Farmers must focus on the top end of the market

I can never understand why Westminster politicians need a summer break that extends from the summer until well into the autumn.

Saturday, 21st July 2018, 8:54 am
Updated Saturday, 21st July 2018, 8:58 am
Former prime minister Sir John Major. Pic by PA.
Former prime minister Sir John Major. Pic by PA.

It cannot be because they have worked so hard delivering for those who elected them.

However come the end of next week Westminster will go into recess. Doubtless Theresa May will be glad of the respite – not from the opposition, but from members of her own party in open warfare over Brexit.

They have decided that the end they want – both pro-Brexit and pro-leave – justifies whatever means are used. If the consequence is collapse of the government and a general election some seem to deem that acceptable. Many would also welcome a hard Brexit with no deal in place, despite the clear message from across British industry that this would lead to a loss of jobs and a slow down in the economy, at least in the short term.

That the Conservative party should be tearing itself apart over Europe is no new phenomenon. It happened with John Major over the Maastricht treaty; it was why a frustrated David Cameron will be badly judged by history for calling a referendum on EU membership to try to end party squabbles. The strains in fact go back to the 1840s and the repeal of the Corn Laws, which had been put in place to protect wealthy landowners from imports of grain from Europe. The result was higher prices for food. Divisions over the Corn Laws split the Tory party, with the result that it was thirty years before it could again form a majority government. Brexit at all costs, regardless of the consequences, Conservative MPs may not like French terms – but what we are witnessing now has elements of plus ca change, and indeed deja vu.

These events have moved the possibility of two events up the agenda. The first is a collapse of the government, a vote against the fixed term parliament legislation, and a general election. Based on opinion polls this could result in a Labour government or a coalition with Labour as the major party. All bets on the future of farm support after the CAP would then be off. This would see the end of the plan being developed at DEFRA by Michael Gove to maintain support levels in return for the delivery of public goods. Farmers could live with his ideas, even if there is a clash over the detail and how powers and decision making are devolved. Labour’s approach is an unknown.

The same political tensions at Westminster could equally – and probably more likely – result in a change of Conservative party leader and a hard Brexit. That would see the UK leave the EU on March 29 next year, with no trade deal or any other arrangements in place. This would be Brexit, raw in tooth and claw, which many in the Conservative party want. At a stroke everything would change, the most obvious being the movement of goods without customs barriers. World Trade Organisation (WTO) rules and tariffs would apply, and given the EU’s fortress Europe approach, getting any agricultural products into the EU-27 would be a big challenge.

At the same time food coming from the EU to the UK would also face WTO tariffs. Since we import more food than we export that could help protect the UK market, and in theory deliver higher prices. A more likely hard Brexit outcome however would be that the government would highlight its global free trade credentials by allowing tariff free access to the UK for most products, in the hope that others would match that gesture. It would retain tariffs for industries of strategic significance. There is however no reason to extend this to food.

Opening the market to tariff free imports would enhance rather than reduce food security; it would give the food industry access to cheaper raw materials; above all it could reduce prices on supermarket shelves. Farmers would lose out, but the days of the Tory MPs from the shires are long gone. Today there are few in the urban-focussed Conservative party that would fight for farmers. The message would be that farmers need to focus on the top end of the market where they can gain from attracting a premium for products with better provenance than imports. This might sound harsh, but the economic logic of the short term fallout from a hard Brexit is hard to deny.