What would a no deal Brexit mean for farmers?

As the Brexit deadline of March 2019 draws closer, the government has recently published a series of 'technical notices' explaining what may happen to specific industries if there is 'no deal' agreed for Brexit. Earlier this year the NFU President said this would be an 'Armageddon scenario' for farmers and must be avoided.

Lower subsidy prospects and further changes on the horizon may seem daunting, but a review of your farm structure and assets could identify areas where costs could be saved, or streams of new revenue generated.

'A no deal Brexit would be extremely challenging for UK farming businesses, but there are steps that farmers can take to shape up their businesses to prepare for whatever the eventuality,' says Hazel Anyon, Agricultural Solicitor at Pearsons & Ward Solicitors in Malton.

Farm payments and subsidies

Once the UK leaves the EU, the government will be able to design its own agricultural policies to replace our participation in the EU's Common Agricultural Policy. The nature of the financial support given to farmers is therefore likely to change. However, in the event of no deal the government has committed to protecting the cash total for farm support until the end of this parliament which is expected in 2022.

If you receive farm payments at the moment then you will continue to do so, and you will be required to conform to the existing standards including on-site inspections. All of the rules and processes will stay the same until new policies are introduced.

Rural development funding

If you farm or manage your land in ways that benefit the environment, you may be supported by the Rural Development Programme. If we leave the EU without a deal, the government has guaranteed that any projects where funding has been agreed before the end of 2020 will be funded for their full lifetime. New projects will also be able to be signed off during 2019 and 2020 up to the value of programme allocations.

If there is no deal, the government promises an uninterrupted flow of funding to farmers, businesses and communities whose agreements are due to finish after Brexit. If you are planning to seek funding after March 2019 but before the end of 2020, your application and any existing contracting arrangements would also remain in place.

Organic food production

If there is no Brexit deal, some of the regulations on the production, labelling, imports and exports of organic food would stay the same. For instance, UK organic control bodies would be able to continue certifying UK organic operators for trade within the domestic market. There will also be little disruption to the movement of organic goods between countries such as the USA, Canada, Japan and South Korea. This is because the UK will recognise countries that are currently equivalent to the EU. The government also plans to continue to accept EU organic products in a no deal scenario, but this will be at the UK's discretion.

However, there would be some significant changes if no deal can be agreed, because the EU would treat the UK as a third country. If you produce organic food, you would have to change the logos on your packaging because UK operators would not be allowed to use the EU organic logo. There would be a grace period to allow operators to use up existing stock.

Organic exports to the EU

One area of real concern for organic producers would be the effect of no deal on exports to the EU. UK operators would only be able to export to the EU if they were certified by an organic control body approved by the EU to operate in the UK. To get this certification, UK organic control bodies would have to apply to the European Commission. They would not be able to do this until the UK leaves the EU, and approval could take up to nine months after Brexit.

This would leave organic producers unable to export to the EU for the best part of a year, which would be extremely disruptive and could threaten businesses. The government is exploring ways of speeding up the process and hopes to reach an agreement on the free movement of organic goods between the EU and the UK.

With such uncertainty ahead, it is important that you and your business prepare for the possibility of the UK leaving the EU without a deal. If you are looking to review or restructure your business, our dedicated agricultural law team can advise and assist you on a broad range of matters, including:

  • buying and selling agricultural land
  • farm tenancies and rent agreements;
  • licencing agreements;
  • joint ventures and farm partnerships;
  • supply chain contracts;
  • contracts of employment for permanent, seasonal and foreign workers;
  • planning and development opportunities;
  • environmental and diversification options; and
  • estate and succession planning.

For further advice contact Hazel Anyon, on 01653 692247 or email Hazel.Anyon@pearslaw.co.uk.