Brexit and Food

May’s proposed withdrawal deal was a compromise with the food industry intended to avoid a no deal Brexit food crisis. Several weeks later and the prospect of a no deal Brexit looms larger.

‘The deal’ proposed that existing terms and conditions covering goods and the EU regulations will continue to apply (under draft Article 6 (2)), a list of relevant EU regulations (- 68 pages long) is set out in draft Annex 5. That covered food and medicines, ensuring that the majority of existing EU regulation relating to food and medicine would continue to apply indefinitely (until the end of the open-ended transition period).

The backstop (Protocol on Ireland /Northern Ireland) in the proposed deal was intended to avoid the basic logistical challenges of food supply which would have resulted from a no deal Brexit. The logistical challenges have been well-documented: The UK imports about 30% (by value) of all its food from other EU Member States (more if measured by tonnage). Many of those food products are perishable. The necessary IT systems and infrastructure are not in place for the import and export of agricultural produce so that businesses can continue to trade smoothly with Europe, including the Republic of Ireland, and the rest of the world.

The food security challenges of a no-deal Brexit, the ‘stuff of nightmares’, were to be resolved by stockpiling, according to then Brexit Secretary, Dominic Raab. In evidence to the Exiting the European Union Committee, on Tuesday 24 July 2018, Raab was ridiculed when he suggested it would be up to suppliers to stockpile food in the case of a no-deal Brexit: “It would be wrong to describe the government as doing the stockpiling”. The full evidence session is available here.

In response, the British Retail Consortium warned that: “Stockpiling of food is not a practical response to a no-deal on Brexit and industry has not been approached by Government to begin planning for this. Retailers do not have the facilities to house stockpiled goods and in the case of fresh produce, it is simply not possible to do so. Our food supply chains are extremely fragile and this is yet further demonstration of the need for an agreement on the backstop to ensure frictionless trade is maintained after the 29 March 2019.”

According to Ian Wright CBE’s, Campden BRI Day Lecture in June 2018: “The only acceptable outcome is one that delivers: continued tariff-free UK-EU trade in all agrifood and drink products; continued access to EU FTAs (Free Trade Agreement) during and beyond the transition period; as frictionless as possible trade that avoids delays and added costs and no physical border in Ireland where the majority of goods traded are food and drink.”

‘The deal’ meets these conditions to an extent. It enables the free flow of goods but restricts the flow of alternative trade deals. Instead any such free trade deals will be pursued from within the EU as part of the EU. (It is expected that the EU Trade Commission will explore a “limited” trade agreement on tariffs of industrial goods with the US, next year, although it is not expected that the Transatlantic Trade and Investment Partnership (TTIP) will be resuscitated.)

 

EU trade agreements diagram:

 

 

Image source: http://trade.ec.europa.eu/doclib/docs/2012/june/tradoc_149622.pdf

 

Food producers and labourers: 

The Withdrawal Agreement safeguards the right to stay and continue their current activities for over 3 million EU citizens in the UK, and over 1 million UK nationals in EU countries (Article 10). This will protect  non-UK EU citizens who work as vets in meat hygiene services in the UJ (estimated to amount to 90% of the sector according to the British Veterinary Association). This will not safeguard the rights of seasonal migrant workers characteristic of the farming sector.

A recent report by Migrant Advisory Committee (MAC) recommends the creation of a Seasonal Agricultural Workers Scheme (SAWS): “The labour market for seasonal agricultural labour is completely separate from the market for resident workers in a way that is unlike any other labour market. According to the ONS, 99 per cent of seasonal agricultural workers are from EU countries and it is difficult to imagine a scenario in which this workforce can come from the resident labour market. There is no other sector in which the majority of workers are migrants and very few with a migrant share above 25 per cent.”

The image below, featured in the MAC report shows the change in the hectares planted with some selected labour- intensive crops index to 2004, the year the 8 Accession new member states joined the EU. It shows how the number of hectares dedicated to growing these selected crops was falling prior to this event and either stabilised or expanded afterwards.

 

 Source: DEFRA (“latest asparagus data for 2015”.)

Under a new pilot scheme announced by Michael Gove in September 2018 2,500 workers from outside the EU will be able to come to the UK each year, alleviating labour shortages during peak production periods. As Caroline Nye of the University of Exeter has reported: “Running between spring 2019 and December 2020, the scheme will unfortunately only deal with the tip of the iceberg.. … the 2,500 workers brought in by this new scheme will have little overall impact on the labour crisis currently hanging over the UK farming industry. Many farming businesses could suffer financial problems if larger numbers of visas aren’t made available during the two years the scheme is running. This could lead to further headlines about fruit “rotting in the fields”.”

There are advantages and disadvantages of a seasonal agricultural workers scheme such as that proposed by MAC. The potential disadvantage being that it promotes seasonal migratory work and not permanent year-round jobs. It has clear advantages however, in that it will help against labour shortages in the agricultural sector, and moreover it will protect those workers from the informal labour market. As, it bears noting that the removal of EU protections and rights for seasonal migrant workers in the UK does not necessarily correlate to an exodus of seasonal migrant workers. Instead, in reality, without specific safeguards in this sector, we may see the growth of the informal migrant labour sector across the UK, as farms seek to cut corners and employ cheap labour under the radar to survive.

