According to a survey carried out by The Grocer, the industry is planning to vote with its heart, not its head - and at the moment the majority are planning to vote Brexit. What are your thoughts on that?
SR: If we vote to leave on 23 June, there’s no going back, no second chances. This is an important decision, and one which people need to take seriously, by looking clearly at the facts and taking in the impact on jobs, wages and prices. It is clear that the food and drink industry is better off in, benefiting from unrestricted access to a free market of 500 million with a British say over the rules, EU support for farming and small businesses, and easy access to extra labour alongside protection for workers’ rights. A vote to leave is a vote to put all this at risk - and to hit the economy by an amount the Treasury puts at equivalent to £4,300 per household.
GE: I hear this heart vs heads issue a lot. When it comes to the business case, the key issue is whether it will affect trade. My view is that trade is about willing buyers and willing sellers. And we have a remarkable degree of compatibility between ourselves and the EU. We have been in the single market for decades and have a similar approach to labelling, animal welfare and food safety. That’s not going to change. So a barrier to free trade just isn’t there, and it’s in everyone’s interest to retain trade relations anyway, not least because we have a £10bn trade deficit with the EU. We export £7bn worth of food, we import £18bn worth. It’s not in their interests to create some sort of Russia-style trade embargo. We only get one shot at this, one opportunity to regain control of our country and make our own laws again. We only put up with the stifling regulation and the difficulties of working in the EU because we have got used to it. There is no one working in the civil service today or in politics that has ever known anything other than wading through the treacle of trying to do things at EU levels. And there are a lot of people feeling we shouldn’t waste that opportunity. It would be remarkably easy to put in place a free trade agreement that feels remarkably similar to the single market but without the encroachment of the EU.”
How do you think your respective campaigns are going so far?
SR: The Stronger In campaign has reached far and wide to show why we think Britain is safer, stronger and better off within the EU. We are winning the argument that business and jobs, including in the food and drink sector, are better off in Europe, with businesses, trades unions, the IMF and President Obama all saying our trade would be damaged if we left the EU. We have had campaigners in all four corners of the UK - as far west as Derry in Northern Ireland, and east as Lowestoft in Suffolk, in the south at Land’s End in Cornwall and in the north on the Orkney islands. This demonstrates the energy and enthusiasm felt by the campaigners across the country and their passion for remaining in the EU.
GE: The debate is hotting up now. The Remain campaign has thrown the kitchen sink at the debate, like President Obama coming over and releasing reports from the Organisation for Economic Co-operation and Development, but it hasn’t really moved the dial. If anything, Obama telling us to join the back of the queue backfired. It’s going well and we are getting across our message of the benefits of regaining control.
Would Brexit benefit the British fishing industry if it meant scrapping the controversial Common Fisheries Policy?
SR: Whilst it’s true the previous CFP was not perfect and negatively impacted fish stocks and fishing business, the UK government has led reform of the policy and since 2014 a new CFP is in place. The new CFP reflects the key government priorities of firm dates to ban fish discards, legally binding commitments for fishing to be sustainable, and decentralised decision-making to put Britain in charge of agreeing measures appropriate for British fishers. This shows the amount of influence Britain has in the EU, and the ability of the EU to reform and adapt new policies where EU action is not seen to add benefit. If we leave, EU rules will still impact on us, but we will have no say in making them. The EU also provides a lot of additional benefits to the fishing industry. Scotland will receive £85.5m from the EU Fisheries Fund until 2020, helping our fishing communities, investing in ports and refurbishing fishing vessels. Leaving the EU would put all this at risk.
GE: There is overwhelming support within the fishing industry for leaving the EU. There are some things we wouldn’t change: we will still have a quota system. Quotas aren’t perfect, but they are the best system we have got to manage migrating fish stocks in a shared fishery. We will also still target maximum sustainable yields because if we want a profitable fishing industry in the future we have got to fish sustainably. And there will always be a lot of international negotiation required to manage fisheries. What will change is that our single most important fishing ground is the North Sea. Huge amounts of mackerel, cod and haddock are caught in the North Sea. But we don’t have a seat at the table when quotas for the North Sea are discussed. Very few people realise they are not discussed at the EU, they are discussed at a series of meetings run by the North East Atlantic Fisheries Commission, which is independent of the EU. Norway has a seat, the Faroes have a seat, but the UK does not. We are represented by the EU, which has to represent all other member states, and our technical experts and diplomats are reduced to whispering in the ear of a negotiator and hope they listen to what we want. It’s not a satisfactory state of affairs.
Brexit would mean the end of UK involvement in the CAP. Various estimates say we currently pay about £6bn a year and get about £3bn back. So if the UK government ensured farmers received the same amount post-Brexit it would mean a net gain of £3bn for UK plc. Isn’t that a benefit?
