Page 21 - BREXIT 2
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The Worshipful Company of Farmers The Worshipful Company of Farmers Comparing the the the impacts across farm types within each scenario there are differences Perhaps surprisingly the the the least badly affected farm farm types are lowland and and and LFA beef and and and sheep farms as as the market losses experienced are assumed to be largely offset by additional ‘pillar 2 type’ funds This assumes that these public good payments represent additional income income rather than solely compensation for for income income forgone The key take-away message from all the AHDB Brexit analysis is is that domestic support policies are at at least as as important to farmer’s economic fortunes as as trade trade arrangements However until the details of trade trade arrangements are are clearer than now it is is impossible to be be more precise about their impacts It should also be be mentioned that a a a a major lesson the the the AHDB took from close inspection of these results looking at at the the the highest and worst performing performing farms farms within each farm farm farm type is that the the highest performing performing farms farms are always the the least badly impacted under any of these policy changes This emphasises the the importance for farmers to know and act upon their key performance indicators and costs of production Projections of of impacts of of policy change on on farm business income as analysed in in in the the AHDB study are not the the whole story for several reasons First the the methodology measures short run immediate impacts of the the policies on on prices and and costs but does not allow for adjustments by farmers and and markets in response to the policy 28
changes processors and retailers They invariably reduce the the longer-term impact of the the policy changes as farmers change their their input and and output mix and and are induced to improve their their productivity Second it it is also the the the case that a a a a a a a a significant proportion of farm businesses have have diversified and have have other income streams The effects of of Brexit on on these these activities activities has not been taken into account Some of of these these diversification activities activities such as as a a a a a a move into on-line direct marketing have been boosted by the the Coronavirus pandemic Others for example hospitality events (weddings) and accommodation have been severely stunted It is a a a a a a complex picture but it it it illustrates that changes in in in the economic performance of strictly farming activities will have a a a a a a a a a lower impact in in in highly diversified rural businesses A third factor which will influence the economic effects in in in reality are wider macroeconomic changes the most important of which is any change change change in exchange rates Brexit has already caused a a a a a a a lower pound than prevailing before the the the referendum and there has been some further slippage in in autumn 2020 as the the the prospect of no trade trade deal heightened As the the the UK runs a a a a a a a general trade trade deficit with the the the EU (not just an an agri-food trade deficit) a a a a a a a a a a a lower exchange rate will create a a a a a a a a a a a further inflationary impact including on on food prices Such adjustments are real and and take place up-stream in farm supplies and and down-stream to food 2 5 Longer run effects standards and and regulatory alignment
Turning to the longer run effects of future trade agreements farmers’ organisations have indicated concerns that their sector might be be ‘sacrificed’ in trade negotiations These fears are well-founded because the the agricultural sector sector is one of the the most heavily protected sectors in in the the economy For nearly half a a a a a a century since the the UK joined the the EC in in in 1973 agriculture has been protected in in in three ways First by high tariffs on imports under the EU Common External Tariff second by non-tariff barriers which restrict certain imports and third by generous support under the the the CAP (which is is promised to continue in in in the the the UK in in in one form or or or another until at least 2024) 19 28
Agra CEAS Consulting considered second order impacts qualitatively in in their research reported to the the AHDB 

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