Six months on from Brexiting the EU, British dairy farmers are facing the harsh reality of world market trading. Tim Price reports.
Six months on from the UK’s departure from the cosy protection of the EU, British dairy farmers are facing the harsh reality of world market trading.
For many farmers, the real driving force for leaving the EU was their hatred of its myriad rules and the red tape that governed every aspect of farming.
But even as British Prime Minister Boris Johnston lit a symbolic red tape bonfire to celebrate freedom from EU rules, a massive heap of new paperwork landed with a thump on farmers’ doorsteps. Instead of just red tape, farmers are now faced with even more red, white and blue tape.
The first shock was the announcement of rules for the new environmental-based support system which replaces the EU’s farm support system. Under the outgoing EU Basic Payment Scheme (BPS), farmers got taxpayers’ money based on the amount of land they farmed. That meant the richer the farmers, the bigger the grant they got.
The new Environmental Land Management (ELM) system will pay farmers for running managed schemes which enhance the landscape. It includes adapting farming techniques to help wildlife thrive, planting woodlands to help the country move towards its carbon neutral goal and even flood prevention schemes.
It’s part of a strongly environmentally focused countryside policy which farmers fear will bring increased production costs and make their produce uncompetitive in world markets.
However, government ministers claim the changes will lead to a ‘renewed’ agricultural sector producing healthy food for consumption at home and abroad, and bring about environmental improvements across the country.
It’s so complicated that it includes a scheme to pay older farmers who can’t cope with the change a NZ$200,000 lump sum to get out of farming. Nearly four in 10 British farmers are over the age of 65, and the payments are an enticement for them to retire ‘gracefully’ to let in new blood with new ideas and a willingness to sacrifice yields for a better environment.
Brexit has also brought extra paperwork for British dairy exporters to the EU. Instead of seamless trade as when the UK was still a member of the EU bloc, there are now acres of paper forms to fill in for every single product that crosses the channel. Some dairy exporters have found the process so slow and time consuming that they have stopped exporting to EU countries.
Cheesemaker Simon Surrell was left with a NZ$500,000 Brexit hole in his business as a direct result of the UK’s departure from the EU. He lost 20% of his NZ$8m annual sales overnight after discovering he needed to provide a NZ$360 health certificate on every retail order to consumers in the EU.
He said he was prepared for barriers on EU sales to his wholesale business but there had been no warning there would be no exemption for direct consumer sales.
“This came as an almighty shock, like a rear-end hit in a car accident because I wasn’t expecting it,” he said.
New opportunities for New Zealand dairy exports to the UK are likely to emerge following the announcement of a trade deal between the UK and Australia. The 15-year transition to a zero-tariff, zero-quota trade deal is the first trade deal to be negotiated from scratch since the UK left the EU.
It is seen as an important step towards the UK joining a wider Asia Pacific free-trade agreement. It’s expected that a similar deal allowing NZ dairy and meat exports to ramp up over coming years will be on the table soon.
UK farmers are furious about the terms of the Australia trade deal. They fear there are no safeguards to stop British farmers being undercut by cheaper imports. Already facing spiralling production costs, and a new support system without a food production focus, UK dairy farmers feel badly let down by the Government.
National Farmers Union president Minette Batters summed up their mood: “A tariff-free trade deal with Australia will jeopardise our own farming industry and will cause the demise of many, many farms throughout the UK.
“It is wholly irresponsible for the Government to sign a trade deal with no tariffs or quotas on sensitive products and which therefore undermines our own domestic economy and businesses.
“It is also incredibly concerning that the Government is in a ‘sprint’ to sign up to a trade deal with Australia that would have serious implications for British farming and would seemingly offer incredibly little benefit to the economy.”
Away from the doom and gloom of politics, there’s good news that the British public has turned to dairy-based foods during the Covid-19 pandemic, significantly boosting sales of cheese, butter and cream. Overall spending on dairy rose by 7.8% during 2020 compared with a year earlier, according to Britain’s Agriculture and Horticulture Development Board.