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AGRICULTURE, IT’S CURRENT ECONOMIC CLIMATE AND THE B-WORD…


A TOXIC COMBINATION If you put the simple search ‘farming after Brexit’ into Google the first result that comes up is the government website for the Department for Environment, Food and Rural Affairs.


Click on this and you get guidance on ‘Prepare your farming business for a no-deal Brexit’. In theory as and when a withdrawal has been ratified by parliament deal, then all I would need to know is summarised for me. Then you see a contents split into 12 sections, and then you click on the second section and it provides you with two links, and then you click the first of these links and that takes you to 12 links and so it goes on. By this point you are lost in a bureaucratic minefield and you are still none the wiser on what is going to change and what isn’t. After all this line of links ends up on how to claim the Basic Payment Scheme (BPS), and that is the biggest of the EU’s rural grants for the farming industry. Great, apart from I started this search on farming after Brexit, which its whole purpose is to leave the EU, I somehow don’t think this is going to be very helpful to me.


If you are to look at the current statistics on UK farm income over the past 9 years split roughly by agricultural sector you would be shocked. Cereal farms, general cropping, and grazing livestock farms actually lose money by producing what they are in existence to produce. In fact, a large majority of their income is made up from BPS/SPS (EU subsidies) that we are set to no longer have access to following the split from the EU. If you dig into this further and look at the Farm Business Survey datasets for £’s output per £100 of input, you see historically that around 50% of farms don’t break even which you would expect to become a higher percentage following the previous statement.


It all appears pretty damning for the future of UK agriculture. It therefore comes as no surprise that AHDB has reported a dramatic decline in dairy farm producers over the past 10 years and sheep


flock numbers in the past 4 years despite the UK’s continually growing population. The old saying in the industry ‘no matter what people have got to eat’ somehow seems to be bypassing the UK or maybe it should have tagged on the end ‘but not from the UK’.


It is not all doom and gloom though, as seen in the previous table, the intensive livestock market is booming. Intensive farms by nature also do not rely on EU subsidies and are thus far less directly affected by the UK’s departure from the EU.


No matter what category of agriculture a farm falls under, those that prosper tend to have two very clear attributes. High performance of livestock or crop, and most importantly a strong control over their costs. The largest components of these costs across the whole sector are animal feed 23%, paid labour 11%, seed and fertilisers 10%. All of these are directly affected by the UK leaving the EU and what agreements/deals are made in the coming months. After all, 73% of all UK agricultural imports are from the EU and 61% of its agricultural exports are to the EU. These figures are based on a 3 times trade deficit.


To be able to excel in cost structure management,


you need to be able to plan for the future. So what does this mean for our farmers on the day we finally cut all ties from the EU? Although the UK will be able to negotiate new trade deals once it has left the EU this will take time. For example, the EU / Canada trade deal (CETA) took 7 years; and as for the TTIP between the EU and the United States which started in 2010, the EU declared the negotiations obsolete on the 15th April 2019. A whole 9 years of negotiations which have so far resulted in nothing.


16 | ADMISI - The Ghost In The Machine | November/December 2019


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