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spring / summer 2017 |

aspects of land

|

9

A

sk most farmers what impact Brexit could have

on their business and you will usually get a

response that mentions the word “subsidy”.

Worth £2.5 billion a year to UK agriculture, there is

nothing surprising about that.

Trade, however, is only just starting to get mentioned,

which is important, because the agricultural sector

could lose £2.1 billion if standard tariffs are applied to

trade between the EU and the UK post Brexit. Tariffs

would also mean that a large quantity of food and drink

produced both here and in the EU would be looking for

a new international home to avoid these tariffs.

In short, there are two extreme scenarios. One, tariffs are

levied on trade between the UK and the EU, which would

increase UK food prices substantially because the UK is a net

importer of goods and the EU a net exporter. Or two, tariffs

are not imposed, which would leave the door open for

imports from some of the world’s lowest cost producers.

HOW DO TARIFFS WORK AT THE MOMENT?

Because British products enjoy tariff-free trade with any

of the EU’s 27 other member states, food and drink can

be bought and sold across borders without any tariff cost.

This makes British produce price-competitive in European

markets and EU production competitive in the UK.

Other regions of the world can, of course, also trade

within the EU, but they usually have to pay a tariff

making their produce more expensive.

The tariff rate other nations pay is worked out through

all sorts of reciprocal agreements and varies from product

to product – and even sub-categories within that product.

“For example, a tariff will be levied on beef imported into

the EU, but the exact amount of that tariff will depend on

what cut that beef is and the specific trade deal that has

been agreed with the exporter,” explains policy specialist

Simon Ward of The Policy Group. “That tariff could

change once a specific volume of sales is exceeded and

it may well be different to the one paid by its exporting

neighbours. Changes to tariffs could change the relative

price of fore and rear quarters of beef.”

WHAT MIGHT CHANGING TARIFFS MEAN TO OUR MARKETS?

Another curiously complex example of a current trade

agreement is with New Zealand.

BIG DEAL

When Britain comes out of the European

Union, the replacement trade deals that

are struck will be crucial for the potential

profits – or not – of Britain’s farmers

CLYNT GARNHAM AGRICULTURE / ALAMY