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Brexit: How Will UK Agriculture Fare?

Author

Listed:
  • Carmen Hubbard
  • John Davis
  • Siyi Feng
  • David Harvey
  • Anne Liddon
  • Andrew Moxey
  • Mercy Ojo
  • Myles Patton
  • George Philippidis
  • Charles Scott
  • Shailesh Shrestha
  • Michael Wallace

Abstract

There is little doubt that Brexit would have significant implications for UK agriculture, a sector with strong trade links to the EU and strong reliance on CAP income support. This article reports preliminary results from employing a Computable General Equilibrium Model, a Partial Equilibrium Model and Farm Level Models to explore selected trade and domestic policy scenarios post‐Brexit. These allow for the estimation of changes in producer prices, production and farm incomes against a baseline scenario of continued EU membership. Under a Free Trade Agreement with the EU, agricultural impacts are relatively modest. By contrast, unilateral removal of import tariffs has significant negative impacts on prices, production and incomes. Adoption of the EU's WTO tariff schedule for all imports favours net importers (e.g. dairy) and harms net exporters (e.g. sheep). Given the strong dependence of most UK farms on direct payments, their removal worsens negative impacts of new trade arrangements and offsets positive impacts. Impacts vary across different types and sizes of farm, but also regionally. However, the period of adjustment to new trade and domestic policy conditions may prove very challenging for a large number of farm businesses. Il ne fait guère de doute que le Brexit aura des répercussions importantes sur l'agriculture du Royaume‐Uni, un secteur qui entretient des liens commerciaux solides avec l'Union européenne et qui dépend fortement du soutien au revenu de la PAC. Cet article présente les résultats préliminaires de l'utilisation d'un modèle d’équilibre général calculable, d'un modèle d’équilibre partiel et de modèles au niveau de la ferme pour explorer une sélection de scénarios de politique commerciale et intérieure après le Brexit. Ces scénarios permettent d'estimer les variations des prix à la production, de la production et des revenus agricoles par rapport à un scénario de référence de maintien de l'adhésion à l'Union européenne. Dans le cadre d'un accord de libre‐échange avec l'Union, les impacts sur l'agriculture sont relativement modestes. En revanche, la suppression unilatérale des droits de douane à l'importation a des effets négatifs importants sur les prix, la production et les revenus. L'adoption de la liste tarifaire de l'Union européenne à l'OMC pour toutes les importations favorise les importateurs nets (par exemple le secteur laitier) et nuit aux exportateurs nets (par exemple le secteur ovin). Compte tenu de la forte dépendance de la plupart des exploitations britanniques vis‐à‐vis des paiements directs, leur suppression aggrave les effets négatifs des nouveaux accords commerciaux et neutralise les effets positifs. Les impacts varient selon les types et les tailles de fermes, mais aussi au niveau régional. Cependant, la période d'ajustement à de nouvelles conditions de commerce et de politique intérieure peut s'avérer très difficile pour un grand nombre d'entreprises agricoles. Es besteht kaum ein Zweifel, dass ein Brexit erhebliche Auswirkungen auf die britische Landwirtschaft hätte. Gründe hierfür sind die engen Handelsverbindungen zur EU und die große Abhängigkeit von der im Rahmen der GAP gewährten Einkommensstützung. Dieser Artikel zeigt die vorläufigen Ergebnisse ausgewählter handels‐ und innenpolitischer Post‐Brexit‐Szenarien. Sie wurden mit Hilfe eines allgemeinen Gleichgewichtsmodells, einem partiellen Gleichgewichtsmodell und mit Betriebsmodellen erstellt. Hierdurch können Änderungen in den Erzeugerpreisen, in der Produktion und im landwirtschaftlichen Einkommen im Vergleich zu einem Basisszenario mit fortbestehender EU‐Mitgliedschaft abgeschätzt werden. Bei einem Freihandelsabkommen mit der EU sind die Auswirkungen auf die Landwirtschaft relativ gering. Dagegen hat eine unilaterale Abschaffung von Importzöllen erhebliche negative Auswirkungen auf die Preise, Produktion und Einkommen. Eine Einführung der EU‐WTO‐Zölle auf alle Importe begünstigt Nettoimporteure (z. B. Milchprodukte) und schadet Nettoexporteure (z. B. Schafe). Aufgrund der großen Abhängigkeit der meisten Betriebe im Vereinigten Königreich von den Direktzahlungen würde deren Abschaffung die negativen Effekte neuer Handelsregelungen verstärken und positive Auswirkungen aufheben. Je nach Art und Größe der Betriebe und auch je nach Region variieren die Auswirkungen. Die Übergangsphase, bei der die Anpassung an neue handels‐ und innenpolitische Rahmenbedingungen erfolgt, könnte sich jedoch für zahlreiche landwirtschaftliche Betriebe als sehr schwierig erweisen.

