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Farming

Hard Brexit threat to west Wales’ farmers

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John Davies, NFU Cymru: Priority must be tariff-free trade with EU27

BREXIT threatens major upheaval for Welsh agriculture, with small upland farms particularly threatened.

A report from the Public Policy Institute for Wales (PPIW) suggests that there is a massive risk to west and north Wales.

LIVESTOCK FARMING THREATENED

Its analysis suggests that the most likely changes in trading conditions would tend to disadvantage the competitive position of Welsh agriculture in its main current markets and trading competitors (particularly in sheep and beef).

The report also anticipates generally reduced levels and scope of public funding by comparison with those the sector has enjoyed in recent years.

However, within these challenging probable change scenarios, there are opportunities if farm businesses are enabled to respond adaptively.

Some farms and sectors face much greater challenges than others, which implies uneven structural change across significant areas:

  • a decline in the economic viability of sheep production is likely, with these farm businesses especially vulnerable to changes in both market access arrangements and public funding support – this could increase pressure on rural services;
  • accordingly, north and west Wales are likely to face stronger negative impacts than the south and east, where more potentially positive and diverse impacts can be expected among dairy, horticultural, mixed and other farm types.

MARKET RESPONSE UNCERTAIN

How key food and forestry processors and retailers respond to the Brexit process, and their willingness to invest in Wales and Welsh products, will be an important factor. Their patterns of operation may change in response to shifting economic and market conditions.

Managing the challenges faced is key, to prevent undesirable impacts on natural capital, landscape quality and community identity.

Three policy directions are recommended:

  • Fostering resilience in farm and other land management businesses; supporting successful adaptation, enhanced efficiency, diversification, adding value and intergenerational transfer, as well as some moves from farming into other sectors;
  • Investing in longer-term partnerships between government, food retailers, rural service providers, and commercial lenders to promote stronger business networks and SME infrastructure across Wales;
  • Designing a future funding framework to support natural resource management and rural vitality in Wales.

THINK OUTSIDE THE BOX

Report author Prof Janet Dwyer, from the University of Gloucester, argued that while farming only employs a relatively small proportion of people directly, its success has a ripple effect across rural communities.

“People need to be more willing to think outside the box, to think about working together, think about understanding the way in which one person‘s business affects what other people do because farming affects the landscape, which affects tourism, which is an important sector in Wales, so a lot of these things are connected,” she said.

The CCRI Director and Professor of Rural Policy makes a number of recommendations to overcome these potential challenges. These include investing in better business planning and adjustment; careful succession planning for farms and small rural businesses; and policies to strengthen health and social services for those in the most remote areas.

“Conducting the work made me more aware of the importance of thinking ahead and planning for continued uncertainty, whatever the eventual political and economic outcomes of Brexit” said Professor Dwyer.

REPORT WELCOMED

A Welsh Government spokeswoman said it welcomed the report, saying it highlighted the possible impact of Brexit not just on trade and markets but on people‘s lives.

“However, Brexit also presents the opportunity to put in place new Welsh policy frameworks to help them adjust and thrive,” she said.
“We recognise that many of these changes will impact businesses in different ways and agree the best approach will be on an individual business level.”

She said they have already begun work to develop “sector readiness” programmes to support businesses to prepare for the change.

“We continue to press the UK government on the need for a multi-year transition period to enable all businesses to prepare and for clarity on the level of funding that Wales will receive after Brexit.”

Responding to the report’s findings, Paul Davies AM, Welsh Conservative Shadow Secretary for Rural Affairs, said: “We note with interest the recommendations of the report.

“Following our departure from the EU, more powers over agriculture will be transferred to the Assembly. “The Welsh Government now needs to focus on ensuring that they listen to rural communities and that they actually devolve power to people living in the countryside.”

Mr Davies view of ‘more powers’ being transferred to Wales does not appear to reflect the views of many Conservative Brexit enthusiasts within the UK Parliament, including David TC Davies, who chairs the Welsh Affairs Select Committee and David Jones, the former Secretary of State for Wales, whose appearance in Cardiff this week as a member of the Public Administration and Constitutional Affairs Committee was noticeable for his equivocal approach to the transfer of powers in areas of existing competence back to the Assembly after Brexit.

HARD BREXIT’S SEVERE IMPACT

The report’s publication coincided with the release of the Welsh Government’s own Brexit trade paper, supported by an economic impact analysis from Cardiff Business School, argues the Welsh economy is best protected by retaining full access to the European Single Market and membership of a customs union.

The paper sets out the severe impact a hard Brexit would have on Welsh jobs and the economy. If the UK were to move to World Trade Organisation (WTO) rules, the Welsh economy could shrink by 8% – 10%, which would be the equivalent of between £1,500 and £2,000 per person in Wales.

The trade paper calls on the UK government to provide evidence of how new trade deals would replace the benefits of access to the EU. The Welsh Government also wants decisions on new trading relationships with the EU and the wider world to be taken in partnership with devolved administrations to fully reflect the interests of all parts of the UK.

