The NFU has commissioned a world-leading agricultural research institute - the LEI at Wageningen University - to consider the impact of a number of possible trade and farm support scenarios that would be open to the UK Government in the event of the country voting to leave the EU.
The results of this report will be presented at 28 NFU member meetings across England in the next fortnight.
NFU Director General Martin Haworth said: “The referendum on whether the UK should remain in, or leave the EU, is rapidly approaching. The NFU has been informing members of the agricultural issues at stake in the referendum in recent months.
"Feedback from our members has been clear; further information is needed to consider more fully the potential implications for British agriculture if the UK votes to leave the EU. As a result, the NFU commissioned Wageningen University to carry out an impact assessment on behalf of members.
“We have presented the findings of the Wageningen study in a summary brochure which I hope provides an indication of what may come to pass based on a number of scenarios. Ultimately, economic models make predictions based on what may happen under a range of assumptions.
"The modelling work is limited to what can be quantified. For example, it doesn’t consider what the impact would be if the UK government decided to cut the level of regulation faced by our industry. Nor, to take another example, what would happen to the demand for British produce if some food manufacturers decided to relocate in order to remain in the single market.
“Some of the scenarios appear to suggest that there could be serious risks to farm income from leaving the EU, while the results of others suggest there could be a more favourable outcome. It comes down to a matter of judgement as to which of the scenarios appears the most likely. This in turn will depend on the policy position adopted by the UK Government.
"In the past our government has been a strong advocate of open and free trade. It has called for tariff protection across all farm sectors to be reduced and it has called for the abolition of direct support payments made through the CAP.
“The real questions to be asked and considered ahead of the referendum are political rather than economic. What would the UK Government’s position be on international trade and its impact on the consumer price of food? How would it ensure British farmers are treated fairly?
“In the run up to the referendum, the NFU will continue to highlight the facts about our current relationship with the EU. The regional member meetings start today and will run until April 15 and NFU Council will meet in mid-April to discuss whether the NFU takes a position ahead of the referendum on behalf of the industry. Rest assured that irrespective of the outcome of the referendum in June, the NFU will continue to work in the best interests of its members and UK agriculture.”
Outside of the EU and therefore outside of its CAP, the UK Government would need to consider what, if any, direct income support to provide to British farmers. In addition to the trade scenarios, three different approaches to UK farm support payments have been modelled:
- Retention of 100% of the current level of direct payments to UK farmers;
- Reduction by 50%;
- Abolition of direct payments.
Under two of the three scenarios modelled (FTA and WTO default) the future British agriculture policy would become more protectionist.
Impacts for British food and farming if either of these scenarios were to happen are:
- An increase in farmgate prices
- Imports would become more expensive due to trade costs and, under the WTO agreement, higher tariffs to pay to trade with the EU
- Stimulation of domestic production caused by higher farmgate prices.
This would be a reverse of the policies that successive British governments have pursued for the past 40 years; it would go against a worldwide trend to more open agricultural trade and would be in contradiction to the stated aims of many of those who advocate that the UK should leave the EU.
The third scenario is that of UK Trade Liberalisation. This appears more in line with UK Government policy and of those advocating leaving the EU.
Impacts for British food and farming are:
- Lower prices for UK meat and dairy
- As a result of low prices, there would be an impact on production levels and a decrease the UK’s self-sufficiency in these foods.