No Deal: Agriculture Tariffs

Debate between Robert Goodwill and Jonathan Edwards

Tuesday 16th July 2019 Westminster Hall

[Mr Goodwill]

Well, I will now turn to the sheep meat market, which is my single biggest concern about a no-deal Brexit. Supermarkets will operate only within the market. There is an idea that supermarkets will drive prices down. Should we have an oversupply of lamb—we could well have, as lambs come on to the market in the autumn, around the time that we could leave the EU without a deal—it will put tremendous pressure on the market. We have already seen that lamb consumption is pretty inelastic in the UK, with a 4% year-on-year reduction. We will also have the big store markets, particularly in hill areas in places such as Wales and Scotland. Hill farms that cannot keep their sheep over the winter will bring lambs to market, which could be affected by the impact of a no-deal Brexit.

As I said, the largest economic risk to the sheep sector is limiting or halting the export of lamb to the EU. The sector is unique among UK agriculture in relying heavily on exports to balance supply—indeed, we are net importers of most products. UK lamb exports will face both tariff and non-tariff barriers in the event of a no-deal Brexit from the EU. UK exports were worth £365 million in 2018, with 97% destined for the EU. To export to the EU, the UK must be recognised as a third country. Even then, the imposition of EU MFN tariffs—around 50% in ad valorem terms—would reduce the competitiveness of UK lamb on EU markets and consequentially reduce our exports. Should the UK be listed as an approved third country, it will need to meet the EU’s additional requirements for third-country products of animal origin, including movement through a border inspection post, pre-notification of delivery, checks on marketing standards and export health certificates.

My boss, the Secretary of State, has said that he will support vulnerable sectors, should the price of sheep meat fall considerably. In the event that an aid scheme is deemed necessary, it is likely that we would use retained EU powers; hence the scheme would be exempt from state aid rules. As I said, UK lamb exports were worth £365 million in 2018, with most going to the EU.

[Jonathan Edwards]

In March, the British Government said it would have to undertake a mass culling programme of lambs and sheep in the event of no deal. Is that still the policy of the British Government, should they pursue no deal in November?

[Mr Goodwill]

That is not the policy of the British Government. As I say, we are looking at emergency measures, and various figures have been bandied about. The president of the National Farmers Union suggested that the cost of supporting the sheep industry—probably a system involving a headage payment based on the ewes that farmers had already declared—would cost around £150 million. We understand its scale, and I am sure the Treasury will be able to consider that. As I say, we do not want a no-deal situation; we need to get a deal over the line. Whoever the Prime Minister is next week, the best way to minimise the impact on farmers—particularly sheep farmers—is to get us a better deal that is acceptable to Parliament. Every single hon. and right hon. Member of the House will need to examine their conscience and consider how they have voted this year in a way that did not deliver on Brexit.

It is important that we deliver on Brexit. Confidence is waning in our democratic systems, and the Brexit party did very well in the European elections. We have only ourselves in the House to blame for not delivering on Brexit, and sheep farmers will pay the greatest price. We will still get our salaries as MPs, but they will pay the price of our failing to secure an agreement.

In conclusion, I re-emphasise that leaving the EU with a deal remains the Government’s top priority, but the tariff policy has sought a balance between the impacts on consumers and producers in the event of no deal. We expect the impact on UK consumers as a whole to be broadly price neutral should these changes be transmitted to retail prices, and we will provide support for our most sensitive sectors.

Motion lapsed (Standing Order No. 10(6)).