While the farming industry undoubtedly needs a period of transition rather than a cliff-edge as it changes to post-Brexit agricultural policy measures, the timescale should remain short enough to keep minds focused, a leading banker claimed this week.
While agreeing that numerous reforms of the common agricultural policy (CAP) had been aimed at reducing the industry’s reliance on support measures, yet the crunch had never come, Roddy McLean, director of agriculture at Royal Bank of Scotland, said that with the UK government calling the shots after Brexit, a step change was much more likely.
There’s always a danger that people will sit on their handsRoddy McLean
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Stating that much depended on the trade deal hammered out in negotiations with the other 27 EU member states, he warned that it would be sensible for farmers to factor lower support levels into any forward budgets.
“There’s no doubt that a transition period is required to let the industry adapt,” said McLean. “But if this is too long, the industry is unlikely to react and take a mañana approach and fail to make the necessary changes to their businesses which will be required to respond to a new regime.”
He suggested that while the UK government’s pledge to sustain support through the end of the current parliament might not now last until 2022 as had been envisaged, he believed that this was the sort of timescale required to allow a sensible approach to change.
Although falling short of the period being sought by the Scottish Government’s rural economy secretary, Fergus Ewing, who had pushed for rates to be sustained until at least 2025, McLean argued that a five-year transition to 2022 would be enough to allow even sectors with longer production cycle such as suckler beef enough time to adapt.
“And there’s always a danger that the longer a time-scale you give people to change, the longer they will sit on their hands,” he said, adding that despite the natural inclination towards retrenchment during hard times, there were still likely to be opportunities in the industry for those who had the entrepreneurship to seek them.
He said that the adoption of new technologies was likely to be an area set for growth, with many major developments currently on the cusp of being commercially viable.
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Speaking at the bank’s pre-Highland Show press briefing, McLean also revealed that RBS was committed to maintaining its major sponsorship deal with the show until 2020 – giving the event 40 years of sponsorship.
Commenting on the wider implications of the UK leaving the EU, the bank’s group economist, Marcus Wright, said that while certain issues such as the effect the fall in the value of sterling would have on domestic inflation could be predicted, on the larger economic scale the changes were, quite literally, without precedent.
“Economists always look to what has happened in the past to try to predict what will happen in the future – but no large player has ever left a major trading block in a similar manner – so there are no examples.”