Brexit: A Disaster for UK Farmers

By Steven Jacobson

Steven Jacobson is a sophomore at the University of Pennsylvania studying business and history.

Like their counterparts across Europe, British farmers have felt the pinch of plummeting prices for their produce in the past year. The drop has stemmed from the EU’s removal of milk quotas, weakening demand from China, and changing dietary preferences across the continent. Barring an unlikely boom in the Chinese economy, none of these downward pressures looks likely to abate soon. However, a further one might soon be added. Should Britain vote in favor of Brexit in its June 23rd referendum, its farmers will lose the benefits of both the Common Agricultural Policy (CAP) and free trade within the EU, which would lessen the aid that British farmers need to stay profitable and impinge their access to their most vital market.

The United Kingdom’s dairy farmers have taken a 45 percent pay cut this season. [1] Grain growers and pig producers have likewise seen their incomes drop by nearly quarter and half, respectively. [2] Total farm income in Scotland decreased by 15 percent in 2015. [3] Prices are only likely to continue to fall in the short term, as warmer spring weather will bring further oversupply onto the market.

“There’s too much milk in the world,” Robbie Turner, head of European markets at Rice Dairy International, a risk management advisory firm in London, told Bloomberg in January. [4]

While Britain’s farm sector as a share of its annual output—just 0.7%—is among the lowest in the European Union, it receives the fifth-most CAP payments among all EU member states. The farm subsidy program pays over £2 billion annually to Britain’s farmers. [6] For many in the £14 billion industry, this is the difference between profitability and unprofitability. Without the aid, 30 percent of British farmers would be unprofitable. [7] While the CAP’s share of the budget has nearly halved since the 1970s, it still remains the EU’s highest expenditure. British taxpayers have complained of the program’s impact on their wallets. Britain’s contribution to the program is difficult to calculate, but estimates range from £2 billion to £10 billion a year. [7] Critics call the policy bureaucratic, inefficient, excessive, and outdated.

One attempt to bring CAP into the twenty-first century backfired last year when a new online payment distribution system malfunctioned as soon as it debuted. Farmers had to cope with severe delays in receiving aid, and many had to borrow from an emergency fund set up by Lloyd’s Bank to cover costs. Nearly 65 percent of Scottish farmers still have yet to receive payments that were due to them last December [8]. The delays and uncertainty have caused farmers to cancel orders for new machinery, fertilizer and seed. This has had knock-on effects for distributors of those supplies as well.

“The wheels have stopped turning in the Scottish countryside,” said Allan Bowie, head of the Scottish chapter of the National Farmers Union (NFU), the UK’s largest agricultural union. [9]

A vote to leave the European Union could cause similar calamity for Britain’s farmers. Elizabeth Truss, secretary of state for environment, food, and rural affairs, has stated her department has “no plan B” for a British agricultural subsidy program to take the place of CAP. [10] The NFU has yet to announce which side it will take in the Brexit debate because of this uncertainty. For this reason, the union has commissioned a report along with LEI Wageningen, a Dutch agricultural research firm, to examine Brexit’s potential impacts under a number of different scenarios. [11]

While it is nearly impossible to predict the effects of such an occurrence, it seems likely that a national subsidy program would provide less aid to British farmers than the CAP currently does, according to the Country Land and Business Association, an organization of rural property and business owners. [12] The Federation of Small Business, a group for Britain’s self-employed, suspects that the British government would not lavish the same attention on agriculture as the EU does. [13] For the roughly 99.98% of Britons who are not employed in the agriculture industry, this could be good news, as a direct British farm subsidy program would cost less to taxpayers than the CAP does. However, to the country’s already struggling farmers, it would be disastrous.

Farmers would also lose access to the EU single market, which is the destination of over three quarters of Britain’s agriculture exports. [14] Exports to the EU would decline if Britain decides to leave as trade barriers would form. Britain would technically be free from EU regulation, one of the Brexit campaigners’ most prominent arguments for leaving, but the bloc would still likely remain Britain’s largest trading partner. As a result, even if the two were to work out a free trade deal, Britain would still have to comply with the EU’s trade regulations but would have no decision making power over their composition. Furthermore, Britain’s farmers like the common EU standards, as they place themselves on even ground with other European farmers.

The CAP is an albatross, heaping billions of pounds yearly on a nearly inconsequential portion of Europe’s economy. Furthermore, it favors the wealthiest landowners, such as the British royal family and other European aristocrats with large inherited estates, instead of small farmers who could truly use the aid. However, British farmers and consumers alike would benefit more from further reforms of the CAP than from an outright withdrawal from the EU. The combined loss of the CAP and the single market could cause a collapse in British farming. Restrictions on imports from the EU, from which Britain purchases 70 percent of its agri-food products, along with a disintegration in its domestic industry, would lead to price hikes for British consumers. If Britain hopes to save what remains of its ever-shrinking agriculture industry and keep food prices low, it must work to reform the EU rather than quit it altogether.


[1] Whitney McFerron, "Milk Collapse Brings a 45% Pay Cut to England's Dairy Farmers," Bloomberg Business, January 28, 2016.
[2] Ibid.
[3] "Scottish Farming Faces 'cash Crisis' over CAP Payment Delays," BBC News, February 11, 2016.
​[4] McFerron, “Milk Collapse Brings 45% Pay Cut to England’s Dairy Farmers,” Bloomberg Business.
[5] “Q&A: Reform of EU Farm Policy,” BBC News, July 1, 2013
[6] Marion Dakers, “'Whatever We Do, Shops Tell Us to Be Cheaper': The Growing Crisis in Britain's Farms," The Telegraph, February 19, 2016.
[7] Department of Environment, Food, and Rural Affairs, Review of the Balance of Competences Between the United Kingdom and the European Union: Agriculture, DEFRA 2014, 41.
[8] Review of the Balance of Competences Between the United Kingdom and the European Union: Agriculture, 39.
[9] “Scottish Farming Faces ‘cash Crisis’ over CAP Payment Delays,” BBC News.
[10] Olivia Midgley, “Scot Gov Under Fire As Union Claims Payment Delays Have Stopped ‘Agriculture’s Wheels Turning’,” FG Insights, February 11, 2016.
[11] Alistair Driver, “OFC16: No Plan B For Farming In Event Of Brexit-Truss,” FG Insights, January 6, 2016.
[12] Chris Hill, “NFU commissions research into the effect of Brexit on agriculture,” Eastern Daily Press, February 18, 2016.
[13] Review of the Balance of Competences Between the United Kingdom and the European Union: Agriculture, 77.
[14] Ibid.
[15] Review of the Balance of Competences Between the United Kingdom and the European Union: Agriculture, 34.

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