UK farms could see average profits fall by £23,000 every year after Brexit

Francois Lenoir/Reuters

LONDON – The average UK farm could lose as much as £23,000 in profit after Brexit, according to a new report by industry body the Agriculture and Horticulture Development Board.

In a “worst-case” Brexit scenario, based on World Trade Organisation rules, reduced subsidies and tariff-free access to the UK for foreign producers, farms could see average profits drop from £38,000 to £15,000 a year, the report said.

Meanwhile, a “business as usual” scenario, based on as few changes to trade agreements or tariffs but no membership of the Single Market, could see incomes rise to £41,000. A third “Fortress UK” scenario, in which trade occurred under World Trade Organisation Most Favoured Nation tariffs, could see profits fall to £20,000.

“Under the three scenarios outlined in the report, changes in the UK’s trade relationships will impact farmers’ bottom line when the UK leaves the single market, whether or not a free trade agreement is negotiated with the EU,” said the report.

“Policy decisions also leave sectors where direct support has been a key part of farm revenues, such as beef, lamb and cereals, particularly vulnerable,” it said.

UK farmers currently receive around £3 billion in subsidies every year via the Common Agricultural Policy (CAP), which will no longer be available when the UK leaves the EU. However, the UK government has promised to keep “overall” farm payments at the same level until 2022.

Leaving the EU could also result in an agricultural labour shortage: in August, the Food and Drink Federation found that 36% of the businesses surveyed said they would be unable to adapt if they did not have access to EU labour after Brexit.

Despite this, a Farmers Weekly survey of 577 farmers found 58% voted Leave in the Referendum, and only 31% voted Remain.

However, the AHDB’s report also found that the top 25% of farm businesses would remain profitable in every scenario, and said other farmers should learn from such high-performers.

Among the most vulnerable are cereals farmers, who make up a high proportion of UK producers: under a “worst-case” scenario, the report predicts, cereals farmers could see profits fall by 81% to just £8,216, while under a “Fortress UK” scenario their incomes could become negative, falling by 103% to -£1,341.

But pig farmers could see profits rise in all three scenarios, from £46,000 to a huge £205,000 under the “Fortress UK” scenario.

“This report is based on hypothetical and highly unlikely scenarios that do not reflect the government’s negotiating position,” a spokesperson from the Department for Environment, Food and Rural Affairs told the BBC.

“Outside the EU and free from the bureaucracy of the Common Agricultural Policy, our farmers will be able to focus on growing, selling and exporting more fantastic produce.”