Farmers in Orkney could see their incomes cut in half after Brexit, a report by the Agriculture & Horticulture Development Board has warned.
The new research warns that a No Deal Brexit, as increasingly threatened by Theresa May, is one of a number of threats to farm incomes – alongside possible changes to tariffs and subsidies.
Under the three scenarios outlined in the report, “Brexit scenarios: an impact assessment,”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.
You can download the report here: Horizon BrexitScenarios 11oct17
Key findings of the Report are:
•In sectors where direct support accounts for a significant proportion of farm business income, this impact assessment shows the dramatic immediate impact of reduced support levels on business profitability
• Trade issues also have a significant bearing on farm business income. The UK is a net importer of products for most food sectors, and the EU is a key trading partner. In areas such as dairy and pigs, the scenarios show that farmers may benefit from rising prices, reflecting the rising costs of trade
• In sectors where exports are significant, such as cereals and sheep meat, rising costs of trade for UK products into EU markets will mean downward pressure on domestic farmgate prices. In turn, this is reflected in farm business income levels
• In some scenarios higher labour costs, resulting from restrictions on migrant workers, will reduce farm business incomes. The significance of this will be highest in horticulture, where labour forms the highest proportion of costs
• Whichever scenario is chosen, higher-performing farms remain profitable in every sector. These farms are best placed to weather the negative impacts of any of the Brexit scenarios. They are capable of generating positive incomes when the lower-performance farms are making losses. This suggests taking steps to improve productivity and performance would enable farmers to mitigate potentially negative impacts of Brexit, even before details on agricultural trade or policy emerge
The report, finds that the “worst-case scenario” would see average farm profits across the UK fall from £38,000 a year to just £15,000.
Local MSP Maree Todd, SNP said:
“This is a bombshell report that exposes just how bad a Tory Brexit could get for Orkney, and other agricultural communities across rural Scotland.”
“Scotland’s food and drink industries are flourishing, and agriculture is obviously central to the local economy in Orkney – helping drive our tourism and hospitality industries as well as putting food on family tables.”
In another report business leaders have expressed their concerns over the uncertainties around Brexit with the UK set to leave the EU on 30th March 2019 and with no decisions yet having been made. No deal has been done.
“Brexit: What’s at Stake for Businesses”, looks at the key issues from the point of view of businesses, in their own words.
Michael Russell, Minister for UK Negotiations on Scotland’s Place in Europe for the Scottish Government said:
“This report articulates the concerns of Scottish businesses as the Brexit clock ticks towards the UK’s departure from the EU. It is clear that there is a great deal at stake for every business. Their voices must be listened to before irreversible decisions are taken.”
Some key points highlighted in Brexit: What’s at Stake for Businesses
Over a quarter of small businesses in Scotland (26%) employ EU nationals from outside the UK. In some areas such as the Highlands, this rises to over 40%
Bruce Farms, Perthshire produces high quality fruit and vegetables.They employ 375 workers from elsewhere in the EU, largely on a seasonal basis. A combination of uncertainty – with rumours abounding about how EU nationals will be treated in the UK – and exchange rate changes – have had a dramatic impact on supply and meant that there is very real concern for the 2018 season. Existing plans to invest and expand have already been shelved; if no solution is found soon for the future supply of seasonal workers then fruit and veg production will simply have to cease.
Springbank Distillers benefits greatly from operating within the European Union and Brexit will have a negative impact on their business. Firstly, leaving the EU will result in an added administrative burden for the company as they conduct business with 27 countries compared to the Single Market. 10% of their turnover comes from money spent by customers from Europe. Therefore it is vital for them that Brexit has as small an impact on the efficiency and ease of movement of Scotch Whisky as is possible.
For the vast majority of goods, services and companies, one set of rules, clearly articulated and understood, apply both in the UK and throughout the EU.
A Scottish Fish Processor, supplying products internationally has a significant number of employees coming from European member states, it is concerned about the impact of Brexit on free movement. Extensive time generated through documentation and handling could lead to a decrease in product quality and ultimately limit its ability to make international sales. Trade tariffs could also impact the value of sales and competitiveness of its products. As a fish processor it is concerned about the impact of Brexit on fisheries science and regulation. Departing from the EU may lead to less investment in stock science which has long-term impacts for the health of stocks that this business is dependent upon.
Scuba Diving Scotland is Scotland’s largest dive centre and the only one that sells courses online. They are concerned about cost increases and extra bureaucracy for themselves and their customers, so have put on hold plans to expand the range of services they offer.
Atlantis Resources Limited (“Atlantis”) is a global developer of renewable energy projects with headquarters in Edinburgh. Atlantis’s flagship project, MeyGen, is situated in the Inner Sound of Scotland’s Pentland Firth and is the world’s largest tidal stream array. The European Union is an important source of financing for renewable projects, particularly tidal stream. Atlantis has been awarded both Horizon 2020 and NER300 funding from the European Commission as well as received offers of support from the European Investment Bank for future phases of their flagship MeyGen project. Atlantis has strategic partners in Belgium and France as well as suppliers across Europe, and employs a number of EU nationals who are technical experts in marine technology and whose skills and experience would be difficult to replace.
Maree Todd MSP said:
“Theresa May’s reckless approach to negotiations risks enormous damage to our economy. It’s time that the Tories put the interests of the country ahead of their party squabbles – and committed to staying in the single market.”
Reporter: Fiona Grahame