Brexit and farming: what are the next steps?

Back in February last year, we held complimentary seminars in North & East Yorkshire for farmers and rural businesses, providing useful advice regarding the potential future of farming, through and post-Brexit.

Since then, farmers across the country have welcomed the positive news that the UK and EU have agreed a free-trade deal, meaning no taxes on goods (tariffs) or limits to the amount of trading, will go ahead. However, this does bring some challenges, and farmers will have to embrace change to overcome them.

Trade Deals

As the UK and the EU now have a free-trade deal in place, there is a sense of relief, particularly as zero tariffs and quotas remain in place. We are yet to see if this alleviates the fear of goods being more expensive, which we discussed at our seminars back in February. The Brexit deal brings increased emphasis on Rules of Origin; this and the associated paperwork could increase costs within the industry and have a knock-on effect to the consumer.  

Importers and exporters will need to prepare for new procedures at ports, which we have already seen cause some initial delays. They will need to make the same custom declarations as they do when dealing with countries outside of the EU. Live animals and some foods will also need special licenses and certificates; you can find out more about this on the government website, here. If new paperwork is incomplete, it could lead to delays and disruptions. The Farmers Guardian have already reported that UK meat shipments have been left rotting at ports this week due to the increased amount of paperwork. 

However, due to the impact of the Covid-19 Pandemic, the Government have chosen to delay the imposition of full controls on goods entering Great Britain from the EU for 6 months.**

Our Head of Farm, Grant Hartley, shares his opinion on the free-trade deal: “The eleventh-hour nature of the Brexit deal has not provided the clarity that many hoped, and we are yet to fully understand its impact across each sector of the farming industry. Zero tariffs have brought a general sigh of relief, allowing continued trade across EU countries. However, increased bureaucracy in the form of paperwork and additional checks is a source of real concern; friction at ports is already evident. It is of course early days, we are learning as we go; the obvious demand for quality UK produce remains high and it will be interesting to see how this year unfolds. Supporting our farmers to trade smoothly across both new and existing markets, ensuring sustainable prices and profitability, is paramount.”

Support Payments

The Basic Payment Scheme (BPS), which provides rural grants to support farmers, is to be replaced with the Environmental Land Management Scheme (ELMS) by 2024; a total of £1.8bn a year will be transferred to Environmental Payments.

The ELMS scheme will be introduced this year, which will primarily benefit farmers who make environmentally positive changes to their businesses. Productivity grants are also being introduced to help farmers invest in these changes, including purchasing new equipment and technology to help increase productivity.

Farmers will get grants for activities which support the below:

  • Protecting heritage farm buildings and stone walls
  • Expanding hedges
  • Capturing carbon in soils
  • Preventing floods
  • Land management – planting woods & restoring peatland
  • Reducing antibiotics
  • Improving animal health and welfare.

Case Study                 

A pig farmer has placed tanks into the ground to extract slurry from pig units and solidify it – preventing the ammonia from turning into a gas; this has reduced the amount of ammonia in the atmosphere and has improved the welfare and performance of the pigs.

By farming businesses making such changes, the UK’s low levels of farm productivity should increase, with studies suggesting that younger farmers may be more willing to try new methods*. The new initiative is intended to help lead us to a “renewed” agricultural sector, by producing healthy food for consumption at home and abroad, as well as making environmental improvements.

In addition, the Department for Environment, Food and Rural Affairs (DEFRA) have agreed a Sustainable Farming Incentive (SFI), rewarding farmers for basic activities, including crop rotation, soil conservation and assisting in preventing chemicals from polluting waterways.

However, the changes have already caused some concern within the farming industry; some may be unable to adjust to the changes, leading some to feel that the ELMS grant scheme criteria is set too high.

Ministers have confirmed that a lump-sum payment will be available for farmers who wish to retire.

Advice for Farmers

An advisory booklet will be launched with steps to take, towards the end date for direct payments. There will also be additional grants made available for farmers managing livestock slurry more carefully.

The government have accepted that this transition is very much work in progress, and details will follow on the ‘road to the revolution’ in 2028.

Climate Change

The government aim to reach net zero emissions by 2050. To do this, they are proposing that farmers will need to ensure:

  • Low carbon farming practices – controlling release of fertilisers, livestock health and welfare, slurry management and the design of sheds.
  • Environmental permits – if farmers hold over 100 livestock, they will need an environmental permit, giving them the right to farm from certain sites. However, if farmers do not follow the environmental techniques, they will be unable to have their permit renewed.
  • Peatlands – using farming/grazing land to plant 30,000 hectares of trees per year to reduce the amount of carbon in the atmosphere.
  • Reduction of consumption of red meat and milk by 20%. However, as the population increases, the amount of production should stay relatively similar.

New Immigration System

There will be a new point-based system for foreign citizens wanting to move to the UK, aiming to attract people who can contribute to the UK economy. People wanting to move to the UK to work will need to apply and pay for a visa, costing between £610 and £1408 per person, unless they have skills the UK is short of.

If you are considering recruitment of foreign citizens, you can find out more about the point-based system, here.

What should farmers do next?

  • Focus on profitability by reducing cost of production
  • Understand what consumers want by engaging with the supply chain
  • Be aware of production costs
  • Look to embrace change and innovation
  • Keep in touch with your bank with any updates to your business
  • Follow government legislations

Rural Protect

As we proceed through changes to laws and legislation, especially around the environment, and health and safety, we want to remind you about the benefits of Rural Protect. Rural Protect is a management liability policy which protects farming businesses through allegations of wrongful acts and legal action brought against you or your business, by an individual or regulatory body.

The policy also offers free access and advice from leading law firm, rradar, providing information and guidance on legal issues. This means you can gain the right advice on what steps to take through these ongoing changes to protect yourself and your business.

You can find out more about our Rural Protect policy, here.

If we can be of any assistance in reviewing your insurances or answering any queries, please do not hesitate to contact our dedicated Farm Team at farm@mcclarroninsurance.com.

*https://www.bbc.co.uk/news/uk-47213842

**https://www.bbc.co.uk/news/explainers-54195827

https://www.fginsight.com/news/uk-meat-exports-left-rotting-at-ports-due-to-hellish-paperwork-116234?utm_source=editorial%20social&fbclid=IwAR0fVO6H1tdUS9Bg9ewmgoFopw3tYjrYiTBwvB9CFPkA4M7RWVPBnxdv2Ko

More Stories