Evolution
Support payments
Similar levels of direct and agri-environment payments. Labour
Retained at the current level and cost of labour.Trade relationships
EU: Comprehensive Free Trade Agreement (FTA) enabling tariff-free trade between the UK and the EU. Increase in UK prices of 5% due to increased trade friction from leaving the EU.Rest of the world: UK has access to a share of the EU’s existing WTO Tariff Rate Quotas (TRQs) and agrees FTAs with third countries that already have FTAs with the EU. There is an increase of 8% in UK prices to reflect the costs of trade friction with the rest of the world.Regulations
All existing EU regulations adopted into UK law.Unilateral liberalisation
Support payments
Direct Payments (DPs) removed. Agri-environment and other payments under Pillar II are increased to equal 50% of current overall support.Labour
Non-UK permanent workforce reduced by half, resulting in 50% increase in labour cost. Current levels of seasonal workers maintained, resulting in no change to seasonal worker costs. Trade relationships
EU: No trade deal between the UK and the EU is agreed. Increased friction in trading with the EU results in 8% increase in prices.Rest of the world: World Trade Organisation rules apply, although UK unilaterally reduces import tariffs to 0% for all agricultural products within set quotas. 8% increase in UK prices due to trade friction.Regulations
All existing EU regulations initially adopted into UK law, then regulatory burden reduced over time. This would see a 5% reduction in costs of fertilisers, crop protection, other crop costs, veterinary fees and medicines, plus other livestock costs.Fortress UK
Support payments
Direct Payments (DPs) removed.Agri-environment payments reduced to 25% of current levels of overall support.Labour
Non-UK regular permanent and seasonal labour restricted to 50% of current levels. This results in an increase in labour costs by 50%. Trade relationships
EU: No trade deal between the UK and the EU is agreed. Increase in prices by 8% plus tariffs put in place.Rest of the World: UK retains some of the existing imports of beef and lamb but puts in place tariffs on other foodstuffs. Regulations
All existing EU regulations adopted into UK law.The study
The AHDB Brexit report looked at how the different scenarios would affect the different farming sectors in Scotland. Using the Farm Business Survey the report provided a more detailed analysis than previous reports on Scottish agriculture. Bespoke figures were produced for sheep, beef and dairy farms with the other sectors taking analysis from the UK-wide AHDB Brexit impact assessment paper.
Sheep
The sheep sector is the most exposed out of the major Scottish farming sectors, with many forequarters and loins of British and Scottish lambs ending up abroad. Falling domestic demand and an inability to compete with cheaper proteins is causing concern. Currently the Farm Business Survey puts the average income for sheep farmers at £11,122 each year.
Scenario 1: evolution sees a fall of 10% in income as, critically for sheep farmers, access to European buyers is retained in this situation. However, friction to trade would see the value of lambs dip.Scenario 2: unilateral liberalisation sees income fall only 8% as cheaper inputs in this scenario support the bottom line. Sheep farmers farming larger areas could win in a switch towards more environmentally focused support.Scenario 3: fortress UK sees sheep farmer income fall a startling 210% to -£12,379. This shows how exposed the sector is to any hurdle to exports. Cattle
The cattle sector in Scotland enjoys some of the highest prices in the world for prime beef. However, much of this is driven by the national herd being made up of 75% beef breeds along with strong demand for Scotch beef in London. Suckler beef farmers have received a payment for each of their calves in the current support scheme. The Farm business Survey gives the average income of these farms as £24,641 per year.
Scenario 1: evolution shows a rise of 14% income to £28,028. This is driven by the increased friction involved with beef imports into the UK.Scenario 2: under unilateral liberalisation, cattle farms see their income fall 89% to £2,716. This is largely down to the removal of Pillar I direct support which the FBI claims amounts to £35,434 per business. While environmentally focused Pillar II measures would typically rise from £10,950 to £29,572, increased labour costs and a slight decrease in the value of beef would contribute to the fall in income. Scenario 3: Under fortress UK, the average beef farmer would see income tumble 86% to £3,542. While this scenario would see a dramatic fall in imports resulting in higher output prices. The fall in support payments would drag incomes down overall. This could see smaller farms suffer disproportionately.Dairy
Scotland’s dairy sector has seen the number of herds fall faster than the number of cows. The sector has an average herd size of 181, which has risen in recent years. The sector has a mix of aligned farmers whose cost of production influences their price and non-aligned producers whose income changes with market forces. The Farm Business Survey gives an average income of these farms as £35,442.
Scenario 1: under evolution, dairy farmers could see their incomes rise 52% to £53,888. This would come largely from a higher milk price due to a rise in import costs. Scenario 2: unilateral liberalisation would have the most dramatic impact, with dairy farm incomes falling 88% to just £4,375. Much of this is due to reducing direct support payments through Pillar I. Increase in labour costs would also have an impact. Scenario 3: Fortress UK would see incomes rise 37%. While support payments would fall, this would be offset by a higher milk price. The FBI figures show the value of output in dairy farms would rise to £53,077 due to increased costs of imports. Pigs
The Scottish pig sector is small but efficient. Quality Meat Scotland has nearly all full-time pig units, with 142 assured pork farms in Scotland. Suffering from years of cheap imports which often used production methods banned in the UK has restricted the size of the sector. The Farm Business Survey shows an average income of £46,067 on these farms.
