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Livestock

Brexit – are you in a position of strength?

12 September, 2019
Farming is inherently risky at the best of times, due to market fluctuations, rising input costs, weather conditions, and unpredictable yields. That level of risk is currently magnified in the form of Brexit. Nobody is able to predict what the next few weeks – let alone months or years – will bring, with no strong clarity on how UK food production will change or be structured in the near future.
It’s clear that a crashing out of the EU without a deal will have severe consequences for UK farming:
  • In 2017, the Agriculture and Horticulture Development Board (AHDB), warned that agricultural incomes could halve in the event of a no-deal Brexit.
  • On average, UK farms are predicted to have their income fall from the current level of £38,000 per year to £15,000 should the UK unilaterally open its borders to low-cost food imports.1
  • Some reports even estimate that 50% of UK farm businesses could be wiped out by the mid-2020s.
    • While it’s likely that government support will help mitigate some of these disasters, the extent (and existence) of this support is purely speculative. The following gives some sense to the severe financial shock facing the industry:

    “Some idea of the scale of the impact is demonstrated by Mr Hunt’s pledge during the 2019 Tory leadership race to provide a one-off cash boost of £6bn to the farming and fishing industries. Although it was not clear if this payment would last more than one year the scale of the likely crisis can be gauged by setting it against the UK farming industry’s total income of £4.7bn in 2018. It would appear Mr Hunt believes No Deal would wipe out the agricultural industry’s income.” 2
    No-deal Brexit is not guaranteed but serves as a stark reminder: to succeed in farming, there are things we can control, and those we can’t. Identifying the threats to your business which you can fight and putting a robust plan of action in place to do so.

    Risk management has always been the smart choice for UK farmers. With increased uncertainty and the threat of large economic shocks now looming, it’s become absolutely crucial for ensuring continued survival and success.
    1 https://www.ft.com/content/cd9323b8-ad0e-11e7-beba-5521c713abf4
    2 No Deal: The Door to the Decimation of UK Farming, Dr Sean Rickard, 2019

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