Q&As - the EU

EU Q&As_600_353

What is the NFU’s position on the EU Referendum? 

What we can do is assess the pros and cons of our existing relationship with the EU. For this reason we have published our report which explains the UK farming industry’s current relationship with the European Union.  


Is the UK a net importer of agri-food products?

Yes, the UK is a net importer of agri-food products, totalling £39.6bn in 2014. We import nearly twice as many agri-food products from the other EU countries than we export.

Who are UK’s main trade partners? 

In 2014 the main destinations of UK food, drink and animal feed exports were Ireland (£3.4 bn), France (£2.1 bn), USA (£1.9 bn), Netherlands (£1.3 bn) and Germany (£1.2 bn). During the same year the UK imported food, drink and animal feed mainly from the Netherlands (£4.9 bn), France (£4.2 bn), Ireland (£3.8 bn) and Germany (£3.7 bn).

EU report page 5 imports_600_423

What is the value of UK agri-food exports to other EU countries?

In 2014 the UK exported £12.8bn worth of products. Approximately 73% of our exports were destined for other EU countries.EU report page 5 exports_600_469

Is agri-food trade with the EU subject to duties at present?

No, agri-food trade inside the EU borders is not subject to duties. However, goods entering the EU from outside are subject to the “Common Custom Tariff”. The tariff is common to all EU members, but the rates of duty differ from product to product, depending on what they are and where they have come from.

On the other hand, EU exports face tariffs when they are exported abroad. For instance, Norway applies tariffs in the region of 267%-277% for EU cheeses, 344% for EU beef and 429% for EU sheep meat.

If we left the EU, would our exporters face duties when exporting products into the EU?

It is impossible to predict the level of duties that our exporters would face when exporting to the EU if the UK left. This is because the UK would have to negotiate an agreement defining the arrangements for its withdrawal and its future relationship with the EU.

However, the NFU has spoken to a World Trade Organisation expert who explained that in the case of Brexit, the EU (without the UK) and the UK would each have to present a new schedule of tariffs to the WTO members for approval by unanimity. The new tariffs would have to preserve existing trade flows. In practice, the WTO would not allow any tariff increases.

EU Report, page 19_600_302

Therefore, the default position would be that both the EU and the UK would remain on the current EU Common Customs Tariff (CCT). The difference would be that the EU would apply the CCT to UK imports and the UK would apply the CCT to EU imports.

In the case of Brexit the UK could lower or abolish its tariff protection, particularly on agricultural goods. But if it did that, it would have to lower or abolish its tariffs to all WTO members including the EU according to the WTO Most Favoured Nation rule. 


How reliant is UK agriculture on foreign labour?

Access to non-UK labour is crucial for British farmers and growers. Unfortunately, the official figures from the Office for National Statistics only tell us part of the story. In 2014 there were 34,000 non UK-born workers employed in the agriculture sector.

However, the survey didn’t cover workers living in a communal establishment or temporary foreign workers who are in the UK for just a few months. Therefore, most seasonal workers are unlikely to be counted under this survey. 

The most recent picture of non UK-born seasonal workers available dates back to the end of the Seasonal Agricultural Workers Scheme (SAWS) in 2012. The SAWS allowed fruit and vegetable growers to employ workers from Bulgaria and Romania as seasonal workers for up to six months at a time within the limit of an annual quota.

The quota was raised to 21,250 in 2009 and was kept at that level until the scheme ended in 2012. Take up of the quota remained very high between 2008 and 2012 and was at 98% in 2012.

How does the NFU feel about restricting non-UK born workers in our sector?

The NFU recognises the importance of non UK-born labour to the agriculture sector. Any restrictions on our members’ ability to recruit non-UK born workers would have a negative impact on their businesses. 

EU Legislation:

Would red tape disappear if we left the EU? 

man with clipboard_600_399

If we left the EU, red tape wouldn’t go away. The UK would still have to apply WTO’s global rules on trade and if we wanted to export to the EU we’d have to comply with the EU marketing standards in order to access the single market.

If we look at a country like Norway that has a very close relationship with the EU, they too implement all the relevant EU environmental, food safety and veterinary legislation such as the Sustainable use of Plant Protection Products, the Nitrates Directive and Sheep Electronic Identification. 

