AIC chairman Nick Major opened the 2018 AIC conference in Peterborough earlier this month by stressing the need for the agrifood industry – the largest sector in the UK economy – to take a view of the world outside the EU.

 Opening the event, AIC chief executive David Caffall said a lot of the Association’s resource was being used on Brexit, but the everyday issues still had to be dealt with, including an ongoing raft of EU legislative changes.

Brexit will affect every AIC member, he said, and a “wait and see” approach would be too late – if the government is silent in the future shape of agriculture in the UK, the industry can’t be. Nor is it a one way negotiation – both the UK and the EU- 27 need to achieve a good deal.

The AIC is playing its part through its EU trade association partners in working to facilitate a two way dialogue and establishing clear Brexit objectives for economic success and long term sustainability. It is also active within the wider Agri-Brexit Coalition in accessing decision makers; emphasising the role of new technology in raising farm productivity and showing how the trade conduit can help advise on its best implementation at producer level.

Guy Horsington, deputy director at Defra, advised that agricultural productivity is growing by 0.9% in the UK, more slowly than in many EU member states. So it is not just the CAP that is holding the industry back.

There is a need for greater investment in agritech – traditional agricultural support mechanisms do not encourage this sufficiently. He called for more input from the whole agrifood industry, including AIC members.

The government will publish an Agriculture White Paper next year, followed by an Agriculture Bill for Parliamentary scrutiny. The new policy direction is for public money to be spent on public goods, with greater use of risk management mechanisms to mitigate the volatility caused by weather and biological factors on crop and livestock yields. In the meantime, the government has committed to current levels of farm support until 2022 – which could even be better than the CAP level after the current EU budget framework ends in 2020.

While there would be an overall UK policy to protect the national market and prevent barriers to trade, much of the new agricultural policy will be devolved to the regions. Defra does realise how critical trade and labour availability are to the sector, Mr Horsington stated.  The government’s trade bill details mechanisms to trade with rest of the world to ensure high quality, affordable food; good environmental outcomes and secure a strong agricultural workforce. Defra has also commissioned advice from the government Migration Advisory Committee.

In short, Defra’s role is to help farmers and landowners adapt to the new environment, Mr Horsington concluded.

The total value of trade between the EU and UK and vice versa each year is around €600 billion, of which food and drink accounts for €55bn –  €45bn from the EU to the UK and €10bn from the UK  to the EU, advised FEFAC director-general Alexander Dӧring.  He estimated that there is around €1.4bn in trade for grains and feed materials, including co-products like soyameal and corn gluten. UK feed wheat exports to the EU have fallen since the domestic bioethanol industry started.

Cheese, beef and other meats and animal derived food products from Ireland, France, Germany and the Netherlands are the major commodities traded between the EU and UK. Compound feed (including petfood) is ranks sixth in the list. The feed figures include compound and premix products, but not the export of fish feeds from Scotland to Ireland. Nor are high value feed additives, milk replacers and starter diets included – these could potentially be subject to high tariffs under a WTO rules scenario

Brussels is less concerned about the long-term than the short-term aspects of Brexit such as border arrangements and actions, claimed Mr Dӧring. Pascal Lamy has stated that the Brexiteers’ vision of a frictionless border is a fantasy. Any border will increase trading complexity. Transhipment through Rotterdam and other ports is a particularly grey area.

While there is no blueprint for the Brexit negotiations –no member state has left the EU before – there is the goodwill to reach a divorce settlement. The EU ‘redlines’ are for no compromise on the key freedoms. He believed that there is still room for manoeuvre, as it is in no-one’s interests for the UK to ‘crash out’ of the EU – although the domestic pig and dairy sectors might benefit if it does.

The timetable is very tight, if the UK is to leave the EU in April 2019 with a full trade deal or a transitional one.  Michel Barnier has said that a free trade agreement could be reached in 3 years from Dec 2017.

But the ‘hair-raising’ prospect of a default WTO scenario on day one of Brexit is concentrating minds, Mr Dӧring said. He is confident there will be a deal, but it will take a lot of time and manpower to achieve. There will need to be agreement over customs procedures for perishable goods, while the EU should formally acknowledge the UK Exit Bill as allowing ‘equivalence’ if there is to be an easy break.

