Agriculture and food

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Industrial greenhouse farms in England – October 2024
Photo by Alexey Fedorenko/Shutterstock

Agriculture and food: pre-Brexit

The UK does not produce enough food to feed itself. Indigenous food production supplies 61% of consumption (Defra – 2015); 39% needs to be imported and most of it comes from the EU (see Figure 8.3).

Both agriculture and food manufacturing are major employers providing 440,000 and 400,000 jobs respectively. See Table 8.2 for key industry statistics.

Imports exceed exports in each category of food, feed and drink, except ‘beverages’ which has a trade surplus largely due to Scotch Whisky. See Figure 8.4 for exports and imports by food category.

‘Fruit and vegetables’ has the largest trade deficit, followed by meat. Fruit and vegetable imports were £10.3 bn while exports were worth £1.1 bn, giving a trade gap of £9.2 bn (2016).

UK food and agriculture is tied to the EU:

UK agricultural and food production supply chains are integrated with the EU (particularly with Republic of Ireland, but also other countries).
94% of the UK’s food shortfall is imported from the EU or countries with EU trade agreements.
- 70% of UK food imports come from the EU27.
60% of UK exports of food, feed and drink go to the EU27;
- 80% of UK’s agricultural exports go to the EU
- 97% of food exports go to the EU or countries with EU trade agreements.
UK received c.€4bn a year in Common Agricultural Policy (CAP) payments (average of 2014-20 EU financial plan)

Duties raise prices for some imports from some third countries. However, EU trade agreements can mean that non-EU food imports are tariff-free. These include imports from most developing nations. Tariffs are often high for agri-food to protect domestic producers and allow them to charge higher prices to consumers.

The average tariff on EU food imports is 12.2%, but much higher for some, for example:

Cereals 22%
Cheese and wine 30-40%
Dairy products 54%
Some meats > 90%
Sugar 31%

Agriculture and food: expected Brexit impact

The government intended to preserve the EU’s external tariffs in its own version with minor (but administratively tricky) differences. They believed that, without these tariffs for third countries, the level of UK agriculture self-sufficiency would plummet. In the words of the National Farmers’ Union (NFU):

“A potential unilateral lowering of British tariffs would be damaging”; “many UK farm businesses would be put at significant competitive disadvantage if current tariff barriers were removed or slashed without great care being taken to ensure a level playing field”.

“Any Brexit outcome that results in the UK importing cheaper food would be hugely damaging to the farming, food and drinks sectors of Scotland and the UK”

Under no-deal WTO rules, the UK could unilaterally reduce tariffs on EU agri-food imports. However, without a UK-EU trade agreement, it would need to do the same for all countries without a UK trade agreement. This would seriously harm and shrink domestic farming, and reduce the UK’s leverage in future trade negotiations.

The farming industry’s loss could be the food consumer’s gain. With lower tariffs, UK food imports would be cheaper. However the Brexit devaluation of sterling, already 10% or more and higher with ‘no deal’, has increased all import prices. This mutes (and may exceed) the impact of any tariff reductions on prices.

Any new non-tariff barriers reduce the efficiency of the food supply chain and create delays in its time-critical processes. As the House of Lords noted:

“It is imperative that a UK-EU trade deal should avoid the imposition of tariffs on trade in both directions, to minimise the potential for disrupting those supply chains. Non-tariff barriers could be equally if not more disruptive to trade in agricultural products and food”.

The government had said that it would maintain the equivalent of EU CAP subsidies to the farming industry until 2020. The government announced that it intended to phase out direct subsidies based on the amount of land farmed. It said it would shift funding to a new system called Environmental Land Management (ELM). This would reward farmers who prevent flooding, help landscapes recover by planting new woodlands and improve wildlife welfare. However, subsidy cuts would leave farmers in a precarious position if they do not qualify for ELM funding.