The effect of Brexit on the UK agricultural industry

The 4th Agricultural Revolution. That’s how Michael Gove described the level of transformation the farming sector will experience as they tackle the proposed changes to their support mechanisms post Brexit and there is a much greater focus from the Government on environmental measures to combat climate change.

The Agricultural Bill, currently going through Parliament, sets out the direction of travel for the farming industry, with a gradual removal between now and 2027 of direct payments tied to land ownership and replaced with payments related to environmental measures described as public goods.

The future support regime will become delinked from land ownership and there is minimal mention of food production in the Agricultural Bill, merely reference to its importance. So, what does that mean for farmers in the future, how can they start to adapt to the new regime and what will the farming industry look like in 10 years?

The UK is 60% self-sufficient and the sector has done a tremendous job in producing quality produce at fantastic value for money. Indeed, the proportion of the UK household budget spent on food is the third lowest in the world and the lowest in Europe. That said, the farming industry has struggled in recent years to keep up with productivity improvements seen elsewhere and there is huge variability in financial performance and perhaps a lack of investment in recent years along with a slow adoption of new technology.

The focused environmental agenda in the UK will see farmland at the heart of carbon reduction as a resource for offsetting not only the farming industry’s own carbon footprint but also that of other industries. There are several different approaches that the industry can follow, including a significant increase in forestry and better land and soil management.

The farming industry has given itself the target of being carbon neutral by 2040. However, we are only just starting to understand what this will mean in practice. It is a huge challenge for the industry with some pundits suggesting as much of 20% of existing farmland will need to be given over to environmental measures to achieve these goals alongside the wider UK Government’s carbon targets.

Inevitably less productive land will be the focus of these environmental measures, suggesting a greater divergence between farmers focused on the efficient production of food and those who have a greater focus on managing the landscape for environmental reasons.

Improvements in productivity, and the opportunities that come with new technology, mean that for farmers who are focussing on food production, there is the potential that producing more from less land will support the future profitability of farming.

Those farmers who take a more ‘public goods’ route will have the benefit of receiving direct support with the ability to plan their land management relative to the various schemes that will be forthcoming as the new regime comes into play.

So, the farming sector faces a period of massive change, but the industry has always been good at adapting to new circumstances. The industry can use its expertise to adopt best practices and new technology to become a truly world class producer of great food, that is farmed safely and to the highest standards, offering value for money and fantastic environmental credentials.

There is a lot to do and the industry will need time to adapt, but I have great confidence it can find the balance between food production and environmental management and come out stronger as a result.

Brian Richardson is Head of Agriculture at Yorkshire Bank. Find out more at https://secure.ybonline.co.uk/business/sector-expertise/agriculture/