British farmers will be badly hit by tariffs if the government opts for a “hard Brexit” and leaves the European single market, the Liberal Democrats have warned.
Launching the latest in a series of reports on Brexit, Lib Dem EU spokesman Nick Clegg said leaving the EU and reverting to World Trade Organization (WTO) trading rules would have serious consequences for British consumers and the farming industry.
Tariffs were generally higher for agricultural produce than for other goods, including 47% on milk, 40% on cheese, 59% on beef, and 40% on lamb, said Mr Clegg.
Arable producers would face levies of 40% on unmilled wheat, and about 10% on fruit and vegetables, he added.
These “punishing tariffs” could be avoided by either keeping the UK in the single market on a permanent basis – or by seeking a transitional deal that would maintain membership of the single market until a new trade deal with the EU was negotiated.
But the UK faced a “cliff edge” if the two-year Article 50 process of leaving the EU ran its course and concluded without a new trading agreement, forcing the government to simply reverted to trade on WTO terms.
The £11bn worth of agricultural products sold by the UK to the EU each year would be hit with an average tariff of 22.3% – while tariffs faced by some foods would be far higher, Mr Clegg told listeners at the National Liberal Club in London on Monday (17 October).
This would cause a significant increase in food prices, compounded by increased costs to producers from extra red tape such as customs checks and labour shortages caused by the end of EU free movement, said Mr Clegg.
“A hard Brexit will lead us off a cliff edge towards higher food prices, with a triple whammy of punishing tariffs, customs checks and workforce shortages.
“The only way the government will be able to avoid this outcome is if it maintains Britain’s membership of the single market.”
The report also warns of rising food prices in the coming months, as supermarket supplier contracts expire and have to be renewed at current exchange rates.
Disputes such as the recent spat between Tesco and Unilever over product pricing are likely to become more frequent.
‘Tip of the iceberg’
Mr Clegg said: “It’s clear that Marmite was just the tip of the iceberg.”
Food suppliers who could no longer afford to protect themselves from the falling pound – especially smaller and medium-sized firms – would either go out of business or have to pass on costs to consumers, he added.
“We must hold Theresa May’s government to account and fight to ensure what comes next is best for British consumers and farmers,” said Mr Clegg.
The Lib Dem report comes after Defra secretary Andrea Leadsom pledged to secure the best possible Brexit deal for farmers.
In an exclusive interview with Farmers Weekly, Mrs Leadsom said being able to trade with the rest of Europe was vital to UK interests.
“We are very aware of both the potential for tariff and non-tariff barriers – and our absolute desire is to minimise those to the maximum extent possible,” said Mrs Leadsom.