Brexit on Land and Rural Business
No-one doubts Bexit will have a major impact on agriculture, but so far there has been little detail on what might happen.
The most obvious impact will be withdrawal from the common agricultural policy - one of the major criticisms of the EU. It’s estimated Britain contributes just under €8 billion per annum to the CAP budget, with UK farmers receiving around €3.8 billion from the CAP. On the face of it therefore withdrawing from the CAP should save the UK around €4 billion per annum, even if the UK Government follows through on its statement that it would continue funding for rural businesses to the end of the current CAP scheme.
However, things aren’t that simple. The much talked about “divorce bill” is not a one-off capital payment as it has been portrayed in the media. Put very simply the EU’s position is that the UK should meet its commitments to current/ongoing EU programmes, which would include the CAP, so there may be little or no saving initially.
The greater concern for farmers has to be what happens beyond the current CAP term, due to end in 2019 anyway. Studies predict that farm gate prices are expected to rise after withdrawing from the CAP, with some sectors fairing better than others, however the increase in price will not offset the loss of direct payments. Equally, the Government is likely to try and control any resultant inflationary pressure for the benefit of consumers, with various options available from a trade liberalisation scheme to continuing direct support, and a myriad of permutations in between. The exact impact of Brexit on farm incomes therefore depends on a number of variables, however to date the studies available all conclude that virtually all farmers will see a drop in farm income post Brexit.