Launching the document, the First Minister said: “Welsh exports are worth £14.6bn each year, with 61% of Welsh exports and just under half of our imports going to and from the EU. Wales is currently attracting record levels of inward investment, which is largely due to our access to the EU’s 500m customers.

“As our trade paper highlights, moving to WTO rules and the imposition of tariffs could have a catastrophic impact on our lamb sector and on the Welsh shellfish industry, which currently exports around 90% of their produce to the EU.

“These hard facts underline what is at stake if the UK government fails to get the right deal for the UK or we crash out of the EU without one. Leaving the Single Market and the Customs Unions would be hugely damaging for Welsh businesses and jobs, with our agricultural, food producers and automotive sectors being particularly hard hit.

“I urge the UK government to give serious consideration to our proposals and work with us to develop a post-Brexit trade policy which protects Welsh jobs and the economy.”

NFU WELCOMES WG PAPER

Commenting on the document, NFU Cymru President Mr John Davies said: “As the paper rightly acknowledges, the decisions that will be taken about the UK’s future trading relationships with the EU27 and the rest of the world will be significant factors shaping our future prosperity. In my view, nowhere is this more true than in relation to agriculture, with around a third of our lamb crop and around three quarters of Welsh food and drink exports destined for the European market.

“Trade has consistently emerged as a top priority for our members during the Brexit negotiations. As far as I am concerned our future trading relationship must be one which gives us the full and unfettered access to the Single Market that we need, and I welcome the fact that the Welsh Government has made this call once again in today’s policy paper.

“The imposition of tariffs, under a no-deal scenario would impact lamb exports in particular, and under WTO rates chilled lamb carcasses would attract effective tariff rates as high as 46%, effectively shutting us out of European markets.

“Whilst there has been much talk of tariff barriers and the detrimental impact that they can have on trade, I was pleased to see the policy document making extensive references to the negative impact that non-tariff barriers can have on trade, particularly in relation to exports of food. When it comes to food and agricultural produce in particular, non-tariff barriers such as inspections at border posts in order to demonstrate compliance with technical regulations and standards, rule of origin, hygiene, veterinary and phytosanitary controls are all factors which increase costs and hinder trade.

“The paper also rightly acknowledges the damaging impact that the lack of clarity on future trade arrangements with the EU is having for business and nowhere is this truer than in agriculture where production cycles can often span a number of years. That is why we cannot wait much longer for an outline of what our future trading relationship with the EU27 is going to look like, if our members are to start planning for the future.”

Mr Davies concluded: “Although Brexit may well eventually give the UK the freedom to strike its own trade agreements with third countries other than the EU27, speaking as a Welsh farmer, the immediate priority for the UK Government has to be on securing a trade agreement with the EU27 that is free from tariff and non-tariff barriers, and encompasses all sectors including agriculture.”

Farming

Areas of growth, opportunity, and inspiration: OECD report claims

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Food exports: Market messages need to be tailored

BRITISH food exporters need to gain an understanding of consumer needs in different countries if the UK’s farmers are to fully reap the rewards of overseas trade, according to AHDB.

In its latest edition of the Horizon Brexit series, AHDB argues that a ‘one-size-fits-all’ approach to unlocking export opportunities should be avoided and that we cannot rely on ‘Brand Britain’ alone to boost sales.

The report, focuses on international buying behaviours and looks at exporting from a consumer perspective. It highlights the need for industry to monitor and adapt to the needs of each marketplace to create more opportunities.

The study included responses from more than 4,500 consumers in nine countries – from key UK export markets in North America, Europe, Gulf States and Asia – around what motivates and drives them to choose the food they buy.

Among the key findings was that, while seven out of the nine countries surveyed said ‘quality’ was the most important factor, both China and Japan stated ‘food safety’ as critical in their food choices.

Christine Watts, AHDB chief communication and market development officer, said: “Concerns and priorities vary by market and many could benefit from tailored messaging to appeal to these different interests.

“For instance, in China and Japan food safety is critical. Communication to these markets needs to be tailored to meet the desires of consumers so they know more about the safety of the food they eat.”

The report also closely considers the impact of ‘British’ branding overseas and looks at some of the opportunities and challenges this holds in a post-Brexit world.

Steven Evans, AHDB consumer insight manager and author of the report, said: “The research looked to capture the reaction to ‘Brand Britain’ and understand objectively how other countries see us. We found that many consumers have not had direct exposure to British food products and, therefore, have not had the opportunity to build a firm view of their qualities.

“This highlights that exposure to products and clear branding is necessary to drive awareness and build brand reputation.”

Other key aspects from the report include how different sectors also have different drivers in buying behaviour. For example, while quality was important for both meat and dairy, price featured second in the list for meat while freshness was the second highest purchase motivator in the dairy industry.

Also, promoting the same meat cuts across all countries would not be beneficial for British exporters as lifestyles, tastes and food choices differ around the world.

AHDB International Market Development Director Dr Phil Hadley said: “Often, what we as a British consumer perceive as a good product message will not be relevant for all export markets.

