Report points to post-Brexit challenges in beef and lamb sectors
Brexit could bring significant challenges to English beef and sheep farm incomes, according to a recent report looking at how different scenarios could impact farm businesses.
The AHDB report explores three possible post-Brexit situations and models their effect on farm business income on a sector-by-sector basis, looking at possible changes to trade, domestic farm policy, labour supply and the regulatory environment.
These scenarios range from a ‘business as usual’ approach with current levels of support; a liberal approach to trade with tariff-free access to the UK and reduced support; to a cliff-edge Brexit, reverting to World trade Organisation regulations and with dramatically reduced support payments.
The analysis shows that in the beef and lamb sectors, where direct support has been a key part of farm revenues, farms have been left particularly vulnerable. In sectors where exports are significant, such as sheep meat, rising costs of trade for UK products into EU markets will mean downward pressure on domestic farmgate prices. This, in turn, is reflected in farm business income levels.
While the report doesn’t make for easy reading, perhaps the most significant message to take away from this research is that, while results differ on a sector-by-sector basis, the top 25 per cent of businesses, regardless of sector, remained profitable under every scenario.
Individual farmers aren’t able to determine policy, however this analysis clearly shows that performance is key to preparing for the challenges ahead. This should focus attention on farmers knowing their relative performance (such as by benchmarking) and on pursuing practical ways of improving output and containing costs.
Buzzwords like competitiveness, resilience and productivity are not new to agriculture, but Brexit brings renewed focus on farm performance. If businesses that are currently profitable do nothing, particularly in vulnerable sectors such as beef and sheep, they run the risk of heading into the red.
AHDB’s analysis of the big Brexit themes aims to improve industry understanding of the issues, as well as flagging the opportunities and threats they create. In a series of Horizon reports, we have examined future trade relationships, implications for the labour force and policy options among other issues, such as plant protection and the influence of the WTO. These documents can all be found online at www.ahdb.org.uk/brexit
Clive Brown is AHDB Beef and Lamb Head of Regional Development
