Brussels, 24/06/2016 (Agence Europe) - Because the British voted on 23 June for the United Kingdom to leave the European Union, EU agriculture will lose some 7% of its production by value.
Once the country has officially notified its decision to leave the EU, we can expect that it will no longer take part in debates or talks about important issues, including the CAP. According to figures provided by DG Agriculture at the European Commission, the United Kingdom currently receives €3.7 billion a year from the EU's farm budget, €3.2 bn of it in direct aid. The UK will have to give up this funding when it leaves the European fold.
British agricultural production reached €26.204 billion in 2015, 7.1% of the EU total and 9.9% for animal husbandry (32.9% for the sheep sector) and 5% for vegetables. There are 185,000 farms in the UK (1.7% of the EU total), which employ some 430,000 people or 1.2% of total jobs (compared with 4.7% on average in the EU). Some 22% of British farms are bigger than 100 hectares and 4.8% had a turnover of at least €500,000 (in 2013).
In 2014, CAP aid to the United Kingdom totalled €3.71 billion or 7.5% of EU agricultural spending that year - of which 86.1% went on direct payments, 1.1% on market measures (€32 million for fruit and vegetables and €4.5 million for milk) and 12.8% for rural development.
High agri-food trade deficit. British agriculture and agri-food exports totalled €23.809 billion in 2014 or 6.3% of total overseas sales, €14.532 bn to EU partners (8% of total exports on the Single Market) and €9.257 billion to non-EU countries (4.7%). At the same time, the UK's imports in this sector totalled €50.123 bn (9.6% of the total), of which €37.109 bn came from the rest of the European Union (13.5% of total purchases on the Internal Market) and €13.013 billion from non-EU countries (5.3%). British agricultural and agri-food trade stood at a deficit of €26.313 billion in 2014.
When the UK leaves the EU, it will have to strike new trade deals with the EU and many countries bound by free-trade deals with the EU. On a visit to Northern Ireland on 9 May, EU Agriculture Commissioner Phil Hogan warned against a Brexit, saying than CAP payments account these days for 87% of the income of Northern Irish farmers and 53% on average in the UK as a whole. “There is no guarantee than the British Treasury will be able to substitute for this support”, explained the Commissioner, warning that if the UK left the EU, it would take the country eight to ten years to sign new trade deals with its former partners. (Original version in French by Lionel Changeur)
Farm Europe says Brexit will not be a serious blow to the CAP
The think tank Farm Europe says the Common Agricultural Policy (CAP) will not find Brexit a serious blow financially, but the CAP will have to deal with the political consequences, such as a shakeup of the economic arm that has revealed its shortcomings and given rise to loss of confidence.
“The UK is an important contributor to the overall EU budget, but it's less the case when it comes to the Common Agricultural Policy. It supplies 10,5% of the global EU budget, but a more precise analysis shows that it provides only 5% of the CAP headings”, explains Farm Europe in a press release issued on Friday 24 June.
The think tank explains “In 2014, the UK contribution was €14.1 billion after the deduction of the UK rebate (€6 billion), while EU spending in the UK totalled €7 billion: the UK was thus a net contributor, to the sum of €7.1 billion. Taking 2013 as a baseline, UK received €3,9 billion via the CAP and contributed to the CAP for €6,8 billion. This means that in financial terms, the overall impact of a Brexit on the CAP budget would be limited to less than 5% of the CAP budget - or around €2.9 billion per year”.
Farm Europe says “This 5% would be balanced politically in case of a post-Brexit financial negotiation, knowing that the UK government has traditionally been the main advocate in the net contributors group of countries, which are reluctant to maintain the CAP budget”. The UK has always argued for a reduction in direct aid (the first pillar of the CAP), calling instead for funding to go the second pillar, the rural development policy.
Farm Europe urges the EU to take action to deal with the violent crisis experienced by virtually all areas of agriculture. It says that the inaction and failure to decide over recent months are not worthy of a big European policy, particularly because budget means are available to deal with it. The think tank calls on the Council in June to take measures to restore milk prices. (Original version in French by Lionel Changeur)