Thursday, March 28, 2024

Take it or leave it?

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The United Kingdom’s future of being “in or out” of the European Union – often referred to as the British exit or “Brexit” – will depend on the result of a referendum in that country on June 23. The question is if the UK leaves the EU, what effect would it have on New Zealand farmers? That will partly depend on the value of the pound which is predicted to fall. On Brexit, will the UK Government be able to negotiate a special relationship with Brussels and retain the UK’s tariff free access to the markets which have been established over many decades? It could result in a status quo, but not if the value of sterling falls, which would increase the competitiveness of our exports, while putting up the cost of imports. The UK imports a considerable tonnage of lamb from New Zealand, but currency changes could make those imports less competitive. The drop in the value of the pound could increase the 38% of the lamb produced in the UK exported to Europe, which in turn could reverse the decline in the UK’s sheep flock. The other scenario is if the UK fails to achieve special status and has to pay import tariffs to trade with the EU, it would make exporting lamb difficult.
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It would expose British producers to global competition, which could well reduce the size of the national sheep flock, resulting in more opportunity for NZ lamb in the UK, Europe and else-where.

The 1957 Treaty of Rome laid down the foundation of the EU’s Common Agricultural Policy (CAP), which remains one of its most controversial policies.

The UK is the third largest net contributor to the EU budget and in 1985 the CAP accounted for 85% of the budget, but subsequently it has been reduced to less than 40%.

The key question is whether UK farmers will be better off “in or out” of the EU?

That can’t be answered at present because there is no clarity on what arrangements would be available outside the EU or what kind of agricultural policy a British government would pursue, knowing that the Treasury has been trying to reduce the overall British contribution to the EU for many years.

It has also been particularly antagonistic to supporting the CAP and would like to phase out direct support for farming by 2020.

Many Brits are against rules and regulations largely set by an unelected body in Brussels. They assume that leaving the EU would cure the problem.

But for farming it’s not that simple. There are several vital questions that haven’t been clarified if the UK leaves.

Many Brits do want out, asking: why should we have to endure rules and regulations largely set by an unelected body in Brussels?

Would Britain still have access to a tariff-free EU market, the world’s largest economy with more than 500 million people?

Although the UK imports more food from the EU than it exports, those exports are vital for British farmers.

If the UK left the EU, would the British government manage to renegotiate satisfactory arrangements to continue access to its markets on advantageous terms or would it have to establish new trading relationships?

Many farmers wrongly assume that if the UK left, farming would throw off the shackles of imposed rules and regulations.

This is unlikely because many of the regulations imposed on British farmers emanate from the British government, not just the EU.

Organisations such as Friends of the Earth, the National Trust and the Royal Society for the Protection of Birds are powerful voices in the UK and have vested interests in maintaining their environmental grip.

Other unknowns include would the powerful retail trade willingly relinquish their hold over British producers, and would exports to the EU after Brexit have to comply with Eurozone regulations?

So it’s unlikely that UK farming would become less fettered outside the EU if it wanted to retain market share.

With the UK government’s questionable long-term relationship with British agriculture since the repeal of the Corn Laws in 1846, there’s a risk of increased imports from low-cost producers that potentially won’t be able to satisfy high food safety, animal welfare and environmental standards that UK producers are required to meet, putting British farming and the rural economy at risk.

• Ian Howie is a British agricultural writer, consultant, retired farm manager and a Fellow of the Royal Agricultural Societies. Aged 80-plus, he came to NZ as a Nuffield Farming Scholar in 1973, just after the United Kingdom joined the European Economic Community that later became the European Union.

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