The Sheep Farming Industry Says There Will Be A Total Price Collapse In January Without A Brexit Deal
British sheep farmers are just weeks away from a total price collapse unless a post-Brexit trade deal is reached with the EU, the industry has warned.
The stark message issued by the National Sheep Association comes as the EU and UK enter what is being billed as the very final phase of talks.
Negotiator Lord David Frost has made clear he is still willing to walk away without a deal if an agreement cannot be reached on sticking points related to fishing and governance.
There are around 45,000 sheep farmers in Britain and this is the most anxious time for the industry in a generation, NSA chief executive Phil Stocker told PoliticsHome, as it emerges as one of the key sectors likely to be crushed by a no-deal outcome.
EU tariffs on lamb would be between 46 and 48 percent without a trade deal. Ninety-percent of lamb exports go to the EU.
“If we come out of the EU with no deal at the end of December, I think by mid-January our prices will have collapsed if we want to continue to put lamb in that market,” he said.
“People are getting quite nervous about things now.
“Without a doubt this could be the biggest hit to the sector in a generation. Two things are going on, one a potential change in trade, and other big thing is taking back control on our environmental and agricultural legislation that will change the way farmers have been supported for the last 50 years or more.”
Alternative markets for British lamb in Saudi Arabia and the USA are often cited by government, but Stocker said there is no guarantee the new markets could right the expected losses.
“Those markets are far from open at the moment and again, we could end up falling off the edge of a cliff in January next before way before any of those new market opportunities come to fruition,” he said.
Lamb exported to France today is around £7 per kilo and the NSA believes this would certainly rise to at least £11 per kilo. With the EU countries unwilling to pay a higher price it could force British farmers to reduce their prices at both the export level, and back down the chain to the farm-gate.
“A product landing on the shores in France at £7.50 per kilo would end up being £11.
“What we think they’ll do, and we’d have no choice in this, is they they’d put pressure back on the UK and say lamb coming in at £11 per kilo just simply doesn’t work. We’ll still buy it from you, but we can only pay you less," he said.
This would mean the farm-gate price, which is around £4.50 to £5 per kilo at the moment could be pushed as low as just £2.50.
Stocker said Eustice had caused significant anger across the industry with a series of TV interviews he did on Sunday in which he said sheep farmers would face short-term price drops, and mixed beef and sheep farms could try and diversify into beef.
Either Eustice was putting on a “strong face” ahead of talks to try and get more concessions from the EU on trade, or he was unduly worrying farmers with what felt like a relaxed attitude, Stocker said. He suggested the fact there had been no signaling in private to the industry to alleviate their concerns felt unusual.
On Eustice’s suggestion sheep farmers can diversify, he said most sheep farmers rear sheep alone and most don’t have the infrastructure to keep cattle even if they wanted to.
He said: “With sheep you can get away with a small tractor, a quad bike and not a great deal more. But with cattle you’re talking about big machinery to handle large volumes of manure, and straw to bed them down, silage production. It’s completely different."
With a price collapse, he said there would be significant pressure on the Treasury to some kind of financial support.
They would get market intervention or a compensation payment to get people through immediate financial hardship, he believes, but at some point it would stop, and it could just be delaying the inevitable.