Suggested Citation

  • Carmen Hubbard & John Davis & Siyi Feng & David Harvey & Anne Liddon & Andrew Moxey & Mercy Ojo & Myles Patton & George Philippidis & Charles Scott & Shailesh Shrestha & Michael Wallace, 2018. "Brexit: How Will UK Agriculture Fare?," EuroChoices, The Agricultural Economics Society, vol. 17(2), pages 19-26, August.
  • Handle: RePEc:bla:eurcho:v:17:y:2018:i:2:p:19-26
    DOI: 10.1111/1746-692X.12199
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    References listed on IDEAS

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    1. George Philippidis & Elisavet Kitou, 2012. "Quantifying opportunities and threats: examining the Canada--EU trade negotiations," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 15(4), pages 301-320, December.
    2. Pierre Boulanger & George Philippidis, 2015. "The End of a Romance? A Note on the Quantitative Impacts of a ‘Brexit’ from the EU," Journal of Agricultural Economics, Wiley Blackwell, vol. 66(3), pages 832-842, September.
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    2. Sharma, Aarzoo, 2022. "A comparative analysis of the financialization of commodities during COVID-19 and the global financial crisis using a quantile regression approach," Resources Policy, Elsevier, vol. 78(C).
    3. Kamilaris, C. & Dewhurst, R.J. & Vosough Ahmadi, B. & Crosson, P. & Alexander, P., 2020. "A bio-economic model for cost analysis of alternative management strategies in beef finishing systems," Agricultural Systems, Elsevier, vol. 180(C).
    4. Hardaker, Ashley & Pagella, Tim & Rayment, Mark, 2020. "Integrated assessment, valuation and mapping of ecosystem services and dis-services from upland land use in Wales," Ecosystem Services, Elsevier, vol. 43(C).
    5. Andrew P. Barnes, 2023. "The role of family life‐cycle events on persistent and transient inefficiencies in less favoured areas," Journal of Agricultural Economics, Wiley Blackwell, vol. 74(1), pages 295-315, February.
    6. Alan Matthews, 2019. "How Ireland is Facing the Threat of a ‘No‐deal' Brexit," EuroChoices, The Agricultural Economics Society, vol. 18(2), pages 23-27, August.
    7. Dogbe, Wisdom, 2023. "Potential Impact of Brexit on Fruits and Vegetables Purchases in Scotland," 97th Annual Conference, March 27-29, 2023, Warwick University, Coventry, UK 334510, Agricultural Economics Society - AES.
    8. George Cusworth & Jennifer Dodsworth, 2021. "Using the ‘good farmer’ concept to explore agricultural attitudes to the provision of public goods. A case study of participants in an English agri-environment scheme," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 38(4), pages 929-941, December.
    9. Hardaker, Ashley & Pagella, Tim & Rayment, Mark, 2021. "Ecosystem service and dis-service impacts of increasing tree cover on agricultural land by land-sparing and land-sharing in the Welsh uplands," Ecosystem Services, Elsevier, vol. 48(C).
    10. Marcin Pigłowski, 2021. "The Intra-European Union Food Trade with the Relation to the Notifications in the Rapid Alert System for Food and Feed," IJERPH, MDPI, vol. 18(4), pages 1-19, February.

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