Post-Brexit trade scenarios

Leaving the single market and customs union poses a serious risk to Scottish farming, an independent study has concluded.

Scotland’s Rural College has analysed the potential economic impact of three potential post-Brexit trade scenarios on four farm types – beef, sheep, dairy and crops. These include:

• Bespoke free trade deal with the EU similar to the single market
• World Trade Organisation default Most Favoured Nation tariffs
• Unilateral trade liberalisation

The report found that in every scenario Scotland’s farmers would be worse off compared to under the current trade arrangement, with some or all producers facing lower returns.

Commenting on the report, Rural Economy Secretary Fergus Ewing said:

“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.

“Furthermore, if any of these scenarios were combined with the removal of direct support payments at current levels, the financial consequences for Scottish farms would be much more significant, with pronounced reduction in net profitability across beef, sheep, and crop sectors.”

Steven Thomson, Senior Agricultural Economist at Scotland’s Rural College, said:

“Brexit is an extremely complicated process, particularly when it comes to agriculture due to the EU’s protection for the sector. Our results highlight the potential threats, and opportunities, to the profitability of different Scottish farming sectors under possible post-Brexit trade and policy scenarios. The findings 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.”

Background

Assessing the impacts of alternative post-Brexit trade and agricultural support policy scenarios on Scottish farming systems was funded through the Scottish Government’s Strategic Research Programme.

The research is predicated on the assumption that direct support payments to farmers will remain at current levels.