Agriculture European Update
January April 2017
January Maximum Uncertainty
As the constitutional obstacles to the Government notifying the European Union of the UK's withdrawal under Article 50 of the EU Treaty are gradually removed, what lies ahead for UK agriculture? No one knows.
There are a plethora of possibilities, with advocates for each immediately faced with vociferous objections.
Trade agreements with non-EU countries are proposed as the magic answer. Donald Trump says he is keen for the US to have one quickly with the UK, but what about `America First'? Mexican farmers know the answer to that. When Mexico joined the North American Free Trade area, US farmers were able to flood the Mexican market with cheaper produce and put many of their farmers out of business.
Then there are Australia and New Zealand; what good would agreements with them be to UK farmers seeking to export produce? The populations are tiny, and on the other side of the world. Far better to retain access to consumers in the EU, but the Prime Minister is apparently adamant that, if the UK becomes a member of the European Economic Area (which guarantees access so long as EU regulations are complied with), that would not be a proper Brexit and therefore cannot be considered.
The EU Commission maintains that the European Treaty prevents the UK from negotiating trade agreements while it is a member of the Union. That is true as regards agreements that would apply to the
Union and all member states, but why cannot a member state negotiate an agreement that would apply to it alone and come into force after it has ceased to be a member state?
The future arrangements for support are as uncertain as the future availability of export markets. The Welsh Government has suggested that the UK should have a common agricultural framework. That went down like a lead balloon in Edinburgh. The Scottish Government suspected that it would lead to curtailment of its devolved powers, and said that it was essential that the Scottish Parliament decided the detail of any framework. The First Minister insists that the needs of Scottish agriculture are different, but she must be careful not to
create barriers to trade in the UK domestic market. 85% of Scottish agricultural exports are to England and Wales surely it is more important not to disrupt those than to obsess about access to Europe, and look for ways for Scotland to remain a member of the EU Single Market if the UK ceases to be?
While the political shadow boxing goes on and farmers are forced to put their plans on hold, their day to day concerns remain. The fall in sterling has resulted in prices for fertiliser, fuel and feed increasing in the second half of last year, and the trend is predicted to continue, with fuel forecast to go up by 15.2%, fertiliser by 14.6% and feed and medicine by 7.6%. If inflation takes hold, other costs, including wages, will rise. Farming is a difficult business.
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February How to write the post-Brexit rules?
Now that the Parliamentary obstacles have been removed and the Prime Minister gets ready to give notice under Article 50 of the UK's withdrawal from the European Union, the next legislative step will be to deal with the EU legislation that has direct effect in member states. There is to be a Great Repeal bill, to disapply EU Regulations; it does not have to deal with EU Directives as they do not have direct effect and have all been brought into effect in the UK by domestic legislation.
The replacement of the Regulations is far from straightforward. Already there is talk of an initial seven separate bills, with more to follow, and it is easy to see why.
In the case of agriculture, if the replacement bill simply provided that the Regulations are to apply with all references to EU institutions replaced by references to the UK Government,that would undermine `the devolution settlement', and justify the complaints from Edinburgh of a power grab by
Whitehall. But, the more detailed the replacement bill, the greater the chance of unintended consequences, and thus the need to be wary of relying on the legislation without checking the detail against the text of the replaced Regulation. As if farmers and their advisers did not have enough to worry about - with uncertainties about access to markets and financial support post-2020, without having to make sure that the law has not changed too.
The need for new legislation may, however, provide an opportunity to link national agricultural policy with local economic issues. Rules on land management can make the difference between farms and businesses being flooded or not. And in fruit and vegetable growing areas, how are the crops to be picked if the EU seasonal workers policy is not replaced? New rural devolution deals may provide a better way forward than more `one size fits all' policy.
In the meantime the EU Agriculture Commissioner is starting his consultation on the future of the Common Agricultural Policy post-2020. The Commission is apparently considering five options for reform, which cover everything from the status quo to support being limited to small holdings, local food and environmentally-friendly farms. Probably these will be narrowed down to a choice between ending area based payments with support only for rural development and keeping area based payments but linking them to delivery of environmental and economic benefits.
The outcome will not affect UK farmers directly, but it looks as though the pressure that the EU agriculture budget will come under, when the second largest contributor - the UK - ceases to pay in, has concentrated minds in Brussels, and EU farmers may face significant changes too. Whatever happens, UK farmers need to know what is going on the EU is likely to remain the UK's largest trading partner. There must be a risk that the promised trade deals with non-EU countries such as Canada will see the door opened to unwelcome agricultural imports into the UK.
