Opportunities and challenges are familiar words we hear when examining the potential implications of Brexit for UK industry, and agriculture and horticulture are certainly no exception.
Since the Referendum the Agriculture and Horticulture Development Board (AHDB) has produced a series of Brexit Horizon reports examining the potential impacts on UK agriculture and horticulture of leaving the EU.
Perhaps most importantly, our analysis has highlighted that the key to transitioning to a post-Brexit world within a very short period of time lies in increased improvements in productivity, and the ability of farmers and growers to turn inputs into outputs.
In Northern Ireland opportunities and challenges for agriculture and horticulture are broadly the same as the rest of the UK – changes in policy, changes in trade arrangements, access to labour and the regulatory framework.
There are, however, areas which are perhaps more significant to Northern Ireland. The size of farm units, for example, means they have less scope to explore the economies of scale than farms on the mainland.
Integrated supply chains and cross-border trade
Fully integrated supply chains also represent a significant issue, the prime example being the import of milling wheat for human consumption, which is processed and exported as flour.
There is currently a carousel effect, whereby the product crosses the invisible border twice: this cross-border trade with the Republic of Ireland has been crucial to the growth and development of the industry, and any significant change has the potential to cause major disruption.
Much has been made of the implications for support payments, but we must remember that reform to the Common Agricultural Policy (CAP) had already been on the agenda. Brexit hasn’t changed the direction of travel in this respect, but it has concentrated it into a much shorter timeframe.
However, while some have asserted that we will see significant reductions in CAP payments by 2019, I think the pace of change will be slower with CAP reform than it will be with domestic agricultural policy.
The tightness of the timeframe for transition can’t be overstated. Unlike manufacturing, agriculture has very long time lags, and very long planning and funding cycles.
Therefore, that transition period is crucial and while welcome, cannot be seen as a period of breathing space for farmers and growers. Moreover, it is very much a critical time to allow the sector to adapt to what is probably going to be the biggest change in my lifetime.
We have a unique opportunity here to design a domestic agricultural policy nuanced to the needs of the UK and the devolved nations. We will need to bear in mind the integrity of the internal market among these territories, and there will be a limit to how far we can diverge overarching policy so that we don’t damage that internal market.
Likewise, we do not have a completely free hand in developing domestic agricultural policy, since under WTO rules we are not allowed to implement any trade-distorting levels of support. We therefore want to avoid a dispute at WTO level or a challenge and retaliatory tariffs put in place which would damage all concerned.
Our job at AHDB is to prepare levy payers and processors for the challenges that lie ahead, to shine a light on the issues, to provide unbiased information to help them make the correct strategic decisions for their businesses.
Access to skilled labour
Access to sufficient labour is another issue that has been raised repeatedly since the referendum. Our economy is approaching full employment and we don’t have significant pools of unemployed people. Agricultural work is not located where the population is, and workers therefore have to travel, work unsociable hours and potentially live on site.
Ultimately, it’s very hard work and anecdotal evidence suggests if growers do employ UK workers they tend not to last very long, with the migrant labour force apparently more willing to work.
The other issue relating to labour is the perception of how skilled you need to be to work in the agricultural sector, and the tendency to equate skill with qualifications.
We would argue that in our sector, workers are highly skilled, but they may not necessarily be highly qualified; as such, in the future they may not qualify for work permits under a points-based immigration scheme, and the resulting loss of labour would undoubtedly present the agricultural sector with a major challenge.
These are uncertain times and uncertainty is the enemy of investment, making decisions all the more difficult. The absence of an Assembly in Northern Ireland has exacerbated the unease for growers in Northern Ireland.
As I outlined earlier productivity is probably the burning issue, and to provide some clarity to stimulate the decision-making necessary to get our growers’ businesses fit for the future is the critical issue.
At AHDB we’ve been working hard focusing on the things that growers can change, rather than allowing this ‘wait and see’ or ‘sleepwalking into Brexit’ mantra to gain momentum.
Our work has highlighted that 25 per cent of growers will remain resilient under all Brexit scenarios. If we can get as many of the rest to raise performance to that level, they will remain profitable whatever form of trading arrangement the UK negotiates with the EU.
To achieve this, we’re encouraging them to make small changes over a wide range of parameters, rather than make huge changes in a small area. We have produced a report with Andersons Consulting identifying the characteristics of high performing farms.
This will be on our website shortly. What is key is attention to detail on the small things, and 95 per cent of those factors are within the control of an individual business.
Yes, these are uncertain times but an important point to remember is that farmers and growers make business decisions every hour of every day of every week. A huge number of them will get through this challenging time but they need our support, encouragement and empowerment to do this.
We have to prepare for the worst and hope for the best and it is very much a call to action now for the sector to do what it can to get in the best possible shape for leaving the EU, and ensure it is fit for the future.
By Sarah Baker, Strategic Insight Manager, Agriculture and Horticulture Development Board (AHDB) Market Intelligence. AHDB’s Brexit Horizon series of publications examining the potential impacts on the agriculture sector can be found in the Brexit and Fit to Thrive section of the AHDB website.