Carter Jonas
Carter Jonas

Theresa May’s speech and the impact on farming

Following Theresa May’s speech outlining the government’s negotiating stance on Brexit it is clear we are moving towards what has been described as a “hard Brexit” and from a negotiating perspective I understand her stance. 

What is not clear for British agriculture is what this will actually mean in reality; if all goes well,  Mrs May’s plan would be good news with free access to EU markets, control of our own borders and an ability for the UK to negotiate trade deals with other countries around the world independently of the EU.  However, she also says a bad deal is worse than no deal at all and in these circumstances UK exports to the EU will be subject to significant tariffs which would have a major impact on UK agriculture.
However, at this stage there seems little point in speculating about where the actual outcome will lie between these two extremes but what I do think is vital is that the importance of a trade deal with the EU is made absolutely clear to government because the consequences of no deal at all would be very damaging indeed for UK agriculture.

However, at this stage there seems little point in speculating about where the actual outcome will lie between these two extremes but what I do think is vital is that the importance of a trade deal with the EU is made absolutely clear to government because the consequences of no deal at all would be very damaging indeed for UK agriculture.

In the short term however, UK farmers are benefiting from the fall in value of Sterling and last week we again saw cereal and oilseed prices increase.  It is also encouraging for dairy farmers to learn that the world’s largest exporters of milk have reported their lowest levels of October production since 2013. This will hopefully feed through to further increases in milk price to help offset the losses that many dairy farmers have suffered over the last few years.

But the fall in value of sterling is a double edged sword and it will lead to inflationary pressures on imported goods.  We have already seen this feeding through in to fuel prices at the pumps and from a farmer’s perspective it is also likely to result in an increase in feed, fertilizer and agro-chemical prices as we move on in to 2017.

So, it appears farmers can be cautiously optimistic in the short term, but must be aware that the benefit of the increase in commodity prices may well be eroded by increased input costs and in the longer term they need to keep a wary eye on the outcome of the Brexit negotiations over which they have little or no control but which could have a massive impact on their future prosperity.

Tim Jones

Tim JonesFRICS

Partner - Head of Rural Division

Tim is head of the firm's Rural Division and of the Cambridge office, although he spends a considerable amount of time in London.  He has over 20 years experience in advising institutional and pri...

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