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Jimmy Ireland’s small upland livestock farm in Darvel, East Ayrshire, has weathered the uncertainty of the Scottish independence referendum and new trading conditions with the EU.
But he now perceives a greater threat to the family business — from more than 9,000 miles away.
The UK government’s decision to offer Australia a tariff-free post-Brexit trade deal has sparked fears among farmers that it will open up free trade with a series of big livestock-producing countries, potentially undercutting UK farmers and threatening their way of life.
In Scotland, the concern is particularly intense, since farming accounts for more than 80 per cent of its land area.
“Agriculture is crucially important to an awful lot of people, upstream and downstream,” said Ireland, who chairs the livestock committee of the National Farmers’ Union in Scotland. “It’s a crying shame if they sell that down the water.”
Under current trading arrangements, Australia sent £45.7m of lamb and mutton and £4.3m of beef to the UK in 2020 — a fraction of the multi-billion-pound UK domestic markets. The Australian Agricultural Company, Australia’s biggest beef exporter, has said there may be a tenfold rise in beef exports to the UK if the zero-tariff deal is agreed.
But UK farmers fear a greater threat will come from the precedent that the Australian deal will set in negotiations with other countries, including big meat producers such as the US, Brazil and New Zealand.
An Australia-UK trade deal is expected to be sealed next week when Scott Morrison, the Australian prime minister, is set to meet Boris Johnson in Downing Street after the G7 summit, according to senior Whitehall officials.
Those involved with the negotiations said that agriculture and the implementation period for the agreement remained the final sticking points. But Johnson is among those trying to promote the deal among farmers.
“I do think that free-trade deals present a fantastic opportunity for our farmers, for businesses of all kinds, and for manufacturers,” the prime minister said last week.
Government estimates suggest a trade deal with Australia would be worth an additional 0.01-0.02 per cent of gross domestic product over 15 years.
The NFU has reacted with fury, arguing such deals would not only remove trade protections from the UK farming sector, but would force it to compete on an unfair playing field.
While the World Organisation for Animal Health has noted Australia’s “high animal health status” and food safety standards, Australian farmers, like those in some other countries, are allowed to use techniques banned in the UK such as long-distance live animal transport and pesticides such as paraquat.
The UK can bar specific products, such as hormone-treated beef, from entering the country using its so-called sanitary and phytosanitary (SPS) standards, but it is much more difficult to account for broader welfare and environmental factors in trade negotiations.
Minette Batters, NFU president, said the government “must recognise that opening up zero tariff trade on all imports of products such as beef and lamb means British farming, working to its current high standards, will struggle to compete”.
There is another concern: with their patchwork of small farms on a densely populated island, England, Scotland and Wales have far smaller average holdings than those in Australia, with little prospect of gaining planning permission for vast feedlots like those in the southern hemisphere.
“Farmers will have to get bigger in Scotland to compete,” said Robin Traquair, vice-president of NFU Scotland. “We can’t all compete on top-end products. There has to be an amount of commodity product and that’s what will take the brunt.”
Farmers will also have to adapt in the coming years to a new, post-Brexit, government support system. EU-style subsidies based on land area, which have helped keep many afloat, are set to be replaced with separate schemes in each of the devolved nations, with England and Wales planning environment-based payments.
In the Australia trade deal, farming groups had wanted a tariff rate quota system, or an alternative mechanism to trigger tariffs once a given threshold was met, either in terms of import volumes or impact on domestic prices. Another option considered was a dual-tariff structure, with lower tariffs for products made to the highest welfare standards.
Supporters of the government’s strategy argue that the increased competition will push UK farmers to adapt so as to survive, as well as adding to their export opportunities.
Jethro Elsden, who grew up in a farming family and now works for the conservative Centre for Policy Studies think-tank, said: “We can’t romanticise farming. The same rules apply as in other industries . . . If you have high tariffs and subsidies, you protect [farming] in the short term but weaken it fundamentally in the long term . . . [Lower tariffs will] force them to innovate and be more productive.”
As an example, he cited farmers moving into free-range egg production — where consumer demand is growing — to become more profitable.
One such farmer is Llyr Jones, a beef and sheep farmer in north Wales, who diversified into eggs six years ago, and also runs holiday homes, produces cold-pressed rapeseed oil and generates electricity for local homes through ground source heat pumps.
He is worried about banks withdrawing support for operations like his if meat prices are forced down. “Farms are always buying more land, but if you’re getting cheap meat in such a quantity . . . the banks aren’t going to support it.”
He said small farmers such as himself were key to maintaining the UK’s landscapes and rural economies. “When I did my VAT return last year I realised I had dealt with more than 170 businesses — 76 per cent of those are within Wales and 70 per cent of those were in Welsh, which is my first language. In rural Wales it’s all interlinked . . . it always comes back to farmers.”
Georgie Styles of the Landworkers’ Alliance, which represents more than 1,500 smaller farmers, said small farms were “hugely beneficial”. “They create more resilient farming systems and operate in more local supply chains,” she added.
Jones was pessimistic about what he perceives as a “race to the bottom” on food standards and trade. “Brexiteers were promising the earth . . . But ultimately they didn’t treat the fishermen right and I feel we are next in line,” he said.
But he added: “Farmers are very resilient. We would literally just carry on until the bank pulls the plug on us.”
This article was first published at https://www.ft.com/content/7d432850-8dea-4ee3-b408-02723d6c7cb3