THE NUMBER of sheep in Scotland could halve if the UK doesn’t secure a free trade agreement with the European Union (EU) after Brexit, according to a new report to be discussed by Shetland’s NFU branch this evening.
Scotland’s Rural College researchers says a worst case scenario outcome on trade could see a huge impact on livestock numbers as a result of rising costs.
The report looked at three possible economic outcomes from the UK leaving the EU in 2019.
One was a free trade agreement with the EU where both the UK and EU retain tariff and quota free access to each other’s markets, and the UK maintains EU tariffs to the rest of the world.
The second option were default World Trade Organisation (WTO) tariff regimes, which would include a most favoured nation tariff for trade with the EU and the rest of the world, while the third was a unilateral trade liberalisation situation where there are no tariffs on imports, but WTO tariffs on exports.
The report estimated that under every scenario, Scottish farmers would be worse off than they are currently.
The free trade model would have the least impact on Scotland’s beef, sheep, dairy and crops industries by 2022.
But the unilateral trade liberalisation model would have a “very substantial negative impact” on farm profitability, the report suggests, as tariff protection would be lost.
Researchers also say that nearly nine out of ten specialist sheep farms are expected to make losses in 2022 if direct support payments were removed.
And under the default WTO tariff regimes option, Scotland’s ewe flock could more than halve in size due to new tariff barriers for lamb entering the EU market.
It is also compounded by the possibility of farmers shifting from sheep to cattle to benefit from anticipated higher beef prices.
In all scenarios the price change between 2015 and 2022 for barley and wheat would all be positive – although it would be less than if business was kept usual.
Local NFU chairman Cecil Eunson said the report would be discussed at its latest meeting tonight (20 February).
Shetland MSP Tavish Scott said last week he had been planning to discuss with the national NFU and local NFU reps the “importance of planning for post-Brexit”.
“I fully understand the challenges that the devolved governments face because the UK Government won’t say what its position is,” he said, “and until they sort our their precise position on the future trading relationship between the UK and Europe, then it is very difficult for any farm or croft business – never mind the NFU – to make plans for post-2021.
“Farm payments are fine, but if you can’t export because trade barriers have come down, as the majority of the Tory party seem to favour [a hard Brexit]… crofting and farming face an incredibly uncertain future,” he said.
Scotland’s Rural College senior agricultural economist Steven Thomson said Brexit is an “extremely complicated process”, especially for farming.
“The findings [of the study] reiterate how vulnerable hill farming systems are to trade deals and policy choices, stressing the need to take the disadvantaged areas into account during the Brexit process,” he added.
Rural economy secretary Fergus Ewing commented: “This study confirms once again what the Scottish Government has been saying all along, that the interests of farmers are best served by remaining within the EU.
“In all scenarios, failure to replicate the current trade arrangements with the EU will have a detrimental impact on farmers, with our sheep sector under particular threat.”
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