Director-general of the Food & Drink Federation Ian Wright despaired at the “desperate fortunes” of the government – rather than discussing and planning the shape of the British economy post-Brexit and charting progress for the farm and food chain over the next 20 years, it is fighting for its day-to-day survival.

It can’t plan without a clear idea of the level of state support for UK agriculture, nor can it negotiate a WTO deal without visibility on this. Therefore Mr Wright couldn’t see any trade deals being in place before 2022.

Mr Wright said the FDF Brexit focus is on three areas – labour availability; the legislative framework and customs and tariffs.

At present, around a third of the UK food manufacturing workforce is European, numbering around 120,000 people. Already, it is harder to recruit EU workers since the sterling devaluation had eroded wages while many also feel less welcome post-Referendum.  At the same time, there is a looming problem as a further third of the workforce is over 55 and coming up for retirement in the next decade – including many of the most highly qualified engineers.

So there is an upcoming labour shortage, which would have been filled by migrant workers. Therefore clarity is urgently needed over the status of existing EU workers, many of whom are very skilled. Mr Wright believes the government is close to letting settled workers stay – although there will be a huge administrative cost in registering three million citizens – but this does not address the problem of new recruits.

On the legislative framework, Mr Wright advised that the regulation of food and drink is a devolved competence. Therefore, after Brexit, competence will devolve from the EU to the four UK regions, with the potential to increase complexity and cost. There has been no progress as yet on this issue, which can’t be left as an afterthought.

Turning to customs arrangements, there was still no clear picture on the future rules. The new UK CDX IT system is due to come on stream in January 2019 – even assuming it is on time, it will need to bed in. With just two months to Brexit day, the changeover is unlikely to be seamless – what are the contingency plans? Nor are there any post Brexit customs arrangements in EU ports yet. But an additional two minutes customs check per vehicle is predicted to cause a 17 mile port tailback within six hours.

Mr Wright said a post-Brexit focus on trade outside Europe would drive more UK food and drink self-sufficiency, but some of this would be needed by the rising domestic population. Nor was the UK raising its game in seeking new markets – he deplored the UK’s “shameful” absence at a recent food trade exhibition in India, which was attended by French, Danish and even Serbian competitors.

He said the government had the opportunity to set a strategy for food and drink from farm to fork through a national food policy for the first time since 1946. This must unblock barriers and target funds at innovation. Farms will have to change as they respond to better signals from the upstream market.

The British have lost their relationship with food, Mr Wright concluded. “No-one remembers rationing and most of the population has become complacent and lost its respect for food. Yet food is fundamental to national security- if you can’t feed a country, you don’t have a country. We need much more detail on future shape of UK farming and food for the middle 21st Century.”

Michael Gove appears to be listening to the sector’s concerns, but so far he has done very little, he noted. Everyone is waiting for the December EU Council – if there is no progress then, business groups will start to become very vocal, Mr Wright predicted – it is getting very late in the day to avoid a “dogs Brexit”.

NFU president Meurig Raymond said Brexit offered the opportunity for “vibrant British farms at the heart of a healthy industry”. Farming is the bedrock of the UK food and drink industry, with 60% of its food meeting high standards and environmentally compliant.

With the UK population set to rise from 66.5 million now to 70 million by 2029, there is a sound business case to expand food output, reverse the decline in self-sufficiency and meet consumer demand for more British food.

The new UK Farm Bill is a huge opportunity to achieve this, but the government must match rhetoric with action through legislation, innovation and rising productivity. The NFU has been impressed with Michael Gove’s enthusiasm, energy and commitment to British farming – but the industry needs to see some action as Brexit rapidly approaches. Mr Raymond set out the four key policy areas – future regulation that is fit for purpose; access to labour, trade policy and a new UK farm policy.

The NFU is working with government and industry to explore post-CAP risk management tools such as commodity insurance, a farm management deposit scheme and a dairy futures market. The UK is a world leader in financial services – allied to its supply trade expertise it should be possible to come up with a mechanism that is both cost effective and efficient and gives farm businesses confidence in the future.

The Union is calling for an ambitious free trade agreement with the EU without tariffs and costly customs checks. It concedes this will be difficult to conclude by March 2019, so a workable transition period will be required, one that allows a fair start for global trade deal negotiations with the WTO. There should also be trade talks with third countries to protect UK farmers from lower standard goods to those produced domestically.

