What does leaving the EU mean for agriculture?
5th Jul 2016
This briefing is largely based on the briefing by the House of Commons Library ‘EU referendum: impact of an EU exit in key UK policy areas’. The opinions and judgements it contains are theirs. We expect to review and add to these articles periodically as events develop.
Now that the UK has voted to leave the EU, it will mean that we will no longer be part of the EU’s Common Agricultural Policy (CAP).
This will have a significant impact. The CAP makes up almost 40% of the EU budget and the largest share of the UK’s EU costs.
It gives direct support to UK farmers and the wider rural economy. From 2014-2020 the UK was set to receive around €28 billion in CAP funding.
The UK government’s recent position in the CAP reform discussions gives some idea of the approach we might take towards agriculture once the UK has left the EU. The UK has sought cuts in the overall EU budget supporting the CAP and has made it clear it wants to see a more competitive, market-orientated policy, to ensure that farmers can prepare for a future without income support.
The government has also ensured that there is flexibility for the UK to effectively devolve CAP arrangements across the UK administrations. However, this devolution brings its own complications, as currently the Devolved Administrations shape how CAP is applied in their regions within the EU rules and have chosen very different paths.
Across the UK, a large part of EU funding for rural development programmes is directed at agri-environment schemes where farmers receive additional payments for practices which especially protect and enhance the environment. The House of Commons Library says it is very likely that these would continue in some form across the UK once we have left the EU. They are well-established mechanisms and promote UK environmental policy objectives.
The rural development programmes in the UK also support the wider rural economy with priorities relating to tourism, rural broadband and small and medium sized businesses. The funding was planned to support various growth programmes across the UK for 2014-2020 with little additional UK government funding. For example, the £3.5 billion rural development programme for England has around 15% government funding.
Without CAP funding from the EU, it is not clear how much specific support the UK government will prioritise for rural areas.
Leaving the EU will probably reduce farm incomes as CAP subsidies form a significant part of most farm incomes. The UK government's previous position on CAP reform suggests that UK government and devolved administrations may be unlikely to match the current levels of subsidy. Either that or they would require more ‘public goods’ in return for support, such as environmental protection, which the UK government views as the “overarching market failure in this sector”.
However, it might also bring wider benefits to the economy as a whole, as the UK would be free to negotiate trade deals with countries outside the EU and at the World Trade Organisation, and would have more flexibility on pricing. The benefits would probably depend on whether or not the UK joined a different trade area and the terms it received.
The National Farmers’ Union (NFU) has said that farmers would accept a reduction in farm subsidies, as long as it was across the board i.e. UK farming was not disadvantaged compared to its EU competitors.
The NFU is also concerned about how the UK would seek access to the single market and seasonal labour. The NFU highlighted before the vote that EU withdrawal would require very careful transitional arrangements to ensure that the uncertainty of future incomes does not lead to problems with lending and change of ownership.
Regulating and licensing pesticides is done across the whole of the EU and has a major impact on agricultural and horticultural businesses. This allows a lot of the scientific work to be shared across the EU. However, the process still requires a lot of UK ‘machinery’ which could be used if the UK had full control over its own pesticide use.
The EU’s pesticide regulations have recently received a lot of attention because of the European Commission's restrictions on neonicotinoid insecticides due to their potentially negative impact on bees. The British government argued against these restrictions at the time, saying that the mixed scientific evidence didn’t justify a ban. Leaving the EU would mean we’re no longer covered by these restrictions, and the government might not continue them given the choice. Ministers say it depends what the latest research says.
The National Farmers’ Union has raised concerns that UK crop production is ‘flatlining’ because EU regulation is steadily reducing the range of crop protection products that they can use.
The rules for pesticide controls apply across the EU and allow Member States to authorise individual pesticide products following a national risk assessment process. The UK’s pesticide authority is the Health and Safety Executive’s Chemicals Regulation Directorate.
Before a pesticide can currently be used in the EU it must be scientifically evaluated by its manufacturer and the evidence given to the European Food Safety Authority (EFSA). The EU Commission then proposes whether it approves or disapproves of the pesticide. All member countries then vote in the Standing Committee on the Food Chain and Animal Health to make a final decision.
Pesticide approvals can be reviewed in the light of new scientific evidence. Once listed on the approved substance list the pesticide must gain consent at a national level.
The UK regulatory process for approving GM crops is also part of an EU-wide system of evaluation and authorisation for Genetically Modified Organisms (GMOs) based on scientific evidence and evaluation. However, the final decision on authorisation rests with member countries.
Plant and animal health and food safety
The UK government’s Competency Review noted that there is an extensive body of EU legislation on animal health, veterinary medicines, medicated feeding stuffs, animal welfare, food and feed safety and hygiene, food labelling and compositional standards. This is mainly to encourage trade and to provide the EU with comprehensive disease and food safety alert systems.
Many of these areas have international standards and an EU exit wouldn’t affect them very much—food is one example of this. Some areas also allow member countries to have stricter rules if they want. For example, the UK has stricter rules relating to animal slaughter and animal welfare.
However, Member States also share expertise, intelligence and resources to support these systems. Without access to such resources the UK would have to develop some of the services currently provided or negotiate with the EU to keep participating.
Update 15 July 2016
We clarified the first sentence to say that leaving the EU "will mean that we will no longer be" in the CAP instead of "will mean that we are no longer" in the CAP.