believes will be a more efficient system that puts public money towards “public goods”.  Reassuringly for farmers who currently rely on the subsidies, Gove intends that farmers will continue to receive the payments under the current regime until 2022, possibly until 2024, as part of a transitional phase into the new regime, subject to capping for the largest eligible farms.  This period, Gove hopes, will provide some clarity and encouragement for farmers who may need to adapt their business models in order to ensure they benefit from the incoming regime, and provide a softer landing for subsidy-free farming enterprises in the years ahead.Brexit

That regime, Gove indicates, will instead ensure that subsidy payments depend on farmers offering “public goods” and will end the “unjust and inefficient” subsidies made under the current EU system.  Payments will instead attempt to reward business efficiency and the money will only be granted in order to pay for goods in the public interest such as for the protection of the countryside, the enhancement of the natural environment and for increasing biodiversity. 

The impact of the incoming policies

Any new farm subsidy regime must ensure that UK farmers are not undermined and their interests protected.  Of course, Gove has confidence in the government’s plans and the impact they will have on UK farmers.  Vocal support and lobbying from sector stakeholders (including CLA, NFU and many others) will seek to ensure a fair and balanced system for taxpayers and farmers alike – but the wind direction is certainly in the medium to long term towards breaking away from subsidies altogether, and ensuring free market forces operate in UK agriculture.

The only certainty regarding the impact of the new regime on farming and the food industry is that it is simply too soon to tell.