The Scottish Rural College (SRUC) has applied the Brexit trade scenarios, produced in a previous report for the devolved UK administrations, to Scotland. It has used the ScotFarm model and applied it to the Farm Business Survey information collected by the Government from around 500 farms annually. This was used to present the expected impacts of the three scenarios at individual farm level:

  • Free trade agreement (FTA) with the EU.
  • Default World Trade Organisation (WTO) terms.
  • Unilateral Trade Liberalisation (UTL) by the UK.

    • Sheep

    The outcomes make particularly gloomy reading for the livestock industry. Less Favoured Area (LFA) sheep farms in particular will be damaged either by full liberalisation and no barrier to product entering the UK, or alternatively with WTO tariffs prevent Scottish sheep meat exports continuing to the EU.

    The SRUC analysis predicts using its model that as many as 89% of specialised sheep farms will be loss-making in 2022 and under either the WTO or UTL models, the sheep flock could fall by 56% – more than half of present levels.

    Beef

    If direct supports are maintained, most beef farms would remain profitable in 2022 under WTO and FTA arrangements, though UTL would see many farms slip into a loss-making situation.

    This is because beef isn’t as dependent on exports to the EU as sheep meat and WTO tariffs would protect access to the UK markets, as would an FTA.

    Without direct support payments, farms in all scenarios would move into a loss-making situation and SRUC is predicting a 28% decline in the Scottish suckler herd in 2022.

    Dairy and crops

    In the dairy industry, assuming an 8% increase on 2014/2015 milk prices, all dairy farms remain profitable either with or without direct support and under each scenario. This reflects the importance of milk price to dairy farmers, and the report predicts that there will be no loss of dairy farms in 2022.

    With crops, the report envisages that the post-Brexit scenarios will have minimal impact under any of the three plans, because of the relatively small price adjustments under each one.

    The models

    The scenarios modelled by SRUC were developed by the Agri-Food and Biosciences Institute (AFBI), which is a Northern Ireland-based, non-departmental, public body affiliated to the Department of Agriculture, Environment and Rural Affairs.

    Of the three options produced, the FTA arrangement is considered closest to existing arrangements, although it is predicted to carry a 5% administration cost.

    The WTO model is often referred to as the “hard Brexit” and uses WTO tariffs which are huge on meat products in particular. They would also carry an 8% administration cost, according to the AFBI work.

    The final UTL model, where the UK would eliminate all tariffs, would open the UK up to imports from several lower-cost regions, such as South America, Australia and New Zealand.

    At the same time, Scottish and UK exports could still be exposed to WTO tariffs on exports, the worst to both worlds from farmer and industry perspective. This model would also carry an 8% administrative cost.