Brexit, free-trade agreements, the National Food Strategy, and net zero emissions, UK agriculture is set to see some big changes, but what are the opportunities and implications?
The government’s proposal to allow up to 260,000 tonnes of raw cane sugar into the UK tariff free has been seen by some as a sop to Britain’s only cane sugar refiner and the reward for hard lobbying by its American owners.
Equivalent to about 13% of annual demand, the NFU warned “this quota will undermine thousands of sugar beet growers in the UK and seriously jeopardise the viability of the home-grown crop”.
Conversely, there will be others who consider it as necessary to ensure fair competition between suppliers and prevent the UK’s only domestic producer from abusing its dominant position.
Of less debate, however, is that the changes to the UK’s international trading status following Brexit and a desire to secure free-trade agreements with countries for which agriculture, especially refined sugar, is a significant export opportunity, mean our farmers can expect more, not less, overseas competition.
“The implications of Brexit will pose significant challenges for many sectors of the industry, though the exact extent varies, often depending on the balance of trade for a particular good,” says Nick von Westenholz, NFU director of trade and business strategy.
“Sugar is of big interest to the United States and, further down the road, Australia. Gaining access to the UK market will be a priority for these countries. Consequently, the UK sugar market is likely to see significant price competition in the coming years,” says Mr von Westenholz.
Another issue that is likely to have an impact on the prospects of the domestic sugar sector is how the UK government handles the thorny issue of ‘rules of origin’. This came up in discussions about biscuits in the trade negotiations with Japan.
Specifically, Japan was willing to offer lower tariffs on UK-made biscuits, but a sticking point arose around how much non-UK sugar these could contain and still qualify as a UK product. In the end, it was agreed that baked goods could contain up to 30% imported sugar and still qualify for the reduced tariff.
“This gives manufacturers more freedom to manage raw material costs, but it is also clear that the government is prepared to take a more liberal approach to rules of origin on some commodities than we are used to seeing with the European Union,” says Mr von Westenholz.
International trade aside, the government has other policy initiatives that will impact the fortunes of agriculture. Commitments such as becoming the first developed country to achieve carbon neutral status, the National Food Strategy, a priority of which is to reduce obesity, and deliver a new system of farm support, are running in parallel to other government objectives.
It is possible to mitigate the impact of one policy with changes elsewhere, but the extent to which measures can be passed depends on the priorities of government, says Mr von Westenholz.
“In our conversations with government we urge it to consider the impact of policies in the fullest context, but the unfortunate reality is that it simply isn’t that joined up. Domestic agriculture and international trade are distinct areas of government but should not be viewed in isolation.
“Government understands this argument but developing policies that reflect it is a challenge. A DEFRA official designing the Environmental Land Management Scheme for example, is focussed on producing a system that supports environmental delivery and is easily accessible to land managers. It is not their job to consider how business investment may be influenced by import policies on meat, fruit and vegetable products,” says Mr von Westenholz.
