Brexit – a year on from Article 50

A lot has happened over the past twelve months since the Prime Minister triggered Article 50, but are we any further forward in reality?

Which groups are acting?

For a start, the Department for Education, Food & Rural Affairs (DEFRA) has taken on an extra 1,200 staff to work on Brexit, reversing years of declining staff numbers.

The Tenancy Reform Industry Group also reconvened in 2017 at the request of the Secretary of State, tasked with suggesting improvements that would help increase productivity on tenanted land for when the UK leaves the EU. Though we will have to wait a little while before we find out whether there is the appetite for significant tenancy changes, given the other legislative demands upon the government.

In February 2018, DEFRA launched a consultation on the future for food and farming and the environment in a ‘Green Brexit’. Within this so-called Command paper, the concepts of ‘natural capital’ and ‘public money for public goods’ appear to be the guiding principles behind English payments to farmers and landowners once direct support is phased out. However, many are convinced that this move is merely a vehicle for the Government to win over younger voters with an overtly ‘green’ agenda, and for the Secretary of State to stake a claim for higher office in due course.

A transition period has been confirmed

Despite all the inherent uncertainty around a the post-Brexit future, the Rt Hon Michael Gove and his ministers have been remarkably transparent in their thoughts on many Brexit related issues. In particular, the government has committed to a sector-specific transition period over and above the one recently agreed with the EU.

During the initial transition and implementation period, the UK will continue to pay into the EU budget, receive funds from it and be required to follow EU rules, including the Common Agricultural Policy (CAP).

The additional sector specific transition period would run from 2021 until the end of 2024 and is intended to prepare the sector for life without direct support. As it stands at present, the timetable for events for the agriculture sector will be as follows:

  • 2019 – same rules as 2018 will apply
  • 2020 – Basic Payment Scheme will remain in place, but there is every likelihood of some kind of capping on payments being introduced. It is currently unclear where the cap will fall and how quickly it will be extended.
  • 2021 – likely to be as per 2020
  • 2021 and 2022 – at some point during this period, there will be the introduction of a domestic agriculture policy and the phasing down of direct support.
  • 2023 and 2024 – commencement of the roll out of ‘public money for public goods’ schemes.
  • 2025 – no more direct support in the UK.

It is also believed that payment rates will taper down in the period 2021 to 2024 in order to ‘wean’ farmers off direct payments and to release funds for other programmes.

Migrant labour – what will happen? 

Apart from the DEFRA, which has shown itself to be one of the more proactive government departments, a lot of issues remain for the sector, including migrant labour and trade.

Although arable and livestock farming are not particularly affected by this issue, horticulture relies on a 90% EU migrant workforce. Likewise, there are high levels of reliance on migrant labour in the food processing, veterinary and transportation sectors. There has been talk of the reintroduction of a programme similar to the Seasonal Agricultural Workers Scheme, but many are pushing for a far wider scheme since many EU workers are employed in the UK all year round.

Similarly, the issue of our future trading relations with the EU and the rest of the world remains key for many in the sector. Those in the sheep sector are particularly concerned, for they are heavily reliant on exports with France. How negotiations with the EU are likely to conclude is anyone’s guess at this juncture.

Will these changes have a real impact?

Many farmers may be tempted to think that nothing has really changed, particularly those who have experienced higher BPS payments due to the weakness of the pound. However, the 2017 Agriculture and Horticulture Development Board report, ‘Brexit Scenarios – an impact assessment’, showed only the higher performing farming businesses are likely to stand a chance of weathering Brexit. With that in mind, it really is never too early to begin auditing your business to assess where improvements in profitability and productivity can be made.

At the recent Worshipful Company of Farmers Annual Lecture, which focused on the subject of Brexit, much was made of the need for farmers to collaborate more both intellectually through knowledge transfer as well as via joint venture projects. While there is no shortage of information within the industry, the challenge is going to be its dissemination and practical application. Proper and thorough benchmarking is still to really take off in the agriculture industry.

If the inherent uncertainty over what the future holds in terms of trade, support payments and other similar matters is not incentive enough for farmers to really interrogate everything they do to improve efficiency and productivity, then it is difficult to know what will.

On a positive note, Brexit and the political machinations around it over the past 12 months has done little, if anything, to undermine the aspirations of new entrants.

The last year has undoubtedly been very frustrating for many. Let us hope that some meaningful progress can be made on the trade negotiations over the coming months so we begin to see some light at the end of the tunnel.

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