Brexiteer farming plans more “demented” than CAP

by Luke Lythgoe | 10.04.2016

Eurosceptics used to lambast the Common Agricultural Policy for costing taxpayers the earth and pushing up food prices. Boris Johnson famously called the CAP “demented” as recently as March. But in its desperation to woo farmers in the coming referendum, the pro-Brexit camp is advocating policies that would do nothing to save taxpayer money or help consumers. They may actually make taxpayers and consumers worse off.

Vote Leave politicians say they want to keep free trade in agricultural products with the EU while simultaneously proposing more support for UK farmers. Farming minister George Eustice told the BBC’s Today programme on April 6: “We would still have a free trade agreement with the EU” (listen from 50:00). Meanwhile, Johnson, during his recent Treasury Select Committee grilling said: “We would have a system whereby we were able to support our agriculture and support it more generously.”

Keeping free trade in agricultural products with the EU after Brexit would be unprecedented. No non-EU country enjoys fully liberalised trade in agriculture with the EU. Even the EU’s closest partners such as Norway and Switzerland are subjected to EU quotas and tariffs for some produce.

Around 60-65% of UK agricultural exports – equivalent to 50% of total output – have been going to the EU in recent years, amounting to £12.9 billion in 2014. So losing unfettered access to that market would be a blow to our farmers.

Johnson, though, thinks this won’t happen. “Given the huge exports of agricultural products to this country from the rest of the EU, they would be insane not to do a deal with us.” Around 70% of the UK’s agricultural imports come from the rest of the Union, amounting to £32.2 billion in 2014.

Johnson’s argument, though, ignores proportionality. Under 12% of EU agricultural output is exported to the UK.

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    Even if the EU did take agree free trade in agriculture with Britain, it is hard to imagine it wouldn’t attach conditions. First, it would insist on Britain not providing any extra subsidies to its farmers. So Johnson’s idea of giving them more generous support would go out of the window. Mind you, just maintaining farm subsidies at the current CAP levels would cost over £2.8 billion last year, eating away at the supposed windfall eurosceptics tell us a Brexit would produce.

    Second, the EU might well insist on Britain applying the same tariffs on imports from the rest of the world as it does now. Otherwise, third countries would just be able to ship their produce to the UK and re-export it to continental Europe without paying tariffs. An alternative would be to stop this round-tripping by imposing “rules of origin” on British exports to the bloc – but this would then tie the industry up in just the sort of red tape Brexiteers say they want to slash.

    If Britain had to impose the same tariffs as the EU, its consumers wouldn’t benefit from the fall in food prices that the Leave camp often promises, even though they exaggerate the potential benefit.

    The likely scenario, though, is that the UK doesn’t get unfettered access for its farmers if it quits the EU. In that case, the agricultural lobby will still want tariff protection along with subsidies. Given how willing Johnson and Eustice are to offer aid, it is reasonable to expect they’d also erect tariff barriers. So there would be no saving to consumers in that scenario either. In fact, given that tariffs would presumably cover imports from the EU as well as the rest of the word, consumers could end up worse off.

    InFacts contacted Boris Johnson and George Eustice for comment but received no response.

    Edited by Hugo Dixon