John Mitchell: Brexit means barriers for Scotland’s agricultural producers

John Mitchell is a Partner with Anderson Strathern
John Mitchell is a Partner with Anderson Strathern
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The EU is Scotland’s largest international trading destination and Scotland’s larder is internationally renowned. Our food and drink industry is key to Scotland’s economy, worth around £14 billion each year.

Next month, the best of Scotland’s agricultural produce will be at The Royal Highland Show as we celebrate its 179th year. Scotland’s rural communities and many more will descend on Edinburgh to experience country living, top quality livestock and our exceptional food and drink. As a long-standing, leading legal adviser to Scotland’s rural sector, Anderson Strathern is proud to be a sponsor of the four-day event. We love farming, food and absolutely everything to do with rural life.

Of course, The Royal Highland Show also presents an opportunity for us to talk to our rural clients about all things farming and the rural sector, at what continues to be an uncertain time for our rural industries in Scotland. Estate owners, owner-occupiers, tenants, commercial lenders, charities, community bodies, intermediaries and private individuals will all be affected one way or the other by Brexit. We have spent a lot of time considering the main concerns and opportunities brought about by Brexit out in rural Scotland.

As a no deal Brexit and WTO rules have come to the fore in recent weeks, we know leaving the single market would translate to trade barriers for agricultural commodities and exports. Around two-thirds of the agricultural exports and imports across the UK go to or come from the EU. Within this total, Scotland is actually less reliant on EU trade but it still plays a significant part.

As well as likely trade tariffs presenting a market barrier, any future differences between EU and UK regulations will present non-tariff barriers including labelling, border checks and quotas. Frictionless trade and the efficient movement of goods are crucial business factors for the rural sector, as is the impact of a changing EU workforce, a prominent feature of our recent Brexit White Paper, Taking the temperature of Scottish business, where we polled more than 250 businesses leaders about how much they rely on the EU.

EU workers play a significant role in Scotland’s labour market, particularly in farm jobs and the production of vegetable and soft fruits. Following the Brexit referendum, the pound weakened and in doing so made the UK a less attractive destination for EU workers.

What we do know is that the existing model of payments under the Common Agricultural Policy is to continue until the end of the current UK Parliament. The Agriculture Bill currently going through the House of Commons gives a sense of direction for England but only a few of its key provisions apply directly to Scotland. It has been announced that there will be a Scottish Agriculture Bill but no timeframe has been provided.

The UK Bill moves underlying priorities further towards environmental protection and the concept of ’public goods’ like clean water, clean air and public access. To what extent this approach will be followed in Scotland remains to be seen, although the protection of the environment and conservation of public goods are also likely to feature in the Scottish plan.

The Scottish Affairs Committee has launched an inquiry around the future of Scottish agriculture post-Brexit. It is seeking to investigate the funding requirements of Scotland’s agricultural sector going forward and, we will be responding via the Law Society of Scotland.

In terms of overall regulation of the rural sector, changes to domestic law (moving away from EU law) are not expected in the short-term and if a Brexit deal can be reached, the UK has agreed to be bound by EU rules until the end of 2020. However beyond then, we still don’t know what the overall shape of regulation and support may look like for our agricultural producers, but we do know how key they are to the Scottish economy. We will continue to track these issues so our rural clients to be better informed and better prepared for what might be ahead.

John Mitchell is a Partner with Anderson Strathern