Farmers will lose out by as much as €34,000 (£27,400) a year if the UK votes to leave the EU, unless new national taxpayer subsidies are put in place to bolster farm incomes, a new study has found.
The agricultural sector will face a mixed picture, according to the report, which projects its post-Brexit future. Some farmers, such as those specialising in cereals and dairy, are likely to see steep falls in the price of their goods but businesses less dependent on the EU, including poultry and pig farmers, could benefit.
The prices of some key commodities such as beef, lamb and wheat could fall for consumers, but the effects are likely to be volatile as farmers lose EU subsidies worth about €3bn a year at current levels.
The study, commissioned by the National Farmers’ Union from the University LEI Wageningen UR, examines three likely post-Brexit scenarios - one in which a free trade agreement is struck with Europe, another in which the World Trade Organisation’s rules are paramount and a third in which trade is fully liberalised between the UK and other nations.
Under the first scenario, the study found that farmers’ incomes would fall by an average of €24,000 if farmers were to lose all subsidies. The other scenarios would cost €17,000 and €34,000 respectively..
Politicians campaigning on the issue have given no guarantees that farmers would continue to receive subsidies in the case of Brexit. It would be highly controversial for the UK government to continue to subsidise farming at current levels. George Osborne was forced into a U-turn over proposals to cut £4bn from government budgets for people with disabilities and targeting farmers could prove similarly contentious.
The environmnent secretary, Liz Truss, told farmers earlier this year not to take a “leap in the dark” by voting to leave the EU.
The NFU has so far refused to take a stance on whether or not to advise its members how to vote. Its governing council, made up of representatives from all its regions, will meet on 18 April to decide on whether to take a public position.
An NFU official said, however, that even if the council decided to take a position, the union would not campaign on the issue overtly.
One reason is the difference in the effects Brexit would have on various types of farm. Recently reformed EU subsidies go to landowners based on the acreage they farm rather than the amount they produce, which distorts earnings in favour of the biggest landowners.
When the Guardian asked farmers at the NFU’s annual conference earlier this year whether they favoured Brexit, many said yes. This was in stark contrast to previous informal polls at the event, which found the vast majority in favour of remaining. The NFU has refused to undertake formal polling of its members or the wider farming community on the issue.
Martin Haworth, the union’s director general, said: “Some of the scenarios appear to suggest that there could be serious risks to farm income from leaving the EU, while the results of others suggest there could be a more favourable outcome.
“It comes down to a matter of judgement as to which of the scenarios appears the most likely. This in turn will depend on the policy position adopted by the UK government. In the past, our government has been a strong advocate of open and free trade.
“The real questions are political rather than economic. What would the UK government’s position be on international trade and its impact on the consumer price of food? How would it ensure British farmers are treated fairly?”
George Eustice MP, the farming minister, who supports the campaign to vote to leave the EU, told the Guardian the report was wrong: “Economic exercises of this sort always say more about the assumptions of the model than real life, and not all of the assumptions are plausible. The report ignores the fact that we would have lower burdens of regulation and better, more effective policy design if we took back control.”
The Vote Leave campaign said that scenarios in which the UK failed to negotiate free trade agreements with key partners were unlikely, and that such agreements would allow for more favourable treatment of farm exports. The campaigners also argue that support will become available to farmers in the event of an exit, as the savings they argue can be made by leaving the EU could be directed towards the farming sector.
Eustice added: “What the report does show is that after we Vote Leave and conclude a free trade agreement while continuing to support UK farming, farm incomes actually increase. We send Brussels £350m every week - we should spend our money on our priorities, like UK farming.”
The effect of Brexit on farming is likely to be of greater concern to the Conservatives than other parties, given the reliance of many Tory MPs on rural votes.