Mr Raymond said the UK should “inherit” a fair proportion of the current EU Tariff Reduced Quota concessions for third world trade once it leaves the EU.

UK farmers have many issues with EU regulation, especially when it comes to crop protection products. Properly designed UK rules should aim to encourage good quality food production, while not diverging from EU trade requirements – much can be achieved with voluntary action, rather than legislation, he advised.

In conclusion, Mr Raymond said the NFU sought a predictable, realistic Brexit on a business-friendly timetable that works for farming and wider society, but he was disappointed at the lack of progress from both sides since Article 50 was triggered. Businesses across UK and Europe will suffer if an agreement is not reached – and time is running out.

David Camp, chief executive of the Association of Labour Providers, warned that labour availability could rival the weather as the biggest constraint on agricultural businesses.

He noted a recent EFRA Committee report on labour that warned of an impending labour crisis, and criticised the reliability of the government’s statistics in this area. While there is low unemployment in the UK, this is also the case in traditional UK sources such as Poland and Romania – better domestic wages plus the UK devaluation means the UK is a less attractive destination, quite apart from the Brexit bad feeling. 

“2018 will be a complete train wreck of a season. Labour supply and quality will continue to fall, as fewer EU workers choose the UK,” Mr Camp wand. “Already, 45% of members expect to be short for Christmas this year.

But, the government is determined to control EU migration. IT is demanding sector by sector evidence for the UK’s future labour needs. While Mr Camp expects there will have to be a seasonal agricultural workers scheme (SAWS), there is great political pressure to limit unskilled immigration.

Industry bodies are collaborating to lobby government ion the issue, but a single national labour supply task force would drive message home better. Mr Camp called for a single, trusted source of labour statistics to prevent manipulations; to start the groundwork for a SAWS now, so it can be quickly set up when needed and for Defra to get behind the industry and ensure the problem does not become a crisis.

Dr Andy Cureton, head of business and interaction at the British Biological and Biotechnology Research Council, said the UK R&D sector “punches above its weight”. With just 1% of the global population, the UK attracts 3% of the world’s R&D funding and publishes 8% of its scientific papers.

Public funders spent £320m on UK agricultural science in 2012/13, with the AgriTech strategy and Catalyst projects increasing that level.  But the EU Horizon 2020 programme had an €80 billion budget for the 2013-20 periods. There is a great fear that Brexit will cut off access to EU research funds.

The government’s future partnerships paper sets the objective of reaching future research arrangements with the EU, and to strengthen what we already have. But this has yet to be agreed. In the meantime, UK researchers are encouraged to bid for EU funds until Brexit actually occurs.

As well as funding, researcher mobility is also a crucial issue – the Royal Society says that 29% of the UK’s academic workforce and 50% of its PhD students are from overseas. Mobility is seen as crucial to science career development, and restrictions could deter scientists from looking for work in the UK.

The UK has a world leading research base, and is well placed to respond to Brexit, Dr Cureton concluded. But EU funding accounts for a significant part or the current spend – the government must address future EU collaborations, while public: private research will help improve agricultural productivity.

Allie Renison, head of Europe and trade policy at the Institute of Directors, explored possible post-Brexit trade agreements with the EU.  The lack of detail meant much was still speculation, she observed – it is not yet clear whether the UK will be leaving the customs union, or what the status of Northern Ireland will be.

But the Brexit process is forcing government and industry to think hard about the future shape, albeit within a concentrated timescale. There will be some loss of EU market access, but how much? And will the UK choose to continue under some EU regulatory regimes rather than set up its own?

There could be advantages – for instance the EU political circus around glyphosate, and the refusal to use a bovine TB vaccine since a treated and naturally infected animal can’t be differentiated. But would the UK take a different approach, especially if still needing to export treated products to the EU?

“The UK is more gung-ho about a settlement than other EU countries,” she noted. If there is to be a transition period, would the UK remain in the CAP?  Food processors are already concerned about exports to EU – would it be easier for them to move processing to the EU?

Ms Renison concluded that a “no change transition” is the best option until business is quite clear what the new trade arrangements are.