“For example, the Chinese Sunday roast is not commonplace but Dong Po Rou (braised pork belly) is. Both hold a similar association as they both use larger joints but each fit very different meal occasions.

“We also know that a Chinese consumer is comfortable to view the whole journey from farm to fork. But it would be dangerous to assume that the same approach across all export markets will result in the same sales performance.

“A one-size-fits-all approach doesn’t allow for customisation and adapting to meet specific domestic demands. It is critical that British food producers don’t make assumptions that their product has the same relevance across all markets.”

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Farming

Rural areas vital for economies

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Areas of growth, opportunity, and inspiration: OECD report claims

RURAL areas are vital to national economies and addressing global challenges, according to the policy statement released at the 11th OECD Rural Development Conference held in Edinburgh.

The policy statement, which provides guidance to governments to support rural economic development, also declared that innovation will be critical to the future competitiveness and sustainability of rural economies. It also outlines the case for focusing on rural areas as engines of national prosperity and how policies should leverage this opportunity.

Jose Enrique Garcilazo, Head of OECD’s Regional and Rural Policy Unit, said: “Rural regions are not synonymous with decline or agricultural specialisation, but places of growth, opportunity and inspiration, yet rural is still not central to government policy. Rural areas have a key part to play in some of our major global challenges. They are best placed to develop new energy sources, to help sustain our natural environment and to ensure food security.

“In an increasingly interconnected world, opportunities are emerging to promote rural prosperity. Digitalisation will propel rural economies forward, and the conference has highlighted that supporting innovation in rural areas will be key to the future prosperity and wellbeing of rural regions.”

The policy statement identifies 10 key drivers of change predicted to influence the future of rural economies and communities and their potential to prosper, including additive manufacturing (for example 3D printing); decentralised energy systems; digital connectivity; the future of health; shifting values and preferences; drones; and driverless cars.

The statement also recommends that, in addition to prioritising rural innovation, a robust rural policy should place social, environmental and economic wellbeing at the forefront of policy decisions and take an integrated view across policy sectors to avoid one policy detracting from another.

The 2018 Conference, Enhancing Rural Innovation, was hosted by the Scottish Government and co-hosted by the European Commission and the UK, to provide a forum for key policy officials and academics from OECD member countries to engage and share ideas and experiences on rural policy.

It is the eleventh in the OECD Rural Conference Series, which has been held all over the world since its inception in 2002.

Prior to the main conference, a series of interactive sessions, led by the European Network for Rural Development, showcased exemplary projects and approaches already launched by rural communities to embrace 21st century challenges and opportunities.

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Farming

Rural Wales in ‘the 4G Wilderness’

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#4GforAll: CLA Wales highlights digital divide

NEW DATA gathered by the CLA has shown what rural communities have suspected for a long time; that the mobile industry is willing to abandon rural areas to the digital wilderness.

Director Rebecca Williams says: “Our information has revealed that too few planning applications have been made for mobile phone masts in our rural counties to bridge the digital divide between the urban and rural community.

“Latest research has shown that a county such as Powys – which has appallingly poor mobile connectivity at less than 3 per cent – has seen just 13 mast sites applied for in the past 12 months, yet urban counties such as Cardiff have seen as many as 62 applications. Even a rural county, such as Monmouthshire, close to the urban centres of Bristol, Newport and Cardiff, has seen just two mast applications.

“With 5G on the horizon in 2022, progress needs to be better – and Wales must not be left in the boondocks. The rural community must not be excluded. Farms and rural businesses lack the digital service they need to be competitive. We must remember that this is not about resident population numbers, since mobile communication should be available to everyone everywhere.”

In February, the CLA asked Ofcom to force reluctant mobile network operators to improve coverage in rural areas by imposing a legally binding coverage target on their operating licenses. It called for EE, O2, Vodafone and Three to be required to deliver 4G coverage to at least 95% of the UK geographic landmass on all networks by 2022.

Rebecca Williams continues: “Three years ago, we were told that coverage would be delivered in the countryside and yet rural communities are still waiting. In the same period the mobile industry has extracted concession after concession from UK Government Ministers. They have got the new legal powers they wanted, on the basis that they are a utility service.

“Now they must be forced to deliver the universal service that a utility operator provides. We expect government and the regulator to take a tough line on this, and if Ofcom won’t then Ministers must step in.”

The CLA has highlighted Ofcom’s failure to push mobile network operators to achieve universal coverage for consumers. It is calling on the UK Department for Digital, Culture, Media and Sport to review Ofcom’s statutory remit and confirm that the body should prioritise working towards universal, quality mobile coverage for consumers.

“The mobile operators have no market incentive to improve coverage in these rural areas. It is absolutely clear that the only way they will deliver the coverage the countryside needs is if they are forced to do so. However rather than pushing them to achieve universal coverage for consumers, Ofcom is setting soft targets for rural coverage. As a result rural consumers face inadequate service and lack of network choice for years to come.”

Further information can be found at www.cla.org.uk/4gForAll and Ofcom’s 700Mhz spectrum auction proposal.

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