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March We are not out yet
With all the attention about to turn to the discussion of the terms on which the UK will leave the European Union, it is easy to overlook the need for the UK to continue to participate fully in the formulation of EU legislation.
There have been suggestions that the pressure of Brexit is causing Government departments to take their eye off the ball due to lack of staff. To say that `it does not matter as we are coming out' is dangerous. The grandiosely titled Great Repeal Bill will repeal very little; its main purpose is to transpose into UK law all EU legislation as it stands at the time the UK actually leaves the Union. So it is important that the UK does not take a back seat or leave an empty chair in the meantime, especially in relation to insecticides.
The struggle to get glyphosate reauthorised from the end of year for use in the EU continues. To the surprise of some and the consternation of others, the European Chemicals Agency, to which the Commission had referred the question of whether it was carcinogenic, has ruled that it is not. The Agriculture Commissioner has said that he would like to re-authorise it `for at least the next ten years'. The anti-insecticide lobby within the European Parliament is up in arms, claiming that the research on which the Agency relied was influenced by Monsanto, the manufacturer, and proposes to challenge the Agency's conclusion. The Commissioner will need as much help as they can muster from member states including the UK, and their representatives on EU committees, if he is to succeed.
The situation with regard to neonicotinoids is worse. Some have been banned within the EU since 2012 on the grounds that they are harmful to bees. The Commission's Joint Research Centre has
recently concluded the ban has been counter-productive, in that the use by famers of more damaging alternative sprays on their crops of oil-seed rape has increased and the ban has had no benefit for bees. The European Court of Justice is hearing an appeal against the 2012 ban. Instead of accepting the Research Centre's conclusion and withdrawing its opposition to the appeal, the Commission has apparently decided not to publish the conclusion and to press ahead with a complete ban on neonicotinoids before the case is concluded. The UK ought to do all it can to thwart the Commission.
Had EU member states been more open minded about genetic modification, crops might by now have been developed which do not need as much, or any, glyphosate or neonicotinoids. The UK can take a different view post-Brexit, but, if, as seems increasingly likely, there is no new blueprint for UK agricultural policy and instead it gradually evolves from EU policy on exit day, new thinking will take time to translate into new legislation, and that may differ depending on whether it is enacted in London, Edinburgh, Cardiff or Belfast.
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April Brexit - Dose of Realism from the House of Lords
The European Union Committee of the House of Lords has just published an 80 page report `Brexit: agriculture' which should be compulsory reading for any one who claims authority on the subject.
It considered evidence from some 50 organisations and bodies and heard oral evidence from some 25 witnesses over a period of 3 months in the early part of the year. Its conclusions and recommendations illustrate the scale and complexity of the task facing the UK Government and make it painfully clear that it will not be complete for many years and have ramifications that have not so far been widely appreciated.
To take `Resources' as an example, the Committee says that `UK bodies, such as food inspection agencies, will need additional resources if they are to take on roles currently fulfilled by EU institutions in relation to the agri-food sector. One of these new roles will be an inspection workforce working in countries with which
we have Free Trade Agreements to ensure upholding of welfare and phytosanitary standards'.
The Committee doubts that DEFRA will be able to cope. It says that `DEFRA faces an enormous challenge in repatriating agricultural policy alongside fisheries and environmental policy, particularly given the heavy cuts in its budget over recent years. Its role in relation to the agricultural sector will also increase significantly. The Department will need significant numbers of additional staff, with appropriate expertise. We welcome DEFRA's use of expertise from its agencies as an interim measure to inform policy development ahead of Brexit, but the Department will need to secure sufficient long-term resource'.
The Committee points out that DEFRA will be required to take on three different roles to support the agricultural sector. First it will need to see itself as a `sponsoring body', to look after the interests of British agriculture' and not as a regulatory body administering support from the EU. Second it will have to act as a `trade negotiator', there being an urgent need for improved trade negotiation capacities not only in DEFRA but in other ministries too, which, if not addressed, `might affect security of food supplies'. Third it will have to act as `co-ordinator across the UK'.
This last role is fraught with political difficulty. The First Minister of Wales said in his evidence to the Committee that `It is vital for the UK Government to work with the devolved administrations in order to identify the most effective approach for the UK as whole', and added that the structures for such co-ordination were `currently provided by European institutions'.
The Scottish Government was equally clear that there had to be negotiation between London, Edinburgh and Cardiff, and also Belfast, though that is difficult so long as there is direct rule and no government in Northern Ireland. The Barnett Formula for distributing funds will not do. If it was used, Scottish farmers would lose 50% of present support and Welsh farmers 40%.
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