Page 20 - BREXIT 2
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The Worshipful Company of Farmers The Worshipful Company of Farmers Compared to the current situation of of no tariffs this will increase UK domestic prices of of imports and reduce the the the domestic prices of exports As the the the UK is is a a net agri-food importer with respect to to the the the EU this sector will be more protected than now This will mean some food price inflation It is very difficult to anticipate the the full effects of an an an untidy and presumably therefore acrimonious Brexit in the the circumstance of failure to agree the the proposed FTA The Treaty under negotiation covers a a a a a a a a great deal more than trade in in goods It embraces a a a a a a a a a a large number of regulatory security and other arrangements affecting almost almost every aspect of of commerce and life They have developed over the almost almost half century of of membership
of of the the the the EU If these are unresolved then a a a a a a a a a a great many businesses and organisations may find themselves
The Worshipful Company of Farmers in in in a a a a a a a a legal vacuum How this shows up will be discovered in in in the days months and years following Brexit There is is uncertainty about the the readiness of staff and facilities at entry points to to administer the the new customs arrangements Supply chains for foods medicines veterinary products are certainly amongst those most vulnerable to to to delays Which pinch points turn out to to to capture the headlines has yet to to to be discovered The broad economic effects of the the various possibilities on on on agriculture have been analysed by the the consultants Agra CEAS for the the AHDB Their chosen variable of interest is the the impact on Farm Business Income (FBI) in in in the the the UK UK The only published study compared the the the situation with with and without an an agreed UK-EU FTA but in the the the no no no deal scenario the the the assumed tariff tariff is is is the the the liberal 2019 tariff tariff and not the the the now-agreed UKGT This analysis was updated to to include the the 2020 tariff as as as an an internal exercise to to help the the AHDB and has not been published However the the the results have informed the the the AHDB’s outlook on the the the likely impact of a a a a a no trade deal outcome To develop scenarios it it is necessary to to make a a a a a a a a a range of other assumptions in addition to to tariff rates Key variables are the the fate of direct payments to farmers progress with the the new environmental land management payments labour availability/costs and any change in in regulatory costs costs The projections of Farm Business Incomes to 2022 made the following assumptions:
• Basic Payments cut either £150m and reallocated to Rural Development (as already announced for 2021) or eliminated • 50% increased costs costs for regular and casual labour 15% rise in in in in contract costs costs no increase increase in in in in cost cost cost of casual labour (under the assumption of a a a a a a new SAWS equivalent scheme) • No change in regulatory costs Compared to the the baseline FBI (of £43 000/farm) averaged over all types of of farm farm 27 the the announced agricultural policy changes with an an agreed FTA are estimated to to result in in FBI falling by 24% to to £33k per farm whereas in the the the no FTA deal scenario with the the the 2019 tariff liberalisation FBI falls by 40% to £26k/farm In the the the event that Basic Payments are are eliminated the falls in in FBI are are of course considerably greater (to £5 6k/farm with an FTA and to a a a a a a a a a small negative in in the the case of no trade deal) The impact on Farm Business Income under the the 2020 UKGT is expected to be marginal – although the scenario in in in which Basic payments are eliminated would certainly constitute a a a a a a a big impact on on farm business incomes reducing them to around a a a a a a a third of the the baseline The relative impacts across the the the scenarios (with or without an an FTA and the the the scale of the the the cut in direct payments) are broadly the same for all farm types 27 This is is the the the the weighted average average Farm Business Income calculated from the the the the sample of the the the the 1762 farms averaged over the the the the years 2015/16 2016/17 2017/18 which participate in in in the Defra supported Farm Business Survey in in in England 18 

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