SR: As George Eustice has acknowledged, Leave campaigners cannot guarantee the UK government would replace CAP funding in full. Vote Leave has promised what they claim is the UK’s contribution to the EU budget many times over to a range of competing domestic spending priorities, and their figures for the UK’s contribution are wrong in any case. The effect on farms is particularly worrying. This was shown in a recent report by the NFU, which stated farmers could lose up to £27,400 a year if we leave the EU, unless new national taxpayer subsidies are put in place to bolster farm incomes. For farms specialising in cereals and dairy, the loss is likely to be the highest. A study, titled Preparing for Brexit, by the independent analysts Agra Europe, last year found a British exit from the EU would have a devastating effect on the nation’s farmers, leaving only the most efficient 10% able to survive without the multibillion-pound subsidies handed out by Brussels. And CAP funding is only one of the benefits that British farmers get from EU membership. British farmers benefit from guaranteed full access to the EU’s free trade single market of 500 million people. The EU buys around 60% of British agriculture and food exports, but independent experts agree that British farmers could face tariffs and non-tariff barriers if we left. In the EU, British farmers also benefit from privileged access to over 50 other countries through free trade agreements that the EU has negotiated around the world. UK food exports outside the EU have grown by 60% over the past decade. Our contribution to the EU budget is a small price for access to the largest single market on earth, which buys half our exports, worth over £220bn, a year.
GE: I’ve been clear, and every MP has been clear, that we would at least retain the same level of support for agriculture as we have now. There is a commitment from me to do it, as with all these things it would depend on the government of the day, but every MP campaigning to leave is very clear on that. Farmers are sceptical, they argue the Treasury is always trying to cut budgets, but ultimately it will write the cheque the government orders it to write. I am absolutely confident that once we take back control we have lots of MPs in parliament that represent rural seats. I get thousands of letters a year relating to problems in agriculture, and the idea we would hang agriculture out to dry is not going to happen.
Is the government concerned that if it makes a firm policy commitment to a level of subsidy comparable to CAP it would offer financial reassurance to farmers and risk encouraging them to vote to leave? Is there a concern that in doing so it would offer reassurance to farmers that, financially at least in terms of subsidies, they would be secure in the event of Brexit?
SR: I’m not able to comment on the government’s response. What is clear is that the huge amount of uncertainty that surrounds the issue would cause insecurity for farmers.
GE: Exactly. You have to understand the context of this debate. The primary strategy for those arguing to stay is to terrify everyone about the risk of leaving. The last thing they want to do is provide any reassurance. So it’s in their political interest to go around trying to spook people and make them think they might not get that money. For 15 years I’ve advocated renegotiating with the EU but staying in. But the deal the PM came back with was hopeless and I felt I had no choice but to argue we should leave. For me, it would be way better if we take back control on areas like agriculture so we can run our own funds. And the constant threat of proceedings hanging over Defra because we are not administrating something in precisely the way EU wants creates a constant threat of legal jeopardy. You’ve got a whole department fretting about EU regulation rather than thinking through what good policy should look like.
Only 50% of FDF members decided to vote over Brexit. And 29% of those voted to leave. What do you make of that?
SR: The outcome of the referendum will affect all of those involved in the food and drink industry, and I am confident they will make sure they secure the best possible future. The majority of those who did vote wanted to remain in the EU, which demonstrates how important this issue is to the food and drink industry and how much they have benefited from the EU. To win this referendum, business needs to speak out on the ways it benefits from membership of the EU. I would urge anyone reading this article to do so.
GE: I think most trade bodies, because they have to live and work with the outcome, will try and stay neutral in the campaign. Individual polls are more interesting. But it doesn’t surprise me that big lobby groups have taken the position they have because, frankly, lobby groups are never very good when it comes to big political decisions. They have a natural propensity to be timid, unimaginative and cautious. There are times in life when you have to take a big decision and this is one of those times. And they have a very strong tendency to curl up into a ball and stick with the status quo.
Would grocery prices go up in the wake of Brexit?
SR: Our membership of the EU allows us to keep food prices low. This is because our access to the free trade single market allows us to enjoy unrestricted access to the single market of 500 million customers. If we had to renegotiate a deal, it is unlikely it would be on the same terms, losing out on millions of customers. Under WTO terms, the EU would apply ‘Most Favoured Nation’ tariffs on imports from the UK, including agricultural imports. This would make UK exports to Europe more expensive and tariffs could be as high as 42% for dairy products. These additional tariffs and costs would force prices up. Research by the independent CEBR think-tank has found WTO tariffs would increase the price of imports by £11bn across Britain. UK food and agricultural exports to the EU are worth around £11.4bn a year. The EU takes 60% of UK food and agricultural exports. Losing out on this market would impact profits and drive up prices, rather than the opposite.
GE: I’ve seen economists say prices will go up and others saying they will go down. The truth is that economists exaggerate the impact any tariff changes might have. We would have a free trade agreement with the EU. We will also gain agility on the world stage. But, most fundamentally, if you look at drivers of food prices it tends to be energy costs, a link with the price of oil or supply and demand. There are much bigger forces at work that drive commodity and food prices. So in the scheme of things, in or out, it’s probably inconsequential for food prices.
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