Strange Harvest: Scottish farmers and a no-deal Brexit
The bitter prospect of a no-deal Brexit has robbed many farmers of the sense of satisfaction that autumn typically brings.
As the summer drifts away, the evenings become shorter, the mornings that little bit fresher, and Scotland’s farming communities normally turn their attention to reaping the fruits of their labours.
It should be a positive time of year; of fresh starts, newly ploughed fields, winter feed sorted. Perhaps a time to give some thanks for another year of fruitful labour and lay down new plans for what’s ahead.
This is how farmers and their families have functioned since the first hand-held plough scratched away at the surface of the dry earth, bringing the soil’s nutrients to the surface, creating a furrow and scattering seeds.
Of course, down the centuries there have been many challenges to overcome along the way – war, disease, climate and financial. And now, courtesy of Brexit, comes another.
Indeed, the frightening spectre of a ‘no-deal Brexit’ come 31 October is the Hallowe’en nightmare that it’s feared could alter the shape of the sector forever. And the scale of the challenge facing today’s farmers is one which Aberdeen-based Hamish Lean, head of rural property and a specialist in rural law at leading legal firm Shepherd and Wedderburn, does not underestimate.
“Farmers can do their bit to increase efficiency and productivity in relation to their own business, but these macro-economic factors are completely outwith their control,” says Lean. “The industry is watching developments – or maybe lack of developments – with alarm.”
The installation of a new Prime Minister and a cabinet of mainly strong-willed Brexiteers has done little to suggest Britain won’t wake up on the first day of November isolated from the EU, with no firm deals to help keep business running as normal.
“The prospect of a ‘no-deal Brexit’ is worrying,” Lean adds. “Prior to the cabinet shake-up, Stephen Barclay, the minister in charge of exit negotiations couldn’t deny the warning from the National Farmers’ Union that a large percentage of the UK sheep stock would have to be slaughtered as a result of ‘no-deal’.”
“That’s not scaremongering,” he insists, pointing out that ‘no-deal’ would likely see export tariffs on British-reared lamb to Europe rising to a level that would leave Scottish producers in particular unable to compete on price on the continent.
“They would be priced out of their main market in respect of lamb and that would lead fairly quickly to a collapse in the Scottish sheep industry,” adds Lean. “I’m not sure that the government has properly grasped that.”
Currently, almost 40 per cent of the UK’s total lamb production is exported, with the market hitting its peak in October. Of the amount sent abroad, 96 per cent is traded in Europe – raising the prospect of the sector suddenly having to switch to World Trade Organisation terms and hefty tariffs.
But, of course, sheep farmers are just one part of an entire sector braced for Brexit. Beef farmers face similar export issues, while others which rely heavily on the free-flowing movement of labour to handle fruit crops or fish processing are also nervously scanning each day’s headlines.
According to a recent survey by the National Farmers’ Union of Scotland, just one in ten Scottish farmers felt positive about the future in a post-EU landscape.
Regardless of talk of compensation being on offer to farmers to help smooth the Brexit process – during his leadership campaign, Boris Johnson pledged an extra £25 million a year in subsidies for Scottish farmers post-Brexit as they have been “poorly treated” – Lean warns of a pressing need for farmers to explore new income streams now to help prop up their business.
“Compensation might address the immediate crisis but might not halt the very dramatic restricting of the whole industry,” he says. “Small farms across the UK and in Scotland, in particular, might be enormously reduced. It’s likely a number will go out of business.”
But while it is without doubt a serious situation, Lean, part of Shepherd and Wedderburn’s nationwide team of agriculture specialists, believes the remarkable resilience of the farming community and their inventiveness when
it comes to diversifying will see them through.
“We’ve already seen businesses diversifying their income streams. For example, one client is looking into a biomass scheme to provide a source of income away from the core income of the business,” he says.
“Hill sheep farmers are looking at planting trees. The Scottish Government has an ambitious project with regard to timber planting, there are special grants available and the market is buoyant.”
That could see demand increase for suitable land, giving some farmers a realistic option to sell.
“There will be an impact on land values, but productive, good quality farms will always have a market,” Lean adds. “And investment in agricultural land is still a fantastic way to hedge against capital taxes. Investing in farm land will allow the new owner, as rules currently stand, to qualify for agricultural property relief at 100 per cent. There are always people looking to acquire agricultural land for that reason. That will help keep some prices up but overall the value of land is likely to go down.”
Amid so much uncertainty, emotions can run high – particularly among farming families with members who may want to leave because the income is not sustainable, or in the event of land linked to a family for generations needing to be sold.
It’s where the guidance of Shepherd and Wedderburn’s agricultural and business law experts can be particularly useful.
“We can help with restructuring a business,” says Lean, who specialises in representing landlords and tenants in the Scottish Land Court. “A family farming partnership might decide to go their separate ways or there may be the realisation within a family that not everyone can get a living from the business.”
Business exit strategies, land sales and the appropriate legal structures for diversified activities are all expected to become a more frequent element of the legal firm’s activities as Brexit bites.
As emotions run high, the clear direction and support from some of Scotland’s sharpest minds within the sector is bound to help. Shepherd and Wedderburn has a dedicated rural dispute relation team of civil litigators with years of experience in the kinds of agricultural sector disputes and land issues which can end up in court. The firm has experience of handling virtually any legal issue that arises in respect of a Scottish farming business, as well as having a wider outlook linked to rural businesses including diversification into renewable energy, forestry and planning, among others.
“It can be emotional for families,” says Lean, who is also a trustee of RSABI, Scotland’s leading agriculture charity, which provides support for those who find themselves in difficult circumstances.
“It can give rise to enormous tension within families. There’s often pressure on people who might be considering exiting because they feel that out of several generations they are in some way letting the family down –that carries its own stresses.”
Lean adds: “But having said that, there is a significant number of enthusiastic people involved in the industry, they are determined – however difficult it is – to make things work. We should not underestimate the resilience of the industry and its ability to come through sometimes very difficult times indeed.
“Scottish agriculture might be a different looking industry in five or ten years’ time, but this doesn’t spell the end.”
Find out more about Shepherd and Wedderburn’s expertise in the rural and agriculture sector at www.shepwedd.com
This article first appeared in Vision magazine.