5 Apr 2019
Preparing for Brexit and Preparing for Change
The 2016 referendum now seems a lifetime ago but, of course, its ramifications are becoming self-evident as the UK prepares to leave the EU. At the time of writing, the nature in which the UK will leave the EU and the form it will take is still being debated. However the effect on the farming and food sectors of the UK leaving the EU is likely to be profound. Leaving the EU means significant changes over a period of time to our political, economic and trading links to the EU. Farming will face some of the biggest changes.
Bringing back well over 40 years of agricultural and environmental policy from Brussels to Westminster means that the Secretary of State will be the first politician in a generation to hold political responsibility for UK food security. He intends to do this in time through the proposals described in the Agriculture Bill which is working its way through parliament. This in essence, subject to a bucket load of ‘what-ifs’ connected to Brexit negotiations, provides the framework for a domestic farming policy. It proposes to remove direct payments over time and replace them with the much discussed ‘public money for public goods’ approach through a new Environment and Land Management Schemes or ‘ELMS.’ There will also be some support for farm resilience and productivity improvements.
So with all this up in the air – what does this actually mean for farmers on the ground, and how can they prepare? This in part is a difficult question to answer such is the political uncertainty connected to Brexit. It seems clear however that many ‘Brexit’ discussions connected to the future for farm businesses are often actually ‘business’ discussions that need to continue regardless. The age old management maxim of controlling the things you have control over seems particularly relevant.
In the short term the political uncertainty connected to Brexit means that we are urging farm businesses to look at our Brexit toolkit on a regular basis. For instance, in the event of a disorderly “No Deal” withdrawal from the EU the impact of Brexit will be felt much more keenly from the day of exit. One thing farmers can do to prepare for this possible outcome is to identify the business risks and the level of exposure you have to the EU market – both on the inputs and outputs side of farm businesses.
On inputs such as feed, fertilisers, veterinary medicines, plant protection products, machinery purchases, machinery parts and service agreements, we are urging farmers to consider when they need or use these and to consider whether there could be disruption to their supply. We think it is important for farm businesses to consider the origin of farm inputs and to talk to suppliers to understand whether they anticipate any delays or price increases (for example if duties are applied at borders).
The same applies for outputs – for example if you are exporting live animals, selling livestock to abattoirs, grain to merchants or other products that may be destined for the export market. Farmers need to know where the product from the farm is destined and to what impact a disorderly exit from the EU could have on business transactions.
In the medium to longer term after we have left the EU and as we move towards new trading relationships and a new policy environment in the UK in which farm businesses operate, clearly the decisions on farm are back to the ‘business decisions’ I have already mentioned. The changes from Brexit will mean that farm businesses need to focus on what the future holds and start to make decisions perhaps more quickly than had been expected.
For instance, if there are changes to be made in the farm business to allow older farmers to take a step back and allow a younger family member to step forward then those too often avoided conversations about succession planning need to be taking place. Similarly in whatever area of farming a business is engaged in, the changes that will arise from Brexit mean that farmers should look in detail at their existing businesses. Like so many farmers do already, there is a real need for farm businesses have a thorough understanding of how it is performing and to consider how and in what ways the business can become more resilient.
The co-operation of organisations involved in the ‘Grow Yorkshire’ are all there to help with this process – whether that’s through farmers organisations like the NFU and the advice, benefits and services we offer to our members, or the wide range of other organisations connected to business advice and funding. The NFU and others are all there to help farm businesses thrive in the future – to deal with the challenges that arise from Brexit and to capitalise on the opportunities in what is a dynamic farming and food industry that is so important to the Yorkshire economy.