A no-deal Brexit would wipe £850m off the farming industry’s bottom line, new research from farm business consultant Andersons has concluded.
The analysis looks at what might happen to total income from farming (Tiff) – a measure of farm profit – in the nine to 12 months after Brexit takes place on 31 October, compared with a three-year average for 2016-2018, in the event of a Brexit deal and no deal.
The assessment considers the potential effect of tariffs, non-tariff barriers and tariff rate quotas on farm prices and costs, but also assumes the levels of support to farmers will remain unchanged in the year after Brexit.
“Under a Brexit deal scenario, a small decline in profitability of 3% is projected,” said the report. “However, under no deal, an 18% decline is forecast, which would equate to a hit to UK farming generally of almost £850m.”
Report author Michael Haverty says there is significant variation between sectors, but with substantial declines of 31% in output forecast for sheepmeat.
Cereals, milk and beef production are also expected to see lower output, though horticulture and pigs and poultry could see increases, provided there is sufficient labour available.
“With respect to costs, some decreases are forecast for inputs, such as feed, fertiliser and plant protection products, which would be affected by the introduction of lower UK import tariffs under a no-deal scenario.
“However, other inputs such as veterinary costs are projected to rise, as it is anticipated that there would be a significant increase in demand for veterinary staff to assist with border inspection operations.”
The Andersons’ model shows that profitability for a typical dairy farm in England would fall from 3.4p/litre to 0.9p/litre in England under no deal.
The typical arable farm might see its business surplus drop from £297/ha to £203/ha, with profit only sustained by the £219/ha it would still receive in farm subsidy. This would in part reflect the fact cereal exports would face an £11/t tariff on shipments to the European Union, said Mr Haverty.
Commenting on the report, NFU policy director Johnny Hall said it provided a “stark reminder” of the risks to primary producers of a no-deal Brexit.