I was dumbfounded recently when I discovered that the National Farmers Union, the largest farmers’ union in the UK, had not come out categorically in favour of remaining in the EU.
They say that they are waiting for the end of the Prime Minister’s EU reform negotiations before taking a position at their conference on February 24. They argue that they are a member’s organisation and they take their cue from their members.
I would argue however that NFU officials have a responsibility to educate their members and warn them of the absolute devastation that could befall their industry if we were to pull out of the EU.
We should be acutely aware of the immense pressure facing the agricultural industry today and the dire situation dairy farmers in particular are confronted with. “It can’t get any worse” they mutter, but I assure you, if we left the EU – it would.
Subsidies make a difference to farm’s survival
Subsidies make the difference to many farmers between making a profit or loss. In Wales subsidies accounted for an average of 81% of farms’ business income in 2014-15 and over 50% of all farms made a loss or would have done so without a subsidy.
Whilst I understand this position of waiting until the end of the negotiations from a number of professions, from farmers it makes no sense at all, it is dangerous, and the NFU leadership is doing a disservice to their members. There is not even a sniff of a suggestion that any issues relating to reform of agriculture are on the table in this re-negotiation.
What the 58,000 Welsh farmers should remember is that a huge percentage of farm income comes directly from the European Union. Across the UK, Common Agricultural Policy (CAP) payments in 2014 were over 3.08bn euros for just one year.
In Wales alone this amounted to £ 240m in 2014 in direct payments via the Single Payment Scheme and we are expecting to receive an additional £300m to help rural development from 2014 to 2020.
Ukip and others argue that the money currently spent on the UK’s contribution for EU membership (approximately £8.5bn net in 2015) could simply be re-diverted and given directly to farmers.
In theory this is true, but in practice farmers would do well to question how much faith they have in this Government to simply re-direct this funding when there is a massive big hole in the Chancellor’s budget and when we will also need to pay for access to EU markets – irrespective of whether we are EU members or not.
The Norway comparison
Just remember that Norway is the 10th largest contributor to the EU budget despite not being a member. If our access to the EU market were negotiated on the same terms as Norway we would still have to pay around £7.5bn for the privilege of trading.
If we didn’t pay for this access there is a high probability that we would see the introduction of import tariffs on British goods and border controls which would make British goods abroad more expensive and less competitive.
As we have seen with the steel industry, this Tory Government is more than happy to import produce if it can be produced cheaper elsewhere. They did not defend steel workers, and they will not defend farmers.
Whilst the cost of the Cap has been reducing drastically over the years from 73% of the EU budget in 1985 to 39% today, we know every time that there has been a reduction, French farmers, who are powerful advocates for the whole EU industry, complain and ensure that subsidies are not reduced further.
hey pour milk down motorways and herd their cattle down the middle of the streets of Brussels. They demand attention and they receive it. Can agricultural workers in the UK be confident that their voice will be heard in the domestic UK market without the French by their side?
On top of that farmers should be aware of the fact that it is the UK Government which has been most vocal in their efforts to move more payments from Pillar 1 (direct payments) to Pillar 2 (rural development).
Some believe that there would be a reduction in the regulatory burden if we were to leave the EU. There is zero chance of that happening.
If we still want to export to the EU, we will still have to comply with EU rules, but we will have absolutely no say in what those rules will be, and let’s not forget that the British civil service has a long and established tradition in the field of agriculture of gold plating these rules with an extra set of rules from the UK.
On top of this, farmers should be aware of the massive risk they would be taking with how agriculture would be supported. The current method of support could change hugely, and there is no clarity on which sectors would continue to be supported and what method would be used to allocate support.
Even the Environment Secretary Liz Truss has admitted that “there is no plan B” if the public decide to leave the EU.
Professor Wyn Grant of the University of Warwick has published a report on the issue and has suggested that: “The lack of contingency planning by the Government would inevitably lead to a period of great uncertainty for at least two years as the new regime took shape, making medium and long-term planning for farmers extremely difficult.”
I for one could not be confident of predicting how many farmers could hang on for two years whilst a new system was introduced.
Nobody is suggesting that the EU is perfect. It is in need of reform and in relation to agriculture, steps should be taken to ensure that the industry becomes more innovative and globally competitive.
But it is not just direct subsidies from the EU which should be of interest to farmers. The fact is that 73% of the UK’s agri-food exports are to the EU. Whilst nobody is suggesting that all trade with the continent will be halted, what we can be sure of is that the terms of trade if we left the EU would change.
Our ability to negotiate a decent agreement would be compromised by the fact that all 27 member states would need to agree. Member states, many of whom are in direct competition with UK farmers, would not be in the mood to cut us much slack in those negotiations.Ninety per cent of Welsh lamb is sold to the EU so an exit would have a huge impact on the market.
It is not just an issue for farmers however; the public should bear in mind that in nations where there is no direct agricultural support, food is more expensive. We should all be aware that food prices could rise as a result of leaving the EU. The average UK family spent 26% of their disposable income on food and non-alcoholic drinks in 1970, compared to 14% in 2013. Will the public really be happy to pay more?
The agricultural sector in Wales is still significant with almost 58,000 people working directly in the industry. The wider agri-food sector with food processing employs around 230,000 people or makes up around 18% of the workforce and is worth around £6bn annually to the Welsh economy.
Farmers and anyone working in the agri-food sector should think very carefully before placing their cross in the box in the EU referendum. A leap into the dark is the very last thing that agriculture needs in this time of real pressure.
The NFU responds
NFU Cymru director, John Mercer, said in response to Baroness Morgan’s comments: “We all recognise that the EU referendum is hugely topical and polarises opinions across society and the membership of NFU Cymru is no different.
“We recognise that the potential impact on Welsh agriculture is huge and for that reason we have published a comprehensive 24-page booklet to allow our members to gain a better understanding of the industry’s current relationship with the EU and to properly consider some of the pros and cons of remaining a member state. We have commissioned independent research which examines a range of scenarios to help us make a more informed decision.
“Now that the outcome of the Prime Minister’s renegotiation is becoming clearer, NFU Cymru, as a democratic membership organisation, is consulting all of our county branches on this matter and in the next few weeks our governing body, Welsh Council, will be meeting to agree our stance on this important issue.
“The Prime Minister has until the end of 2017 to call the EU ‘in or out’ referendum. We are a grass-roots membership organisation and we want to make sure we are representing our members when we agree our position.”