A Brexit boost for pig farm incomes?
According to the latest AHDB Horizon report, Brexit scenarios: an impact assessment, Brexit could provide a boost to pig farm incomes.
The report explores three possible post-Brexit situations and models their effect on Farm Business Income (FBI) on a sector-by-sector basis. Possible alterations to trade, domestic farm policy, labour supply, and the regulatory environment are explored under the following scenarios:
- “Evolution”- a business-as-usual approach where the above variables remain as close to the status quo as possible, given that the UK will no longer be a member of the single market.
- “Unilateral liberalisation”- overall support payments to farmers halves, with direct payments abolished. Access to EU labour is also halved. The UK adopts a liberal approach to trading and abolishes import tariffs for all agricultural products within set quotas. No EU-UK trade agreement is made.
- “Fortress Britain”- support payments are reduced to 25% of current levels. Access to EU labour is halved and UK casual labour costs also increase. The UK adopts the same WTO tariffs as the EU for agricultural imports, and no EU-UK trade deal is agreed.
For the pig sector, farm incomes rise under all of the above scenarios. From a base of £46,067, incomes reach £68,708 for “Evolution”, £57,418 for “Unilateral Liberalisation” and £205,354 for “Fortress Britain”. This is due to the increased costs of imports, which is particularly apparent under the third scenario, enabling investment in the industry. According to the model, higher import costs outweigh any increases to labour costs. Lower feed and regulatory costs are also apparent under unilateral liberalisation, which also helps boost projected farm incomes.
However, it is important to balance the seemingly positive initial outcomes suggested by the report against the longer-term impact. For example, if a market is not found for cuts not currently in demand in the UK, it could be difficult to take advantage of the price rises described, and the potential large increases in FBI would be significantly reduced.
To read the full report, click here.
Bethan Wilkins, Analyst
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