Credit: Original article can be found here
I REFER to the recent agreements and reports on the free trade deal with Australia and maybe others to follow. I view the situation with substantial anxiety.
For nearly 200 years the UK has been unable to produce sufficient food product to feed its population. Today the percentage of home produced food is about 55 per cent, having varied in the past from 40 per cent (1939) to 75 per cent (1980/81).
In a free trade situation and with such a large percentage of imported foodstuffs, the food wholesale prices and consequently the price paid to the farmer/producer is dominated by the price of the imported product.
The history of UK agriculture up to our entry into the Common Market in 1973 shows this clearly. For the period from 1947 to 1973 protection to the UK farmer was provided by a the deficiency payment system. The subsidy payment was based on the difference between auction market prices and the annual target price set each year by Government.
Both consumers and farmers benefitted. The consumer paid a retail price closely influenced by the price of the imported product, and the deficiency payment helped to increase the farmgate price.
This payment in turn had a major influence on the development and modernisation of UK agriculture after World War Two. Such a system is no longer available, having been removed under the terms of the World Trade Organisation of which the UK is a member.
Since 1973 UK agricultural prices have been based on the EEC and EU level of prices, mostly at higher rates than world prices for the major agricultural products, beef, dairy products, lamb and mutton, cereals and sugar.
Leaving aside for the moment arguments over the standards and methods of production, the future outlook for UK agriculture on the basis of this first agreement looks bleak. The circumstances have many similarities to previous periods from 1920 to 1940 and prior to World War One.
The question over standards of production is high on politicians’ lips but not mentioned in the detail published to date. What appears to have happened is headline agreement on quantities with no reference to methods of production. This can only be described as a recipe for disaster.
The Secretary for Trade Liz Truss makes a statement in the press and nowhere mentions the question of imports or the probable reduction in our food exports to Europe. Both lamb and beef production systems will be under large price pressure from the quantities of imported products.
It is no good saying that new opportunities will open up when those possible markets are thousands of miles away and we have given up our automatic access to the EU single market with its 500 million population.
The resulting economics for agriculture of the current trade agreement announced with Australia, probably to be followed by New Zealand and other countries, is perfectly obvious – lower prices to the farmer, less access to the single market, and large quantities of imported product, available at lower prices and produced to lower standards.
The majority of northern European countries do not have the advantages of size and climate enjoyed by major food exporting countries, Australia, New Zealand, South America, Canada and USA.
The UK is one of the major food importing countries and thus a major target for those food exports. In addition, in one respect or another, these major exporting countries have further substantial advantages in respect of regulatory control at a level below current EU and UK levelsproduction regulations.
Common examples are transport regulations (48 hours in Australia, eight in the UK), hormone assisted beef production (not allowed in EU and UK), and skin removal on sheep hindquarters (meusling), again forbidden in the UK and Europe.
The question over beef production using hormone implants has already been the subject of WTO arbitration under the World Trade Organisation in a dispute between the EU and US. The verdict was made in favour of the US and as a result allowed some US beef (not hormone treated) is allowed into the EU. Thus the likelihood of the UK maintaining a ban on hormone treated beef looks questionable.
In press reports which I have read to date nobody has mentioned the likely effect of Australian mutton on the UK market, which could be substantial.. This is a market governed wholly on price and such imported product could have a substantial effect on UK mutton prices.
Regrettably I go back to my opening remarks and can see very little daylight from as a result of these and possible future free trade agreements.