New scenarios modelling: Pig farms could suffer post-Brexit
AHDB has released a second set of scenarios, identifying the possible impacts of Brexit on the farm incomes in 2022.
The report models two scenarios: a free trade agreement between the UK and Europe (UK-EU FTA) and a “no-deal” Brexit where the UK trades with the EU under WTO rules (WTO: UK tariffs), applying its own import tariffs.
The new scenario modelling includes updated global pig prices, and adjustments to take account of carcase balancing in the pig sector. Recent announcements regarding the timing of direct payment removal, and import tariffs the UK would apply under a no-deal scenario, were also incorporated.
Farm business income for pig farms drops by around £15,000 under UK-EU FTA, to £21,273. The average pig farm under the WTO: UK tariffs scenario becomes loss making, with an FBI of -£10,741.
An increase in labour costs reduces farm incomes under both scenarios.
Under UK-EU FTA there is a modest increase in production returns caused by increased trade friction on imports. Conversely, under WTO: UK tariffs scenario, cheaper world pork supplies are expected to flow to the UK, pushing down prices. This is even with an expected increase in trade friction costs. For more details, and the full report, click here.
The figures above relate to average farm business incomes. Under both scenarios the FBI of high performing farmers remains positive, regardless of farm size.
Duncan Wyatt, Lead Analyst
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