Slides from a presentation for students at Harper Adams on 9 June 2017, day after the 2017 General Election. The voxvote poll is for live audience participation so it will not work on this version of the presentation.
6. Negotiations ..
UK – Theresa May
• Agree future partnership alongside
withdrawal terms
• Economic and security cooperation
• Not Single Market
• Early agreement about citizen
rights
• Implementation period
• Irish border
• Free trade agreement including
dispute resolution
EU – Donald Tusk
• EU 27 to act as one
• Nothing is agreed until everything is
agreed
• Phase One: withdrawal and citizen
rights
• Phase Two: overall understanding of
future framework
• Transitional arrangements may also be
determined to extent necessary and
legally possible
• Any ‘extension’ subject to all EU rules
• Gibralter
7. Timetable
Event Date
Article 50 triggered 29 March 2017
Two years to negotiate Brexit 29 March 2019
BPS and similar payments continue – Treasury guarantee Until 2020
‘Business as Usual’ – cross compliance, greening BPS years 2017 and 2018
Basis of payment for two more years? 2019 and 2020?
START OF FORMAL TALKS 19 June 2017???
8. Some of the key issues
• Trade terms with EU – Single
Market?
• Trade terms with RoW (Rest of
World)
• Tariffs v Free Trade
• Global outlook
• Labour movement
• Regulations
• Payments
• Will it take more than two years?
• Two years guillotine?
9. Some of the key trade figures: who relies on
whom for what?
Agricultural Trade
£40bn + imports
73% from EU
c.£20 bn exports
50% to EU
All goods
£400 bn + imports
54% from EU
c. £300 bn exports
50% to EU
10. International Trade agreements, eg USA …
May 2017: Merkel persuades Trump that EU/US deal is priority …
• Value of US exports in goods to EU, 2016: $270 Bn
• Value of US imports in goods from EU, 2016: $417 Bn
• So US/EU trade deficit $146 Bn
• Value of US exports in goods to UK, 2016: $55.4 Bn
• Value of US imports in goods from UK, 2016: $54.3 Bn
• So US/UK trade surplus is $1.1 Bn
15. EEA/EFTA
‘Norway’ version
• Single market access
• Free movement of capital, people and services
• All Single Market rules apply
• Pay – approx. 55% of UK rate per head
‘Swiss’ version
• More complex version of Norway – a series of arrangements rather
than just one
16. Customs Union
• Turkey
• Industrial products only
• No agricultural trade, services
• No free movement
17. Free Trade (1)
• Chile, Canada, S Korea
• Deal specifies area covered and on what terms
• Partial at best
• Eg some agricultural protection
• No free movement
• Regulations harmonised to some extent
18. Free Trade (2)
• Singapore
• Similar to free trade (1) but
• Low import tariffs set unilaterally
27. Farm Profits East of England
Acres 471
Total Output 392,286
Total Variable Costs 141,021
Farm Gross Margin 251,265
Farm Overheads 221,083
'Profit' 30,182
BPS income included above -30,354
'Profit' before BPS -172
Farmer net worth 2,464,730
Investment 'return' 1%
28. GETTING FIT – THE BEST AND THE REST
How is West Mids Looking?
OUTPUTS, INPUTS AND INCOME PER FARM
WEST MIDLANDS FBS FOR 2015 (1.2.2017)
Area of farm (ha) 128
Acres 316
Total Output 207,363
Total Variable Costs 85,233
Farm Gross Margin 122,130
Farm Overheads 135,615
'Profit' -13,485
BPS income included above -20,599
'Profit' before BPS -34,084
WEST MIDLANDS FBS FOR 2015 (1.2.2017)
Farmer net worth 1,807,766
Investment 'return' -1%
29. Perform! 1. Large Dairy Farms (£/Ha)
Average
Size 181
Gross Farm Output 3,404
Gross Profit 1,557
Overheads 1,480
Net Profit 76
Top 25%
157
4,147
2,157
1,469
689
BPS and Ag Env included above 174 164
Net Profit before BPS etc -98 525
FBS Benchmarking Data Years Ending late 2015/early 2016
30. Perform! 2. Large Cereal Farms
FBS Benchmarking Data Years Ending late 2015/early 2016
Average
Size 500
Gross Farm Output 1,468
Gross Profit 981
Overheads 792
Net Profit 189
Top 25%
524
1,579
1,158
699
459
BPS and Ag Env included above 209 211
Net Profit before BPS etc -20 249
31. BPS and Ag Env included above 207 213
Net Profit before BPS etc -57 73
Top 25%
338
1,823
1,032
746
286
Average
Size 300
Gross Farm Output 1,906
Gross Profit 1,029
Overheads 879
Net Profit 150
Perform! 3. Large Mixed
FBS Benchmarking Data Years Ending late 2015/early 2016
33. Value from farming
• Remember the Modulation Debate, December 2013?
• Modulation at 9% or 15%?
• RSPB and others said CAP was costing £400 per household and Pillar 2
payments give far better value for money so Defra must strike at 15%
to Pillar 2 …..
• Farmers would be ruined at anything more than 9% to Pillar 2
• Owen Paterson split the difference at 13 ….
34. The Farming Argument was all about farmer
fortunes
• And not about Value at all
• But Consider our milk and cheese consumption for example
• Average dairy product consumption about 4 litres of raw milk a week, 220 l pa
• Average yield 7,327 litres per cow
• Each cow therefore supports 36 people
• Cow needs 0.5 ha
• Average herd 125 cows feeding 4,500 people
• Direct BPS etc say £210/ha
• Cost per consumer for dairy product support £2.92
• And if you took it away??
35. Is ‘the way we do it’ the ‘way we should do it’
• Business planning and
development
• Risk sharing
• Investment and maintenance
expenditure
• Key tenancy terms
36. Look on the bright side
• EU never understood UK land tenure
• Opportunity for own agricultural, rural
and environment policies?
• Change and disruption brings
opportunity?
37. Other Factors
• New forms of financial support
• Planning regime
• Succession and inheritance
• Taxation
• Supply chain relationships
• Others?
39. To conclude:
• Use what we know
• Get in shape and stay in shape
• Seek and use advice/R&D!
• Promote the value of farming
• Nutrition
• Welfare
• Water
• Economy
• Cultivate your networks in the hope that they
will cultivate you
• Engage with the public
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