Scenario 1: evolution would see pig farmers’ income rise to £68,067, which is up nearly 50%. Scenario 2: unilateral liberalisation would see pig farm incomes rise to £57,418. This could be the result of the sector being less exposed to cuts in support payments.Scenario 3: fortress UK would see the most dramatic increase in pig farm income. This model would make importing pork difficult, resulting in a rise in domestic prices of pork.General cropping
Potato, vegetable and arable crops all have domestic demand, with many crops ending up abroad. Increases in storage in recent times has allowed for significant increases in availability of Scottish produce on shelves. The Farm Business Income figures states the typical incomes as £61,231 per business.
Scenario 1: evolution states that their business income will stay relatively stable at current levels. Across the UK areas of barley and oilseed could fall, with wheat plantings rising. The processed potato sector could see an income boom. Scenario 2: unilateral liberalisation would see incomes fall to £20,410 plummeting two-thirds. This would largely be due to the loss of Pillar I payments (£39,084), even though this is mitigated by increased payments under Pillar II. Increased regular labour costs also have an impact, as do reductions in regulatory costs in the other direction. Scenario 3: fortress UK would see incomes fall to £24,710. Despite increases in output prices, the fall in support payments would see an overall decrease in income. Increased labour costs would also have an impact. Sugar beet could see a revival if imported sugar cane is more expensive.Cereals
Scotland has just under half a million hectares of cereals and oilseed rape. The biggest crop is barley with 286,000 hectares grown (average yield of 2.7t/ac) and then 110,000ha of wheat. This is followed by 31,000ha of oats then 30,000ha of oilseed rape. Most of Scotland’s barley, 55%, goes into animal feed, with 35% going for malting. The vast majority of Scottish cereals are marketed through Scottish Quality Cereals assurance scheme.
Scenario 1: evolution shows a fall in income of 9% to £39,788 driven largely by falling prices of oilseed rape and barleyScenario 2: unilateral liberalisation would see the average cereal farmer’s income fall by 81% to £8,216. The biggest contributing factor to the fall is the decrease in direct Pillar I support payments. The Farm Business Income figures show this is worth £37,439 per business, which is only partially offset by an increase in environmental Pillar II payments.Scenario 3: fortress UK sees cereal farmer incomes fall a dramatic 103% to -£1,341. The scenario sees a fall in support along with increased labour costs. The value of output is also estimated to fall.
Evolution
Support payments
Similar levels of direct and agri-environment payments. Labour
Retained at the current level and cost of labour.Trade relationships
EU: Comprehensive Free Trade Agreement (FTA) enabling tariff-free trade between the UK and the EU. Increase in UK prices of 5% due to increased trade friction from leaving the EU.Rest of the world: UK has access to a share of the EU’s existing WTO Tariff Rate Quotas (TRQs) and agrees FTAs with third countries that already have FTAs with the EU. There is an increase of 8% in UK prices to reflect the costs of trade friction with the rest of the world.Regulations
All existing EU regulations adopted into UK law.Unilateral liberalisation
Support payments
Direct Payments (DPs) removed. Agri-environment and other payments under Pillar II are increased to equal 50% of current overall support.Labour
Non-UK permanent workforce reduced by half, resulting in 50% increase in labour cost. Current levels of seasonal workers maintained, resulting in no change to seasonal worker costs. Trade relationships
EU: No trade deal between the UK and the EU is agreed. Increased friction in trading with the EU results in 8% increase in prices.Rest of the world: World Trade Organisation rules apply, although UK unilaterally reduces import tariffs to 0% for all agricultural products within set quotas. 8% increase in UK prices due to trade friction.Regulations
All existing EU regulations initially adopted into UK law, then regulatory burden reduced over time. This would see a 5% reduction in costs of fertilisers, crop protection, other crop costs, veterinary fees and medicines, plus other livestock costs.Fortress UK
Support payments
Direct Payments (DPs) removed.Agri-environment payments reduced to 25% of current levels of overall support.Labour
Non-UK regular permanent and seasonal labour restricted to 50% of current levels. This results in an increase in labour costs by 50%. Trade relationships
EU: No trade deal between the UK and the EU is agreed. Increase in prices by 8% plus tariffs put in place.Rest of the World: UK retains some of the existing imports of beef and lamb but puts in place tariffs on other foodstuffs. Regulations
All existing EU regulations adopted into UK law.The study
The AHDB Brexit report looked at how the different scenarios would affect the different farming sectors in Scotland. Using the Farm Business Survey the report provided a more detailed analysis than previous reports on Scottish agriculture. Bespoke figures were produced for sheep, beef and dairy farms with the other sectors taking analysis from the UK-wide AHDB Brexit impact assessment paper.
Sheep
The sheep sector is the most exposed out of the major Scottish farming sectors, with many forequarters and loins of British and Scottish lambs ending up abroad. Falling domestic demand and an inability to compete with cheaper proteins is causing concern. Currently the Farm Business Survey puts the average income for sheep farmers at £11,122 each year.
