Why uncertain post-Brexit future awaits Northern Ireland's farmers
After 2020 farm incomes and food prices in the UK face major uncertainties. The expectation is that the UK Government will move from the EU system of single farm payments. In the post-Brexit environment, the UK ambition will be to create a less expensive form of farm income support.
The new post-Brexit situation for farming poses an immediate tension. The best answer for Britain may not apply equally for Northern Ireland.
Potential problems will emerge if, for example, cross-border trade in cattle, sheep and pigs, as well as milk, needs to be monitored to measure cross-border flows to minimise subsidy manipulation (even if no cross-border tariffs or taxes were introduced).
The ambition of Government ministers is that the border between north and south on this island should be frictionless and minimise formalities. That ambition will be constrained by the legalities of the trading arrangements between the EU (of 27 countries) and the UK. Those arrangements could only remain seamless if the UK negotiated to remain part of the EU Single Market and the Customs Union. The declared negotiating stance of the UK Government is that that is not expected.
In reverse, therefore, a formal border will exist and cross-border trade in farm produce and food would require some kind of documentation, even if minimised through the use of internet documents.
The significance of the emergence of a formal border becomes clearer depending on the structure of UK policies on importing food. Prior to joining the EU and signing up for what became the Common Agriculture Policy, the UK supported farming incomes by a combination of facilitating the import of cheaper food at then world prices alongside a system of deficiency payments direct to farmers to support farm incomes. Comparatively this was a less expensive system than the more comprehensive single farm payments (of the CAP) and pushed food prices down when there were competitive suppliers around the world.
For the totality of the UK market place, this was an attempt to deliver cheaper food to consumers alongside supporting farm incomes. In operation, the deficiency payments system was less generous to farming than the CAP.
The deficiency payments formula had a built-in bias for farming in Northern Ireland. Northern Ireland producers faced a more appealing set of market arrangements than those in the Republic. This was one of the influences in the discussions leading up to the Anglo-Irish Free Trade Agreement, just prior to EU entry.
Farming and food processing sectors are anxious that the post-Brexit changes affecting these sectors should be identified soon. Farm production plans will adjust to new circumstances but lack of certainty in the immediate future will deter investment in the interim.
The Scottish Government is asking questions about whether farming policies will be devolved from Westminster. London has avoided a clear answer, for the moment, but it seems likely that the UK Government will be reluctant to devolve farm policies affecting farm incomes. The logic of a no-devolution policy is that London will make the critical decisions on food import policies and the scale of Government spending to support farming.
Northern Ireland ministers (provided that Stormont ministers are eventually reappointed) will be anxious that a London perspective, trying to keep down the cost of farm support and opening the UK market to cheaper imports of temperate food products, may hit local farm activity disproportionately.
The UK market for imported food supplies is of major significance to the food processing sector in the Republic of Ireland. The threat of any restriction (or trade tariffs) on access to the UK market, particularly if they are a by-product of UK farm policy support, is one of the potentially most serious distorting effects of a 'no deal Brexit'. Ironically, post-Brexit the border on this island may open new incentives for cross-border smuggling. Back to the habits of the 1950s.