FARM incomes could fall by up to 60% with job losses also predicted, a report looking at the impact of the UK’s post-Brexit trade deals on Scotland’s agricultural sector has warned.
The study, carried out for the Scottish Government, examined free trade agreements (FTAs) the UK Government has done with Australia, New Zealand and Canada, as well as the deal with Arab countries in the Gulf Co-operation Council.
It concluded that the impact of the FTAs was “generally limited, but significant in some sectors”.
But it warned the cumulative impacts of future FTAs “will be more significant”, particularly if the UK agrees new trade deals with “agricultural powerhouses” such as the US and the Mercosur group of South American countries, which includes Brazil and Argentina.
Overall, the report projected long-term output in the Scottish agri-food sector will fall between 1.9% and 2.1%.
As part of this, it forecast output of sheep and lamb could fall by between 10.5% and 11.1%, with a drop of between 2.8% and 6.1% forecast for beef.
The report explained the drop in sheepmeat was because the UK’s trade deal with New Zealand was “seen by many as a strong signal for NZ businesses to recapture trade with the UK, which was lost when the UK joined the EEC (European Economic Community)”.
The beef sector, meanwhile, could come under “notable pressure” from imports from Australia and New Zealand, although the report added there could be export opportunities with Canada as a result of the trade deal there.
The report went on to warn that “without support, farms will generate losses on average”, with farm business incomes in the dairy sector projected to fall between 58% and 60% from 2019-20 levels, while income for lowland cattle and sheep farms could be down between 56% and 57%.
Here the report said: “Price declines are the major driver: Milk prices are forecast to decline by 5.7% versus the base year. Cattle and sheep prices are projected to reduce by 4.1% and 3.6% respectively.”
It also forecast job losses, saying that “employment in the sheepmeat sector is projected to decline by around 11%” with drops of between 3% and 6% forecast for the wheat and beef farming sectors.
Rural Affairs Secretary Mairi Gougeon (below) said: “This report highlights the individual and cumulative threats and opportunities of these trade deals by agricultural sector and farm type.”
She added: “While the dairy sector is best positioned to see export growth, there are some specific threats posed to Scottish sheep meat and beef, with imports from trading partners like Australia and New Zealand expected to exert significant pressure.”
Gougeon went on: “The report shows the current UK Government trade approach is not working in the interests of Scottish agriculture – we will continue to press for a coherent trade policy that makes agriculture a higher priority in future trade deals.
“We will use these findings to help identify future policy options to mitigate or address the differential impacts of trade, as part of delivering Scotland’s vision for trade.”
