Complex array of tariffs

Writers Posted 07/04/19
The most efficient UK producers are clustered on the best land.

‘Hard Brexit’, ‘Soft Brexit’ or various forms of ‘Postponed Brexit’ – one way or another, at the time of writing at least, it still looks like the UK is going to leave the EU (indeed, by the time you read this we may already be post Brexit).

But, if we are to leave, not nearly enough attention has been paid to how changes in trade tariffs will affect British arable farmers. DEFRA secretary Michael Gove seems to have decided that, unlike beef, sheep, dairy, pork and chicken farmers, cereal farmers will not need any form of tariff protection.

Where did he get that impression from? The NFU are at least partly to blame because, at the same time as they lobby the government for continued taxpayer and tariff support, they can’t seem to stop themselves from trotting out the nonsense that British farmers are the ‘best in the world’. Then there are many farmers who seem to be convinced they are efficient in global terms and only need a ‘level playing field’ to compete with anyone in the world.

But in the case of grain, most efficient UK producers are clustered on the best land where they can produce high yields at low cost, and who are also close to a deep-water grain export facility, meaning that they have low transport costs. Given that the majority of UK arable farming is carried out on poor grade three land, miles from anywhere, it’s not surprising that only about one in ten of UK arable farms are thought to be profitable once the BPS is removed from their farm accounts.

So what effect will Gove’s free trade policy for grain have upon UK arable farmers? The removal of existing EU grain import tariffs post-Brexit will allow grain to flow into the UK from anywhere in the world. At the moment there is a complex array of tariffs, some of which are very high (like a €140/tonne levy on high quality milling wheat from some countries). There is also a more modest levy of €12 /tonne levy on any grain imported into the EU. But if all of these tariffs were to be removed either quickly (in the case of a hard-Brexit) or more gradually (with a withdrawal agreement and then an orderly Brexit over several years) the effect on UK grain producers will be devastating.

For grain exports the situation is likely to be just as difficult. Countries that import free trade grain, like Algeria, are currently paying about £100/tonne for feed wheat delivered. Imagine what having to get rid of an exportable surplus at that price would do to the current ex-farm South East of England feed wheat price of £155/tonne.

The UK arable farming lobby quickly needs to change its tone. Post-Brexit we need tariffs in place to protect us from more efficient producers elsewhere in the world. ‘A level playing field’ with Brazilian or Argentinian wheat growers with their vast acreages of fertile land, cheap labour, ideal climates and weak currencies? I don’t think so.


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