Average farm profits could be more than halved in a worst-case Brexit scenario according to new research by the AHDB.
The organisation has modelled various Brexit scenarios based on the potential new tariff agreements that the UK may negotiate on leaving the EU. It found that average farm profitability could drop from £38,000 to £15,000 a year in the worst case scenario, as a result of policy and performance challenges that come from Brexit.
Described as the first time research has quantified the potential impact of Brexit on UK farming businesses, the report found that the top 25 per cent of agri businesses, regardless of sector, remained profitable under every scenario.
It follows a presentation by AHDB head of strategic insight David Swales at this year’s British Tomato Conference, where he outlined the effect of possible trade deals ahead of the official report launch.
The AHDB said the scenarios included a ‘business as usual’ approach with current levels of support; a liberal approach to trade with tariff-free access to the UK and reduced support; and a cliff-edge Brexit, reverting to WTO regulations and with dramatically reduced support payments.
AHDB market intelligence director Phil Bicknell said: “This analysis underlines the fact that performance matters. As individual farms, we know that we can’t determine policy but we can recognise that performance is key to preparing for the challenges ahead.”
The models will allow AHDB to re-run the scenarios in future as more policy detail emerges.
Bicknell added: “Buzzwords like competitiveness, resilience, productivity are not new to agriculture but Brexit brings renewed focus on farm performance. Do nothing and businesses that are currently profitable run the risk of heading into the red. There is plenty that individual businesses can do now to get fit for the future.”
The AHDB will be presenting further analysis and actions farmers can take in a series of Brexit roadshow events around the country.
Running from 18 October to 2 November at 18 locations, the events will also see the NFU present its latest thinking on the development of a domestic agriculture policy.