Could Britain survive without imports

Three post-Brexit scenarios for UK agriculture

According to a new study by the Agri-Food and Biosciences Institute (AFBI), Brexit could become an “all or nothing” matter for British farmers.

The changes in UK trade relations with the EU and the rest of the world after exiting the Customs Union and the EU single market could have a huge impact on trade. The study analyzes three possible scenarios for trade relations after Brexit as well as their impact on raw material prices in Great Britain, the production volumes of farmers and food prices for consumers.

According to AFBI, some changes could result in lower costs for consumers, but at the same time drastically reduce farmers' incomes and make the UK more dependent on food imports.

Three scenarios

The three scenarios of the think tank are firstly a new free trade agreement with the EU that is advantageous for the country, secondly a switch to trade relations in accordance with WTO guidelines with the most-favored nation principle and thirdly, unilateral trade liberalization by the British government.

The British negotiating team around David Davis wants to reach a free trade agreement with Brussels as soon as possible after leaving the EU. Great Britain could then negotiate its trade relations with third countries itself, but would continue to benefit from free trade with the other 27 EU countries and unrestricted access to their markets.

In such a scenario, producer prices for food would remain relatively stable; the AFBI assumes fluctuations of -1 to +3 percent depending on the product. Nor would it have a significant impact on the volume or value of UK agricultural products and their prices to consumers.

However, it could be difficult to negotiate such a far-reaching agreement in time for leaving the EU - and the farmers want security. Meurig Raymond, President of the NFU Farmers Union: “It is imperative that the government plan transitional arrangements to cope with sudden changes. Agriculture will need time to adapt to the new trading conditions. "

It is therefore “imperative that the government understands what is beneficial for the UK food and agriculture industries. Future trade relationships will determine the future of many farms and the country's food security, ”added Raymond.

WTO rules: advantages and disadvantages

If the EU and UK negotiators fail to agree on a trade deal by the end of the talks on March 29, 2019, the relationship would again fall under World Trade Organization (WTO) regulations.

Britain currently imports around 40 percent of its food. The EU is both the largest export and import market. Even under the most-favored nation principle, the tariffs would be high and lead to massive changes in trade, the AFBI expects.

In the WTO scenario, producer prices would rise for some goods, including in particular milk and dairy products (+30 percent), pork (+18 percent) and beef (+17 percent). As a result, production volumes and the output value of these goods would increase. Britain would become more self-sufficient in these areas as EU imports would become much more expensive. At the same time, however, the final prices for consumers would also skyrocket.

In addition, British exports would be affected by tariffs. Farmers who export sheepmeat (producer price -30 percent), wheat (-4 percent) and barley (-5 percent) would experience a loss of income and production volumes would decrease.

Unilateral liberalization

In the third scenario, the AFBI describes what would happen if the UK government abolished all tariffs while trading partners kept MFN tariffs on UK exported goods.

In this case, UK consumers would benefit as the domestic market would be opened to low-cost imports from around the world. However, farmers would suffer as a result.

Producer prices for beef would fall by 45 percent and for sheep meat by 29 percent. These are the most extreme examples, but ultimately the prices, production volumes and output values ​​of all British agricultural products would fall significantly.

Farmers unionist Raymond warns against such a development. The UK government should "ensure that UK farmers do not suffer a competitive disadvantage compared to foreign producers due to different standards."

The AFBI underlines in the report that foreign producers are highly competitive and that it is therefore clear that in this third scenario “domestic productivity and the competitiveness of British goods must be greatly improved”.