A no-deal Brexit could wipe out almost a fifth of profits from UK farm businesses, costing the sector as much as £850m within a year of the UK leaving the EU, new research has suggested.
The combination of increased competition from cheaper imports, higher input costs for services such as vets and an expected surge in export tariffs for some agrifood products would all contribute to an 18% slump in profitability, warned agricultural consultancy The Andersons Centre.
The effect of such a drop would represent a greater challenge than both the BSE and foot and mouth crises, said Andersons’ partner Michael Haverty, who compiled the research on behalf of the BBC.
Substantial declines in output were forecast for sheepmeat (-31%), while outputs for cereals, milk and beef production were also expected to fall, Andersons said.
Some decreases in costs were forecast for inputs that would be affected by the introduction of lower UK import tariffs under a no-deal scenario. Examples here include animal feed, fertiliser and plant protection products.
However, inputs such as veterinary costs were projected to rise, the report said, as it was “anticipated that there would be a significant increase in demand for veterinary staff to assist with border inspection operations”.
And while some increases in production were projected for horticulture and intensive livestock such as pigs and poultry, the success of those sectors would be dependent on providing “sufficient labour”, it warned.
But with many farms already struggling to break even, the projected hit to profitability in some cases was likely to significantly surpass industry averages, the report said. This would place the viability of many farming businesses in jeopardy. Crucially, Andersons’ findings were based on the assumption the sector would retain existing levels of farm subsidy up to 2022.
The Andersons report follows similar warnings by former NFU chief economist Sean Rickard last week. In a report titled ‘No Deal: the Door to the Decimation of UK Farming’, Rickard said up to half the UK’s growers and livestock farmers could be driven out of business by the mid 2020s.
Meanwhile, AHDB modelling in April warned average farm incomes would fall by 36% by 2022 in the event of a no-deal.
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