The Family Business - An agricultural perspective on Brexit

15 March 2019

Let’s assume for the moment we are faced with a ‘hard Brexit’ – no withdrawal agreement, no transition period, and no agreement on the future relationship between the UK and the EU. The cliff-edge.

After Brexit EU law will no longer apply. The UK will cease to be part of the single market and customs union, and the four freedoms – free movement of people, goods, services and capital – will cease to apply.

Following Brexit there is likely to be a total reform of our agricultural policy as the UK is unlikely to be able to match the Common Agricultural Policy (CAP) funding. EU farmers will continue to receive the CAP. For UK farmers there will be uncertainty of income, commodities, prices, tariffs and environmental requirements. Greater customs controls will increase trading costs.

Farmers and producers will want access to the single market, have protection against cheap imports, and support for vulnerable markets (e.g. dairy farming). However, following our exit, World Trade Organization (WTO) rules may be the default position for the UK’s trading relationships.

Following Brexit the UK will need to negotiate its own schedules of WTO tariffs and commitments on services by consensus. Agricultural products remain very sensitive with tariffs generally staying high (in comparison to generally low tariffs on most manufactured goods).

Certain sectors are heavily reliant on migrant workers – for example, seasonal workers for labour intensive fruit and vegetable producers and more permanent staff for dairy production. Recruitment has undoubtedly become harder, and not helped by the loss of free movement of EU citizens.

The UK Government wants to create a system based on simpler, more effective rules so farmers can grow and export more British food by focusing on trade, productivity, environment, trust and resilience. That sounds all very lovely, but following a hard Brexit there will be a gap between leaving the single market and starting any new (free?) trade agreement. And this is a cause for concern for pretty much any business which relies on imports and/or exports. It is all so uncertain.

For further information, please contact Ed Savory or a member of our Family Owned Businesses Team.

This article is from the March 2019 edition of The Family Business, our newsletter for those working within family-owned businesses. To download the latest issue, please visit the newsletter section of our website. Law covered as at March 2019.

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