How do farmers feel now about Brexit?

Perhaps the question I am asked most often is, 'Why did farmers vote for Brexit?' Well, the short answer is that they didn't. Or, at least, we don't have any reliable data. Opinions have been based on self-selected polls by Farmers Weekly and my hunch is that they tend to over represent supporters of Brexit.

However, they are the only data we have. The latest poll suggests that, just like the population as a whole, most farmers have not changed their mind about the way in which they voted, despite being more pessimistic about the outlook for their businesses. The Remain camp gained just one percentage point.

The latest poll of more than 1,400 respondents (two-thirds of them farmers) shows that 53 per cent of them voted to leave the EU and 45 voted to remain with two per cent not voting. This would imply a 98 per cent turnout among farmers and reinforces my view that the more committed are over represented in the poll which would tend to be Brexiteers, given that many Remain voters were not enthusiastic about the EU but thought that on balance the UK was better staying in.

The non-farmers taking part, mostly those in ancillary occupations and the wider food industry, voted 57 per cent to remain and 36 per cent to leave, 7 per cent not voting.

It is no surprise that support for leaving was highest in those sectors that have not received much in the way of subsidies: 67 per cent in sugar beet; 66 per cent in; and 57 per cent in horticulture. Dairy and sheep farmers would be more inclined to stay in the EU.

It would seem that for many leave farmers concerns about sovereignty and immigration trumped purely agricultural issues. One farmer commented, 'My biggest hope is that we will get away from the strangehold Brussels has on this country. The EU has got too Big Brother and dictatorial.'

12 months ago 45 per cent of farmers were confident that Britain would get a good trade deal after Brexit, but that figure has now slumped to 35 per cent. Among non-farmers 67 per cent have little faith in a good trade outcome.

Just 28 per cent of farmers now think they will be better off after Brexit with 46 per cent expecting to see an income decline. Before the referendum 37 per cent thought they would be better off and 43 per cent thought they would be worse off. Just 22 per cent of those in the non-farming group see a benefit to their businesses from Brexit compared with 54 per cent who they will be worse off.

Farmers' confidence hits an all time low

Medium-term confidence among farmers has hit an all time low according to the latest NFU survey: Business confidence goes into the red

One in five plans to cut investment and there is concern about rising input prices, regulation and Brexit. NFU president Meurig Raymond commented, 'everyone is concerned about the trade deal that we'll have with the EU, the domestic policy that will replace the Common Agricultural Policy and labour shortages.'

The survey showed that arable and sheep and beef producers were most pessimistic about the medium-term outlook.

The weak pound led to higher subsidy payments and helped exporters, but the devaluation has recently fed through to higher import costs including feed, fertilisers, energy and machinery.

Policy instruments for domestic agricultural policy

Following the recent workshop of the Brexit working party of the Yorkshire Agricultural Society we have produced an interim report on policy instruments in a domestic agricultural policy after Brexit: Interim Report

A more detailed report is in preparation.

Subsidies to continue for hill farmers

Defra secretary Michael Gove has told the House of Commons Defra committee that subsidies for hill farmers will continue beyond 2022. He said, 'Farmers in less favoured areas, and upland hill farmers who are producing sheep meat as well as wool ... will need support for several years to come.'

Whether payments would still be made on an area basis is unclear.

Mr Gove was not sympathetic to the NFU argument that subsidies were needed to prevent the UK becoming more reliant on imports. I have always been sceptical about the idea of self-sufficiency targets.

Confusion over CAP exit

Theresa May has said that Britain will leave the Common Agricultural Policy at the same time as it leaves the EU in March 2019. She said, 'The relationship we have on [the CAP] continuing through the implementation period with the European Union will be part of the negotiation of that period, which will start very soon.'

She added: 'Leaving the CFP and leaving the CAP gives us the opportunity to actually introduce arrangements that work for the United Kingdom.' What these arrangements might be remains unclear, as is the issue of whether the basic payment would cease in 2019.

Michael Barnier has said that Britain would remain in the CAP in the transition period. In practice the political priority, certainly for Michael Gove, might be getting out of the Common Fisheries Policy. In any event there is now more uncertainty about the future of British farming.

Conservationists estimate cost of new agri-envirionmental policy

A new report Assessing the costs of environmental land management in the UK commissioned by The Wildlife Trusts, RSPB and the National Trust, shows how much Government might need to pay farmers and land managers for their role in looking after our natural heritage.

The report estimates that meeting existing government commitments to improving natural assets such as water quality, soil health and biodiversity will cost £2.3 billion per year. But meeting existing commitments will not be sufficient to halt the decline of the UK’s wildlife and reverse this trend.

£2.3 billion is five times more than is currently spent through agri-environment schemes – the source of most current environmental land management funding. This figure does not include wider financing required in the farming sector, for example for research and development or providing advice to farmers.

The total includes £876m for protecting and improving priority habitats, which include woodlands, marshes, bogs and fens; £402m for hedges and stone walls; and £78m for flood plains.

Ellie Brodie, Senior Policy Manager, of The Wildlife Trusts said: 'Farmers can sell the food they grow through the market. But they can’t sell a whole range of services that society needs them to provide, whether it’s reducing the risk of floods downstream, creating habitat for bees or improving the health of our soils. The Wildlife Trusts believe that farmers should be paid for this as it benefits us all. A healthy, wildlife-rich natural world is valuable in its own right and is also at the core of people’s well-being and prosperity. We must be prepared to pay for these benefits.'

Christopher Price, head of policy at the Country Land and Business Association said that government agri-environmental schemes were over bureaucratic and fragmented and drew attention to the CLBA's vision of a land management contract.

The associated policy briefing can be found here: Policy briefing

Hard Irish border would be difficult for food trade

A hard border between Northern Ireland and the Irish Republic would create particular problems for the agriculture and food sectors.

Food and live animals account for the largest share of trade with Ireland. Northern Ireland is reliant on the republic for more than 60 per cent of its food and live animal exports. Agri-foods are particularly important to Northern Ireland and the sector is 'one of the few economic bright spots' according to the CBI.

Aiden Gough of InterTradeIsland told the Financial Times that 'The food industry is absolutely predominant in the cross-border trade in the island. The vast majority of trade is supply chain and goods cross the border multiple times before coming final products.'

A quarter of Northern Ireland milk and more than one-third of its lamb are processed at plants across the border. Baileys liqueur is produced in Ireland and sent north for bottling before returning to the republic for export.

Shaun Murphy at KPMG says that agriculture is 'the sector that is most at risk' because 'integrated cross-border supply chains are complex and costly to unravel'.

Given that the UK Government is not prepared to countenance Northern Ireland staying in the customs union or internal market, it is apparently prepared to consider continued regulatory convergence between the north and south of Ireland to prevent border problems.

However, that solution is unacceptable to the DUP whom the Government depends on for its majority. It would in effect create a border in the Irish Sea. It might also attract objections from other member states who could portray it as giving an unfair advantage to Northern Ireland.