Scenario 1: evolution sees a fall of 10% in income as, critically for sheep farmers, access to European buyers is retained in this situation. However, friction to trade would see the value of lambs dip.Scenario 2: unilateral liberalisation sees income fall only 8% as cheaper inputs in this scenario support the bottom line. Sheep farmers farming larger areas could win in a switch towards more environmentally focused support.Scenario 3: fortress UK sees sheep farmer income fall a startling 210% to -£12,379. This shows how exposed the sector is to any hurdle to exports. Cattle
The cattle sector in Scotland enjoys some of the highest prices in the world for prime beef. However, much of this is driven by the national herd being made up of 75% beef breeds along with strong demand for Scotch beef in London. Suckler beef farmers have received a payment for each of their calves in the current support scheme. The Farm business Survey gives the average income of these farms as £24,641 per year.
Scenario 1: evolution shows a rise of 14% income to £28,028. This is driven by the increased friction involved with beef imports into the UK.Scenario 2: under unilateral liberalisation, cattle farms see their income fall 89% to £2,716. This is largely down to the removal of Pillar I direct support which the FBI claims amounts to £35,434 per business. While environmentally focused Pillar II measures would typically rise from £10,950 to £29,572, increased labour costs and a slight decrease in the value of beef would contribute to the fall in income. Scenario 3: Under fortress UK, the average beef farmer would see income tumble 86% to £3,542. While this scenario would see a dramatic fall in imports resulting in higher output prices. The fall in support payments would drag incomes down overall. This could see smaller farms suffer disproportionately.Dairy
Scotland’s dairy sector has seen the number of herds fall faster than the number of cows. The sector has an average herd size of 181, which has risen in recent years. The sector has a mix of aligned farmers whose cost of production influences their price and non-aligned producers whose income changes with market forces. The Farm Business Survey gives an average income of these farms as £35,442.
Scenario 1: under evolution, dairy farmers could see their incomes rise 52% to £53,888. This would come largely from a higher milk price due to a rise in import costs. Scenario 2: unilateral liberalisation would have the most dramatic impact, with dairy farm incomes falling 88% to just £4,375. Much of this is due to reducing direct support payments through Pillar I. Increase in labour costs would also have an impact. Scenario 3: Fortress UK would see incomes rise 37%. While support payments would fall, this would be offset by a higher milk price. The FBI figures show the value of output in dairy farms would rise to £53,077 due to increased costs of imports. Pigs
The Scottish pig sector is small but efficient. Quality Meat Scotland has nearly all full-time pig units, with 142 assured pork farms in Scotland. Suffering from years of cheap imports which often used production methods banned in the UK has restricted the size of the sector. The Farm Business Survey shows an average income of £46,067 on these farms.
Scenario 1: evolution would see pig farmers’ income rise to £68,067, which is up nearly 50%. Scenario 2: unilateral liberalisation would see pig farm incomes rise to £57,418. This could be the result of the sector being less exposed to cuts in support payments.Scenario 3: fortress UK would see the most dramatic increase in pig farm income. This model would make importing pork difficult, resulting in a rise in domestic prices of pork.General cropping
Potato, vegetable and arable crops all have domestic demand, with many crops ending up abroad. Increases in storage in recent times has allowed for significant increases in availability of Scottish produce on shelves. The Farm Business Income figures states the typical incomes as £61,231 per business.
Scenario 1: evolution states that their business income will stay relatively stable at current levels. Across the UK areas of barley and oilseed could fall, with wheat plantings rising. The processed potato sector could see an income boom. Scenario 2: unilateral liberalisation would see incomes fall to £20,410 plummeting two-thirds. This would largely be due to the loss of Pillar I payments (£39,084), even though this is mitigated by increased payments under Pillar II. Increased regular labour costs also have an impact, as do reductions in regulatory costs in the other direction. Scenario 3: fortress UK would see incomes fall to £24,710. Despite increases in output prices, the fall in support payments would see an overall decrease in income. Increased labour costs would also have an impact. Sugar beet could see a revival if imported sugar cane is more expensive.Cereals
Scotland has just under half a million hectares of cereals and oilseed rape. The biggest crop is barley with 286,000 hectares grown (average yield of 2.7t/ac) and then 110,000ha of wheat. This is followed by 31,000ha of oats then 30,000ha of oilseed rape. Most of Scotland’s barley, 55%, goes into animal feed, with 35% going for malting. The vast majority of Scottish cereals are marketed through Scottish Quality Cereals assurance scheme.
Scenario 1: evolution shows a fall in income of 9% to £39,788 driven largely by falling prices of oilseed rape and barleyScenario 2: unilateral liberalisation would see the average cereal farmer’s income fall by 81% to £8,216. The biggest contributing factor to the fall is the decrease in direct Pillar I support payments. The Farm Business Income figures show this is worth £37,439 per business, which is only partially offset by an increase in environmental Pillar II payments.Scenario 3: fortress UK sees cereal farmer incomes fall a dramatic 103% to -£1,341. The scenario sees a fall in support along with increased labour costs. The value of output is also estimated to fall. 
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