Depending on your perspective either a lot or nothing has happened in the three and half years since the UK voted to leave the EU in May 2016. Westminster and Brussels continue to negotiate a divorce settlement following the triggering of Article 50, in March 2017. This is set to continue until at least 31st January 2020 assuming no further extensions are requested. The continued delays and negotiations are leaving farmers and other businesses across Scotland in limbo.
The 12th December is now marked on everyone’s advent calendars for a General Election and the only picture likely to emerge will be one of further uncertainty.
What changes are on the horizon?
Farming, as well as the industries it supports such as the food and drink sector, will be the areas feeling the most impact from any proposed changes. These industries will not only be affected by Brexit but are the flagship industries targeted by the Scottish Government for expansion to grow the national economy and meet its ambitious climate change proposals.
Scottish agriculture will be significantly affected whatever the outcome on 12th December or 31 January. Notable changes are on the horizon in relation to the payments received under the EU’s Common Agricultural Policy (CAP), the industry’s access to labour markets, trade deals with the EU and Non-EU countries, and the regulatory control over market practices.
CAP transition period
Scotland has unique agricultural conditions and practices, such as the Less Favoured Area Support Scheme (LFASS) and crofting. These provide different challenges to those faced south of the border. England and Wales have drafted their own proposed Agriculture Bill.
The Scottish Government is preparing its own legislation, which is to concentrate on ‘Stability and Simplicity’ by maintaining the CAP until the end of the current CAP period in 2021 (in line with the rest of the UK), with any new policy to be implemented by 2024. Therefore the Rural Economy and Connectivity Committee has recently launched a call for evidence on the Agriculture (Retained EU Law and Data)(Scotland) Bill, as it seeks to cover the proposed 5 year transition period away from the CAP scheme until 2024.
However, the question is whether this legislation will simply be a band aid preventing Scottish agriculture from being reactive enough to deal with the market in a post EU system or whether it will provide enough security and stability to allow farmers to plan with a degree of certainty.
Managing the uncertainty
Many rural businesses are increasingly diversifying their income streams (via, wedding venues, tourism etc) to hedge their bets within the current system and to move reliance away from traditional farming due to the uncertainty associated with Brexit.
Additionally, there is further debate on whether the new CAP replacement policy post 2024 should be reflective of the current CAP scheme, which is area based, or be a move towards more of an activity-based scheme by rewarding those carrying out the work on the ground rather than those with rights over the land. Many see this as an opportunity to change the status quo and increase efficiencies within the system.
These changes will also have to be balanced against Holyrood’s ambitious aims for climate control, including increasing both forestry activity and the availability of carbon credits which are priority targets for the Scottish Government. This may be a challenge as it will be at odds with their aim to increase production in farming and the food and drink sector.
Changes to labour supply
The rural economy has benefitted greatly from the free movement principles under current EU legislation, not only in seasonal low skilled jobs but in veterinary and other skilled sectors.
Negotiation of the Brexit process has already seen a drop in the supply of seasonal labour to the UK and this will increase costs at key times, which could have a large effect on profitability.
The Home Office have published guidelines as to how workers can apply for Leave to Remain. However, in the absence of any future clarity this may dissuade large sections of the workforce from applying or returning. In the event of a No Deal Brexit it is unclear how long existing EU nationals will be given (if any) as a grace period to apply for settled status.
Businesses may well have to recruit outside the European Economic Area (EEA) for skilled workers which is likely to bring added costs and complexity with difficult application processes and licensing elements.
Maintaining Scotland’s high production standards
Regulation of the market will be wholly dependent on the deal that the EU and Westminster can reach by 31 January 2020. The EU is currently the largest external trading partner for UK and Scottish agriculture and if that is to be maintained production standards must be kept high. And this remains the case whatever foreign or non-EU trade agreements can be reached, World Trade Organisation (WTO) or otherwise.
There is consensus within the industry that a reduction in standards should be avoided, as competing with countries with greater scales of production would not be in our best interests and would bring prices down to unsustainable levels. Instead our higher standards and variety of produce should be held as a unique selling point for Scotland and should be marketed as such.
The next few years are likely to be extremely challenging for Scottish agriculture and will reshape Scotland’s relationship with farming for the foreseeable future. All members of the rural economy should be looking to take the necessary steps to protect their interests and make their voices heard in shaping the legislation to come.
