Potential impacts of Brexit on farm profits

Northumberland Gazette latest
Northumberland Gazette latest

Farmers’ profits could fall by more than half in the case of a ‘cliff-edge Brexit’, according to a new report.

Average farm profitability could drop from £38,000 to £15,000 a year in the worst-case scenario as a result of policy and performance challenges that come from leaving the EU, modelling work has revealed.

The latest Horizon report, Brexit scenarios: an impact assessment, published yesterday by the Agriculture and Horticulture Development Board (AHDB), for the first time quantifies the potential impact of Brexit on UK farming businesses.

The analysis by the advisory body, which is funded by farmers, projects the effect of different trading arrangements, farm support measures and labour availability.

They range from a business as usual approach with current levels of support, to a liberal approach to trade with tariff-free access to the UK and reduced support, to a cliff-edge Brexit, reverting to WTO regulations and with dramatically-reduced support payments.

Under the three scenarios outlined in the report, changes in the UK’s trade relationships will impact farmers’ bottom line when the UK leaves the Single Market, whether or not a free trade agreement is negotiated with the EU.

Policy decisions also leave sectors where direct support has been a key part of farm revenues such as beef, lamb and cereals, particularly vulnerable.

But while results differ on a sector-by-sector basis, the top 25 per cent of businesses, regardless of sector, remained profitable under every scenario.

AHDB says farmers have the chance now to learn from that high-performing group and to use them as a benchmark for what is achievable.

Phil Bicknell, AHDB market intelligence director, said: “This analysis underlines the fact that performance matters.”

He added: “As individual farms, we know that we can’t determine policy, but we can recognise that performance is key to preparing for the challenges ahead.

“Buzzwords like competitiveness, resilience, productivity are not new to agriculture, but Brexit brings renewed focus on farm performance. Do nothing and businesses that are currently profitable run the risk of heading into the red. There is plenty that individual businesses can do now to get fit for the future.”