York Farmers across the country breathed a huge sigh of relief on Christmas Eve when the UK and European Union reached a last-gasp post-Brexit trade deal after nine torturous months of negotiations.
The long-awaited trade deal, which came into force when the Brexit transition period ended on 31 December 2020, averted a no-deal Brexit – which most agreed would have been a catastrophic development for the agricultural sector.
Although the tariffs are no longer a threat, trade will still not be completely frictionless and farmers who deal with the EU or traditionally used EU workers still have much to consider. Our Agricultural Team at Ware & Kay Solicitors explain.
Movement of labour
Free movement of labour ended on 31 December 2020, leaving food and farming sectors exposed to a potentially huge shortage of seasonal and casual workers which have traditionally been filled by EU nationals.
EU workers who usually came to the UK to carry out jobs such as livestock slaughter and fruit, potato and vegetable picking and packing, will struggle to meet the criteria required under the Government’s new points-based system, which allows migrant workers to work in the UK.
The Government has relaxed the rules somewhat for vets, veterinary nurses, butchers, and agricultural engineers. They have also announced a seasonal workers pilot for 2021, with an increased quota of 30,000, but a shortfall of workers is still likely.
Farmers, therefore, need to get a firm grasp on the new rules by reading government guidance, think about how they might recruit UK nationals and examine ways of retaining existing staff and optimise labour use to improve efficiency.
Non-tariff costs
No tariffs or quotas will apply to those involved in exporting or importing goods and services to or from the EU. The UK will now trade with the EU as a third country. The UK‘s position on transporting goods to and from the EU switches from ‘deliverer’ to ‘importer or exporter’ so other costs and red tape are inevitable.
Factors such as extra border checks, more time spent crossing borders, new rules of origin, as well as more onerous labelling requirements, advance notification of loads, and more paperwork like export health certificates will all mean extra costs in the agricultural supply chain. Farm businesses should be holding ongoing talks with their suppliers to try and minimise any possible disruptions.
Direct payments
Since the beginning of this year, an agricultural transition period began in England which aims to help farmers plan for the new arrangements that are on the way as a result of Brexit. A key element of this is the seven-year phased reduction in direct payments.
Direct payments are paid to farm businesses based on the amount of agricultural land they maintain, but these are set to stop completely by 2027. This cessation will hit the profits of farming businesses hard unless measures are taken now to help mitigate the loss.
This would include considering alternative income sources, such as:
- growing different crops, raising different livestock or diversifying outside of agriculture;
- ‘going green’ by ensuring improved soil health, air and water quality, to be eligible for payments available under the planned new Environmental Land Management scheme; and
- introducing measures to improve business performance generally.
Contact our Agricultural Team for tailored advice on how the Brexit transition affects your business and what we can do to help on York 01904 716000, Wetherby 01937 583210 or Malton 01653 692247 or email law@warekay.co.uk
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