 

CFP

Within the fishing sector and beyond, hopes are high that Brexit, and specifically leaving the Common Fisheries Policy, represents ‘a sea of opportunity’ for coastal communities around the UK. – However, both the draft deal scenario and the no deal scenario are unlikely to have the anticipated favourable impact on the UK’s coastal communities, for different reasons.

‘The deal’ paves the way for the UK to operate as an ‘independent coastal state’. Under Article 130 of the draft deal, the UK is consulted about the management of the Common Fisheries Policy (CFP) until a new arrangement comes in to place, expected to be in early 2020. On the other hand, a ‘no deal Brexit’ would mean an end to the CFP more or less immediately.

Under both scenarios it is misleading to suggest that the government will automatically ‘regain control of its quotas’ and that this be the EU’s loss and UK coastal communities’s ‘win’. Indeed the existing quotas have been harmful to the economy of coastal communities. But under existing EU rules on the CFP, it is not the EU but the UK government that has responsibility for setting and importantly, monitoring the quotas in UK waters.

Under existing arrangements, according to a recent investigation by the EU lobby group for coastal fishermen Low Impact Fishers of Europe (Life) and reported by the Guardian: 97% of English quotas are owned by a half-dozen fish producer organisations (POs).  40 % of the entire Scottish catch by value, and 65% by tonnage, was landed by 19 powerful super-trawlers in 2016. Small-scale coastal fishermen, who operate 80% of Scottish boats, have to make do with 1% of quotas.

A new arrangement does not necessarily mean a fairer one. It is big industry not small European fishermen who take the lion’s share of fishing stocks in the UK’s coastal waters. If the UK wanted to improve the lot of small fishing industries, it could do so under the existing EU arrangement.

 

CAP

The draft deal commits to leaving the Common Agricultural Policy (the CAP). What does that mean for farmers and producers in the UK?

The CAP has been troubled and much maligned for many years. Some of the controversy surrounding CAP relates to its early practice of encouraging overproduction within EU, and the ‘dumping’ of surplus produce on developing countries, to the detriment of local producers and local economies in those countries. Combined with high external tariffs for non-EU food imports, the practice of dumping attracted wide spread international condemnation of the EU agricultural policies notably at the Doha World Trade Organisation talks in 2003.

The CAP has evolved considerably since then and is set for further significant reform in the next CAP round (from 2020). The European Commission has set out proposals to structure future CAP payments to prioritise small and medium-sized farms and encourage young farmers to join the profession. The UK is therefore not leaving CAP as we know it now, but instead it is leaving this future reformed CAP arrangement which will be in place post 2020. The loss of the future CAP benefits is likely therefore to have a disproportionate effect across UK farms, namely on those prioritised by future CAP reform - small and medium-sized farms and young farmers.

According to government estimates currently CAP support makes up around 50-60% of farm incomes in the UK. The distribution of support across the UK varies however and the loss of CAP will have a differentiated impact regionally. The four nations’ allocation of CAP funding per capita over the 2014-2020 period: England – €330; Scotland – €855; Wales – €841; Northern Ireland – €1,372.

The Scottish Government has stated: “Without CAP, few of Scotland’s farm businesses would be viable and much of Scotland's land would be unproductive. … For the vast majority of Scotland’s farmers, CAP support helps to make their businesses viable. Without CAP, we’d run the risk of many farmers leaving the industry and that would have a serious impact on our food production as well as the management of our countryside.”

It is generally agreed that the scale and nature of the immediate impact of the CAP exit on UK agriculture will largely depend on future levels of income support for farmers and rural development funding from the UK and Scottish governments (amongst other factors). Gove’s proposed Agriculture Bill sets out that future income support for farmers will be based on environmental contributions, through green payment schemes. How those contributions are measured and therefore the capacity for the diversity of farms across the UK (i.e. including hill farms) to benefit from those subsidies is as yet unclear.

According to a House of Commons Briefing Paper: “The UK Government has pledged [in Gove’s speech The Unfrozen Moment - Delivering A Green Brexit] to maintain the same cash funds as currently for CAP until the end of the Parliament, under the expectation that this will be 2022. … Farming unions have welcomed the Government’s commitment to maintaining the same cash funds for farm support until 2022.”

 

Conclusion

Food security, and moreover, the food industry, have emerged as deal-breakers in the Brexit debate. The conditions set out in ‘the deal’ attempt to avoid some of the most immediate threats to food security but leaves critical questions unaddressed. - It does not mention the return of competences of devolved issues including agriculture, forestry and fisheries (Scotland Act 1998, Schedule 5) to the Scottish Parliament. Though ‘the deal’ is silent on this issue, the UK constitution is not.

On a final note, the proposed deal in essence seeks to mitigate the direct impact on food security and producers in the UK risked by a no deal Brexit. Yet there is much more to be said about the impact on food security and food producers globally. The silence on these issues and the marked return to the self-interest of the nation state, both in ‘the deal’, and in the debate that surrounds it, diminishes us all.

 

This blog is drawn for a presentation given by the author to the Annual Conference of the Law Society of Scotland on 26^th October 2018 and was previously posted on the European Futures blog;  https://www.europeanfutures.ed.ac.uk/