By Struan Stevenson, Chief executive, Scottish Business UK
RURAL Scotland will face almost certain meltdown in post-Brexit Britain. Farmers and landowners, far from benefiting from new worldwide trade deals promised by the arch-Brexiters, will see their markets decline sharply as competition from cheap imports expands. Subsidies will disappear. Land values will collapse.
Under the Common Agricultural Policy (CAP) many British farmers currently receive 60 per cent of their income from EU subsidies via the Single Farm Payment. The sector has drawn comfort from a Government pledge to guarantee annual EU subsidy payments once the UK leaves the EU, though this extends only to 2020. With the current focus on cuts and austerity and prioritising schools and hospitals, there is no way that the existing level of subsidies will be maintained thereafter by either Westminster or Holyrood.
Direct CAP payments to Britain will average £2.88 billion a year up to 2020; last year these subsidies were worth €200 a hectare (£58 an acre). Only the super-efficient, top 10 per cent of farm businesses could survive without them.
Most farmers have thin margins, if they have any margins at all. The European Commission estimates that land prices would fall by 30 per cent if farm subsidies were totally abolished in the UK and they would fall sharply if subsidies were reduced. For farmers who have taken out bank loans against the value of their land, a loss of value could be fatal.
The Brexiters also claim that the EU’s protectionist policies discriminate against cheap food imports and force up food prices for British consumers. In other words they want cheaper food following Brexit. That means throwing open UK markets to cheap food from Africa, Australia, North America, Brazil, and Argentina, causing chaos for UK farm gate prices, a further fall in land values and widespread bankruptcies. UK food self-sufficiency would plummet.
At the G20 summit in Hamburg last week, Donald Trump assured Theresa May that America would sign a trade deal with the UK very quickly following Brexit. Mr Trump stated that the deal would be great for both Britain and America. What he means is that Britain will have to open our doors to vast imports of American hormone-treated beef and chlorine-washed chicken, both currently banned under strict EU regulations. Not only will such imports destroy our own markets for high quality farm produce, it will also sit uneasily with British consumers.
But never mind, the Brexiters claim that our trade with the EU will continue without interruption and that our access to the single market will be guaranteed. The “they need us as much as we need them” argument is a well rehearsed refrain. When Boris Johnson told Italy’s Economic Development Minister that it was “bollocks” to say that freedom of movement of people is a founding principle of the EU and that Italy would be quick to support an end to free movement if Prosecco sales to the UK were threatened, the Italian minister replied that the principle of freedom of movement was sacrosanct and that while Italy might lose Prosecco sales to Britain, Britain would lose the sale of fish and chips to 27 countries. This statement neatly encapsulates the dilemma we face.
When a hard Brexit means hurtling over the cliff’s edge and a soft Brexit means paying for EU membership but having no say, it is time to call a halt. Let us hope that Scotland’s farmers will add their voices to the growing nationwide clamour for a re-think on the calamitous course that the UK now seems to be pursuing.
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