The EU Referendum and the Rural Sector

On 23rd June Britain will go to the Polls again – this time to vote on whether or not the UK should remain as members of the European Union (EU).  Current polls are predicting that the vote will be a close one; however the importance of the outcome on rural life in Wales cannot be overstated.

There are many complex issues on both sides of the arguments.  There are however some factors which are likely to be more significant for the agricultural sector when making their decision as to how to vote.

Firstly and perhaps most importantly, is the direct support that the agricultural sector receives through CAP (Common Agricultural Property).   The remain campaign argue that the payments under this policy are vital to farmers, and will stop if the UK leave the EU.  In 2014 UK farmers received 54% of their income via direct supportⁱ.  If we leave without support introduced by the UK government to replace these payments, it is likely that many farms would become unsustainable.  One point to note is that CAP is only guaranteed until 2020.  There is no guarantee, therefore that if the UK remains in the EU that CAP will continue in the same format after this date.

The leave campaign argues that CAP is inefficient and burdensome on UK farmers and that the UK could better make decisions on how to support farmers and invest in the rural economy.  They also argue that directly elected UK ministers should make decisions on how to spend public money.  There has been a suggestion that the money that the UK would no longer be paying to the EU for membership, could be used to make rural payments.  I have yet to see however an agreed proposal for a structure of supports that would be introduced if the UK leaves, and the focus of the leave camp seems to be that this money would be used to save the NHS.  One may need to question therefore whether there would be sufficient money to cover rural payments as well.   Another question that has not been answered is whether UK farmers will continue to receive payments up until 2020 to respect the commitments made for the current CAP period if the UK leaves.

 The EU is a major market place for the UK - 62% of UK agri-food exports were to the EU and 70% of the UK’s agri-food imports came from the EU in 2013ⁱⁱ.  The leave camp argues that the UK should be free to establish its own trade relationships in the world, and to have a voice in its own right in trade negotiations.  It appears to be recognised however that even if the UK does leave, there would need to be some trade agreement put in place with the EU.  The leave camp say that as the UK is one of the EU’s largest market people should be confident that a trade agreement can be reached which is as good as, if not better, than our current relationship.  There is however no guarantee in relation to this.  The remain camp argue that it is unlikely that an advantageous agreement could be entered into which has the same benefits as existing agreement.  There may be higher trade costs resulting from customs controls and possible import tariffs.

The agricultural sector relies heavily on seasonal workers.  There has been a trend towards these jobs going to migrants from EU countries. Ending this freedom of movement of people within the EU is argued by the leave camp as being one of the big advantages of leaving.  They do however seem to recognise that perhaps the UK would need to have a specific labour market exemption for seasonal agricultural workers.  They do not seem however to have an agreed system that would be put in place.

The remain camp do seem to recognise that there is a large element of the UK public who are concerned about this free movement of people. It is possible that freedom of movement of people may be a condition attached to any new trade agreements that are entered into with EU countries. Freedom of movement within the EU may not be ended therefore even if we leave the EU.  As part of the renegotiations of EU membership, the UK has obtained permission to limit access to “in work benefits” for up to four years, and if someone has not found work they can be returned to the EU country from which they originated.

As can be seen above, there appears to be no certainty on either side of the argument and further questions are raised.  In order to provide peace of mind for the rural community, it would be useful if both camps could answer these questions and provide more certainty about the consequences of either remaining or leaving.  I shall wait with great anticipation to see what the outcome is on the 24th June, although I anticipate that this will not be the end of the matter.