The average profitability of UK farms could decrease by about half after Brexit, new research suggests.
The report, for the Agriculture and Horticulture Development Board (AHDB), said that the “worst-case scenario” would cut average farm profits by Â£ 38,000 a year to just Â£ 15,000.
The analysis attempts to model the effects of cheaper imported food, reduced subsidies and more expensive work.
A government spokesman said the report was based on highly unlikely scenarios.
The UNITED kingdom is due to leave the European Union (EU) in the month of March 2019.
Some formal negotiations with the EU started in the month of June, but so far, it is not entirely clear how the trade between the UNITED kingdom and the EU change if the Brexit calendar is satisfied.
In fact, the specific negotiations for a future trade agreement, have not yet started.
But it will be particularly vital to the agriculture and horticulture industries because of the contributions received pursuant to the EU’s long-term and highly controversial Common Agricultural Policy (CAP), which was once famous for the creation of so-called lakes and mountains of over-produced wine and butter.
The AHDB research has analyzed the possible outcomes of a Brexit:
“Business-as-usual”, with trade agreements being much the same, and the subsidies to continue. The average annual income could rise to â‚¬ 41,000
To reduce subsidies and tariff-free access to the UNITED kingdom for foreign producers. The average annual income of Â£ 15,000
A “cliff” Brexit with the trade on the basis of the World Trade Organization (WTO) rules and tariffs to the side of a big cut of the grants. The average annual income of Â£ 20,000.
“Under the three scenarios outlined in the report, changes in the UNITED kingdom trade relations will have an impact farmers’ bottom line when the UK leaves the single market, if not a free trade agreement negotiated with the EU,” said the Council.
“The policy decisions also leave the areas in which direct support has been a key part of the income, such as beef, lamb and cereals, which are particularly vulnerable”.’Dramatic’ immediate impact’
Currently, the CAP offers UK farmers Â£3.1 billion a year which, on the face of it, disappear after Brexit, even if the UK government has guaranteed to keep the “in general” agricultural subsidies, or payments at the same level until 2022.
AHDB, which is a statutory body, financed by a tax on the agricultural sector, he said Brexit would inevitably have a dramatic immediate impact” on farm sectors that rely more on subsidies for their profits.
The effects of Brexit will not be uniform, though, and the location will be complex, depending on the sector and the scenario that is modeled.
Dairy and pig farmers may benefit from rising prices, the report says.
On the other hand, significant exporters such as grain producers and sheep farmers would suffer lower incomes due to the increase of the cost of exporting to the EU.
And where businesses rely on migrant workers, the higher the cost of the work, because of the strict immigration restrictions to push up farmers ‘ costs dramatically, especially in horticulture.
A spokesman for the AHDB said there were thought to be between 50,000 and 80,000 people from the EU working in the UK, agriculture and horticulture, both permanent and seasonal jobs.
Some sectors, such as for example abattoirs and meat processing, rely almost entirely on foreign labour, he said, with some potato growers already experiencing labour shortages this year and in the summer, fruit growers expecting a labour shortage next year.
A spokesman for the Department for Environment, food and Rural Affairs said: “This report is based on assumptions, and highly unlikely scenarios that do not reflect the negotiating position of the government.
“Outside the EU and free from the bureaucracy of the Common Agricultural Policy, our farmers will be able to focus on the growth, sale and export of the most fantastic produce.
“We are committed to getting the best deal that allows us to continue to have tariff-free, friction-free access of goods and services in the European market, and we will strike new commercial offers, all over the world to help farmers to take advantage of the growing appetite for Great British cuisine.”