The latest in the series of AHDB reports on the implications of Brexit for UK Agriculture examines a range of possible post-Brexit scenarios and attempts to quantify their impact on UK farming. The Board says such information has been lacking in the post-referendum debate so far, but is crucial to help farmer and grower levy payers prepare for Brexit.
Brexit scenarios: an impact assessment examines the effect of three post-Brexit scenarios on each or the AHDB’s sectors – Cereals & Oilseeds, Potatoes, Horticulture, Dairy, Pigs and Beef & Lamb. The three scenarios are: Evolution – where policy, the regulatory framework and trading relations remain as close to the status quo as possible once the UK is outside the EU Single Market, andwith current levels of direct support and labour availability; Unilateral Liberalisation with a liberal approach to trading and increased competition from imports outside the EU, plus reduced support and access to migrant labour; and Fortress UK, with trade only taking place under WTO Most Favoured Nation (MFN) tariffs, again with reduced support and migrant labour.
The AHDB says its conclusions are similar to those of the FAPRI-UK Project report published by the Agri-Food and Biosciences Institute in August which forecast better prices for commodities where the UK is a net importer, but reduced values where it is a net exporter. But the AHDB analysis also covers changes to farm support, labour costs and regulation in addition to trading.
The current average Farm Business Income (FBI) for all farms is £38,405. The Evolution scenario would see a small rise to £41,197 with slight decreases for cereals, general cropping and sheep and beef in both LFA and lowland systems being mitigated by increases for potatoes, horticulture, dairy and pigs.
Unilateral Liberalisation points to significant fall in average FBI to £15,401, affecting all sectors except potatoes, which drops marginally and pigs which increases. The Fortress UK scenario sees FBI fall by almost half to £20,162. While cereal, sheep and beef farm incomes drop to zero, there are slight increases for potatoes and dairy, and a threefold increase in pig unit incomes.
The AHDB emphasises that the top 25% of farm businesses remained profitable under all three scenarios regardless of sector. It says all farm business should learn from the top-performing quartile to benchmark their own performance to adapt to the new policy environment.
“This analysis underlines the fact that performance matters,” stresses AHDB market intelligence director Phil Bicknell. “Individual farms can’t determine policy, but they can recognise that performance is key to preparing for the challenges ahead. Buzzwords like competitiveness, resilience and productivity are not new to agriculture but Brexit brings renewed focus on farm performance. Do nothing and businesses that are currently profitable run the risk of heading into the red. There is plenty that individual businesses can do now to get fit for the future.”
AHDB says it can use the three scenarios to model the likely effect of policy changes as more detail emerges in the coming months and years. It will also present its findings at a series of 18 joint roadshows with the NFU across the country in the next month.
This report, along with all AHDB’s analyses on the implications of Brexit, is available via the www.ahdb.org.uk/brexit website.