Matt Lobley, Associate Professor in Rural Resource Management at the University of Exeter, shares his thoughts on the EU Referendum. The views expressed here are his own.
Regardless of the decision on June 23rd this year, it cannot be assumed that the current model of direct income payments for farmers will continue indefinitely in its current form. Anyone who tries to tell you that they know what will happen is at best exaggerating and at worst deceiving themselves as well as you. We often look to the past to offer a guide to the future. However, no member state has ever left the EU and even if they had, would the withdrawal of a small central or southern European state for example, be a good guide to the implications of the UK exiting? Probably not. So, to a degree we are in the dark, although there certainly is room for informed speculation.
Let’s assume for a moment that the UK remains a member of the EU. Given the importance of agriculture to the EU and the strength of the agricultural lobby in some member states, it seems likely that support will continue, albeit quite possibly at a reduced level and ever more conditional on farmers delivering a range of additional environmental goods and services. It is a hard argument to make that we give farmers large amounts of tax payers’ money just because they are farmers or because they enjoy their particular way of life. Public support, quite rightly, recognises the role farmers play in managing our environment as well as producing food.
If the UK withdraws from the EU the future is less certain. Some level of financial support to farmers is likely to be ongoing but it is not known if this would be a similar level of support to a similar number of recipients as currently. Although politicians on both sides of the debate are ‘promising’ on-going financial support at existing or even higher levels, in a UK outside of the EU payments to farmers would be jostling with the need for cash injections into the NHS, increases in the schools’ budget and so on. Whatever the intention of politicians, it is not difficult to foresee a future where farm support fluctuates and is politically vulnerable in a way that it is not while we are members of the EU.
Some would argue that by leaving the EU UK agriculture would enjoy a future unencumbered by the rules and regulations that it currently faces. Really? Agriculture is unique. Farmers are the largest group of natural resource managers on the planet. Their decisions influence the appearance and quality of the environment; soil health and water quality; habitat for other species; greenhouse gas emissions; the welfare and quality of life of livestock and the food we eat. Of course agriculture is going to be highly regulated. Why would it be any other way? Yes, it could be done in better, smarter ways but regulation in general is not going to go away. Environmental policy on the other hand may well be at threat, with the risk that environmental improvements are reversed and species and habitat decline continues.
If we withdraw from the EU it is likely that land prices will fall, in the short term at least. Whether the fall will be sufficient to free up the land market and offer opportunities to people with only modest levels of capital is unclear. The price of agricultural land bears little relation to the financial returns available for using it to produce food. In part it is a reflection of the financial support available to farmers via the CAP. So if we leave the EU and the CAP land prices may fall. However, much would depend on the type of financial support package that replaced the CAP. Short term uncertainty would probably see land prices fall but in the longer term the generous tax reliefs associated with agricultural land and property, the fixed supply of land and whatever support arrangements were put in place would, in all likelihood, prevent significant falls in land values.
So that leaves trade, a subject on which I can claim little expertise, so my comments will be brief. The USA is already one of our most important export markets so membership of the EU doesn’t appear to be holding us back. If we leave we could, of course, negotiate many new bilateral trade agreements but it could take many years to conclude agreements. Hopefully we would still be exporting to the countries closest to us, as we are at the moment, but here again there would be deals to be negotiated.
So, these are my thoughts on the implications for agriculture of remaining in or leaving the EU. I don’t know what will happen but I can see likely tendencies. What is more clear is that the world of the 1950s and 60s has gone and it is not coming back. We live in an increasingly internationalised world and if the UK is to continue to exist as part of the international order we will remain subject to international agreements. The EU in general and the CAP in particular are far from perfect but as members we can play a part in their evolution.
Matt Lobley is Associate Professor in Rural Resource Management at the University of Exeter.