Brexit: under the bus they go

21/05/2021

After an element of "will he won't he?", The Sun is reporting that Johnson has swung decisively in favour of his trade secretary, Liz Truss, and given her the go-ahead to "ink in" a trade agreement with the Australians.

The only concession to British farmers is to extend the transition period from the five years that the Aussies were demanding, offering 15 years before quotas and tariffs completely disappear. That offer will now be made to the Australian side, the paper says, with ministerial sources confident an agreement is now in sight despite further haggling to be done on the exact length of the transition.

Thus is being played out the next step in what has been dubbed the "battle for the soul of Brexit". Johnson has thrown in his lot with the "free trade" lobby and is now prepared to throw farming "under the bus" in pursuit of his "Global Britain" ambitions.

The extension of the transition period to 15 years is supposedly to allow farmers time to "adapt" to the new trading conditions. This is a rather cynical use of the word as the net effect of opening the UK to all-comers (the Australians merely being the first) will be to drive many farmers out of business.

To "adapt" in this context means that farmers will either have to learn how to deal with long-term unemployment, or move to a completely new line of business.

Their dilemma is easily illustrated by reference to Welsh sheep farmers who, over the period of our membership of the EEC and its successor organisations have actually done quite well out of the CAP.

Wales, of course, is characterised by upland and mountainous topography and is subject to a wetter climate than much of the rest of the UK.

As a result a large proportion of utilised land – about 80 percent - is classified as "less favourable areas" or LFA land, rendering it more suitable for grazing livestock, specifically sheep, on comparatively small farm holdings that make relatively modest incomes.

But it is the special LFA subsidies which have been paid under the CAP, and the EU's protective tariff regime, which have given Welsh farmers their break. In 1914 (which is used as a comparative baseline), there were 914,000 hectares under permanent grass, supporting 3,818,000 sheep.

By 2014, a century later, permanent grass had increased to 1,048,000 hectares, topped up by a 437,000 hectares of rough grassland. And the average sheep population soared to 9,739,000. Some 29 percent of UK sheep are within Wales, produced from holdings which average 48 hectares (smaller than in England and Scotland)., yielding an income (2014-15) of £29,400.

Take away the subsidy regime and, in particular, the protection from external competitors such as Australia and New Zealand, and the whole edifice collapses. There sector, overall, can only adapt massively reducing its production, perhaps to 1914 levels, which would entail a contraction of more than half. Diversification into other agricultural sectors is simply not an option.

A similar picture can be painted for Scotland, only with the bias towards beef production. In England, Cumbia and the central borders regions mirror the situation in Wales, with significant levels of sheep production. Again, without protection from external competition, the sectors do not survive in their current forms.

Claims from Downing Street, therefore, that any deal would "not undercut UK farmers or compromise our high standards", are seen in Wales as hollow rhetoric. Tariff-free imports would simply mean the end of livestock farming in key parts of the UK.

That is not to say that some changes would not be welcome. There is a small but vociferous lobby – supported by Johnson's bed mate, Carrie Antoinette – who would like to see the hills given over to "nature", with "rewilding" taking the place of farmed animals.

Then there are commercial opportunities in the tourism sector, and potential income streams from wind farms (less so, solar farms in rain-swept Wales), which could replace some of the lost income – although farmers are already adept at exploiting these opportunities. There may be fewer genuinely new opportunities than the optimists predict.

Meanwhile, as Pete points out, the very fact of the Australian negotiations has opened up the debate on trade policy in a way that we have rarely seen since joining the EEC.

Predictably, the cheerleader for the Johnson fan club – the Telegraph is leading the way in support of a deal, asserting that the very heart of the Brexit vision – such that it is - may hinge on securing a deal with Australia.

It is that pressure which worries the Guardian. It sees the Tories as trophy-hunting, signing a deal with the Australians simply in order to enact the "Global Britain" rhetoric, irrespective of the actual advantages.

There is a danger, this paper says, that the timetable and terms of an Australian deal will be dictated by the need to prove a theoretical point, and not by rational balancing of competing demands. It would be wholly in keeping with the spirit of Brexit so far if Mr Johnson were to elevate rose-tinted symbolism over clear-sighted appraisal of the national interest.

The reality, though, is that before we go any further, we need a serious debate about the role of farming in this country. If we are to expect farmers to perform their traditional role of custodians of the countryside, then there is a price to pay.

This, I saw for myself when in 2013 I visited a farm in Norway to hear its owner, Odd-Einar Hjordnes explain that his type of marginal agriculture could not survive without protection from external competition.

Norway, like Switzerland, pays its farmers higher levels of subsidy than enjoyed by EU farmers, with both countries also maintaining high food prices. Even with EU-level subsidies, Hjordnes believed that his and the 5,000 small farms in the region would not exist.

But where even large enterprises in the UK are at risk – as with sugar beet growers – we stand to see a revolution in UK farming, forced on us by trade policy, without this even being fully discussed.

The public should be under no illusions though – cheap imported food is not compatible with having a healthy agricultural sector. What, therefore, is wholly unacceptable is the speed with which this deal is being rammed through. As The Times reports, Johnson is aiming to have the deal signed within the month, even though the Financial Times is reporting that Australia's top beef exporter is predicts a tenfold UK sales surge if the trade deal is agreed.

Furthermore, this is not unknown to the UK government. The FT reports that a July 2020 study of the prospective deal said that a "full tariff liberalisation" deal would cause British exports to Australia to rise 7.3 percent, but spark an 83.2 percent rise in Australian exports to the UK.

It also concedes that "Australia has a strong comparative advantage" in meat production, and that in the long run might be able to sell its products "at a lower cost than domestic producers". Thus, workers in British agriculture might be "reallocated" to expanding sectors.

And that is the true meaning of the industry having to "adapt", something which must be factored into the debate – not that it will be. Otherwise, this country might be mistaken for a democracy.

Also published on Turbulent Times.