FT Trade Secrets editor Alice Ross visits a Welsh sheep farm in the Brecon Beacons to see what the UK’s exit from the EU will mean for farming, trade, and tariffs – and asks how coronavirus could influence negotiations
This welsh sheep farm may look beautiful but it’s under threat not just from the impact of brexit but now also from coronavirus sheep farming is big business in wales which has a flock of 9.5 million sheep here outnumber people 3 to 1 but coronavirus shut down the service sector overnight a third of the land market gone so what can sheep tell us about trade
Exits and british farming is there a risk that the uk farming industry as we know it won’t survive in its current form i think it’s really really important that we take these challenges one at a time you know we absolutely must deal with a coronavirus that’s our first priority now that’s got a massive impact on all like cultural markets at the present time next
We need to make sure that we get a deal with eu so we need to work from that and ensure that is right and then obviously we have the agricultural bill that will set the standards and the way you trade some farmers like gary were worried about leaving the european union long before the corona virus hit the domestic market is split between the service sector and
Retail but the remaining third of all the uk lamb is exported and until now more than 90 percent of exports have gone to the eu so what’s the issue well when it comes to trades getting on with your neighbors is very important countries that trade a lot with each other can form a customs union like the eu which doesn’t impose tariffs on members but does impose
Tariffs on non-members and when trade ties are tight breaking up is hard to do which is why it breaks it is hard to do the uk needs to work out how to move from being inside the tariff free eu customs union to being outside that union and it needs to negotiate which tariffs are likely to apply it also needs to find the time to negotiate all this in the middle
Of a pandemic without face-to-face meetings eu tariffs on agricultural products are already higher than average that means uk sheep are at particular risk we visited gary’s farm in the brecon beacons before the outbreak gary can you tell me which way you voted in the brexit vote yes iii voted remain actually important part of our income is the support for food
Production and environmental management which was paid directly from the eu we need a trade deal and we need we needed treated trade deal to be completed effectively it is absolutely vital for for farming within wheels and indeed the uk so gary tell me this sheep right now how much would you get for it if you sent it to the eu oh this this this lamb is worth
About 80 pound 80 pounds unless the uk signs a preferential trade deal with the eu its exports could be hit with the standard teres the eu charges all members of the world trade organisation for lamb that ranges from 14 to 80 percent 40 percent of 80 pounds is 32 pounds which would bring the price of the sheep up to 112 pounds passing that extra cost on to the
Consumer would hit demand but if farmers were forced to pay they could end up operating as a loss i mean would you actually go out of business if that happened well i mean you’d be we’d been serious trouble yeah we’d be very serious trouble would be you know you may be able to cope with it for 6 9 12 months but not not not moving forward you know not over any sort
Of sustainable time period before coronavirus the national farmers union warned that a no deal breaks it would be catastrophic for british farming uk politicians are insisting they will not extend the current transition period beyond the end of the year that means leaving without a deal is still a real risk you can only take so many hits at a tight so let’s take
A sensible pragmatic view to this year great if we can get a deal like as being promised and you know with no tariffs and you know a good trader relationship that’s absolutely great but you know let’s be realistic on what can be achieved you i don’t know you know there’s been a lot of really great things to be learned from using the internet for me tim purposes
This out of the other but when it really comes down to the nuts and bolts of it when we really get into those final stages i think you need to be sat across the table looking eye to eye and picking up all of the body language and understanding all of those messages come in across the lack of a trade deal with the eu could result in a serious blow to the export
Of uk animal products the uk government could cut terrace to stop a rise in food prices actually increasing imports from overseas and trade barriers between the uk and the eu could make it harder for farmers to get medicines fertilizers or immigrant labor of course it’s not just agriculture the eu is the uk’s largest trading partner in 2018 uk exports to the eu
Were 291 billion that’s 45% of all uk exports uk imports from the eu were 357 billion or 53% of all uk imports if these exports and imports get hit with tariffs that could be difficult for various industries not just farming if farmers don’t get a good deal in these trade negotiations with the eu how would it affect the local community sir you know we are the
Backbone of the communities and and if as the farmer if the farmer numbers decrease then you know where where does this leave the local schools the local businesses are reliant on the farm in custom are we just going to be a retirement haven from fur you know people are enough money to move and live here bearing in mind that a lot of these farms some of them are
Fourth fifth generation you know the families have been living here for hundreds of years the welsh language is based around the farming communities our culture you know this it’s not only business you know through brexit britain voted to go it alone some saw clouds overhead others through a light shining through but few predicted a global pandemic could also
Be on the horizon now farmers must struggle with this new challenge the political and economic landscape has changed new trade deals will change the landscape once more
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Brexit, Covid-19 and trade negotiations: what can sheep tell us? | FT Trade Secrets By Financial Times