EU Budget:

What is the UK contribution to the EU budget? How much does it get back from the EU?
The UK is a net contributor to the EU budget. This means it pays more than it directly gets back from the EU. In 2014, the UK’s net contribution to the EU was £10bn, which was around 1.5% of total UK public expenditure.

What is the “UK rebate”?

paper money_600_450

The UK’s rebate was originally negotiated and agreed in 1984 at the Fontainebleau summit by Margaret Thatcher. In broad terms, the UK Government is reimbursed 66% of the difference between what it pays to the EU budget (excluding the cost of contributing to EU overseas aid and from 2009 non-agricultural expenditure in new member states) and what it receives from the EU budget.

In 2005, some substantial changes were made to the rebate, principally excluding the cost of the 12 new member states from Eastern Europe, whose accession to the EU the UK had championed. This meant that the amount of money that the UK is entitled to through the rebate has declined dramatically over the last few years.

In terms of impact on the agricultural sector, the rebate acts as a disincentive for the UK Treasury to draw down any discretionary monies from the EU budget. For every additional pound the UK receives from the EU budget, the Treasury is giving up roughly 66p that it could otherwise allocate elsewhere across the economy. 

Are we the biggest contributors to the EU budget?

The UK is the third biggest contributor to the EU budget after Germany and France.

Will leaving the EU save us money?

If the UK left the EU it would have to negotiate and agree the terms of its withdrawal and its financial contribution would be one of the issues covered. Therefore at this stage we can only speculate on what could happen.

If the UK wanted to maintain access to the single market like Norway or Switzerland, it would still have to make financial contributions to the EU budget.

In 2014, Norway contributed the equivalent of £106 per capita to the EU budget. Presently the UK makes a net contribution of £153 per capita, but if the UK left the EU and instead contributed to the EU budget on the same way as Norway, HM Treasury estimates its contribution would fall by around 30%.


Why do we have a Common Agricultural Policy?

The Common Agricultural Policy (CAP) was established more than fifty years ago to increase agricultural productivity, thereby ensuring that farmers received a fair level of income and that consumers had access to safe and secure sources of food at reasonable prices. 

How much does the CAP cost?

The CAP is one of the few policies agreed at EU level and almost entirely funded by the EU budget. This is why it accounts for a substantial proportion of the total annual EU budget: In excess of €58bn or just under 39%. This equates to 23p a day for every European citizen.

banner for cap blog_600_246

Is the EU alone in subsidising its farmers?

The EU is not alone in subsidising its farmers. The OECD calculates the percentage of producer support out of farm receipts. Data shows that countries like Norway and Switzerland support their farmers more than the EU, respectively 58.4%, 56.5% and 18%. Other countries are less supportive than the EU, for instance the United States (9.8%), Brazil (4.4%) and New Zealand (0.9%).

How much money does UK farming receive through the CAP?

In 2015 UK farmers received €3,084bn in pillar 1 direct support, also known as Basic Payment Scheme (BPS). In England and Wales this equates to an average payment of €235 and €179 per hectare respectively.

In addition to the basic payment, UK farmers will also have access to €5.2bn that has been allocated to the UK for rural development projects over the period 2014-2020. This figure includes €2.3bn that has been transferred from the BPS to the UK rural development programmes.


What do we want from the Government’s renegotiation with the EU?

The UK’s renegotiation with the EU is an opportunity to highlight a number of elements that if addressed will enhance the operating environment of UK farmers. We want to see strategic leadership from the EU to ensure greater productivity and global competitiveness for the agriculture sector. We need science-based legislation, new markets opening and elimination of barriers to trade. You can read the full NFU position on renegotiation here.

Impact of Brexit:

If the UK pulled out of the EU, what would it mean for a typical farmer?

If the UK decided to leave the EU after more than forty years of being a member, it would have to negotiate an agreement with the EU defining the arrangements for its withdrawal and its future relationship with the EU. It’s impossible at this stage to foresee what the future relationship between the UK and the EU would look like given the high degree of uncertainty surrounding the negotiation process.

There are a number of existing agreements in place as alternatives to EU membership, including the European Free Trade Association (EFTA) and the European Economic Area (EEA). However, neither of these agreements covers the agricultural sector.

Would a UK outside the EU accept foreign workers in such quantities. Would those already here be sent home?

As previously mentioned, if the UK decided to leave the EU issues like the movement of people will have to be negotiated and agreed before its withdrawal. At this stage it is impossible to predict the outcome.

EU report, page 7_600_185