Brexit Has Happened - What Happens Now?

Brexit happened on 31st January 2020, so what happens now? In the grand scheme of things, nothing has changed - and nor is it likely to change for at least the next ten months.

On 31st January, the UK entered a transition period which will run until the end of 2020 and all EU Laws and Regulations basically switched to UK Law with almost no change.

It is vital that the UK and EU Governments establish some form of trade relationship in order to replace current friction-free arrangements during this transition period. If plans aren’t in place by August, there is a real risk that there won’t be a trade deal in place by the end of 2020 because of all the work that needs doing to ratify and implement a deal. So there remains a potential for a no deal Brexit and all the accompanying turmoil of trading with our closest neighbours on default World Trade Organisation terms.

Already there are some businesses introducing new port checks and behind the scenes we are seeing regular changes to the TRACES recording system for importing and exporting live animals or animal products. Although these changes aren’t likely to have any direct impacts on a farmers’ daily work, they do provide a taste of what is to come, even if there is a trade deal in place by the end of the year.

A new UK Agriculture Bill, which has sections which variously apply to England, Wales, Northern Ireland, England and Wales, and/or the whole of the UK is currently going through Parliament.

The Bill sets out legislation relating to a vast array of issues, including authorising expenditure for agricultural and other purposes, direct payments, exceptional market conditions, modifying retained EU legislation, market intervention, private storage aid; reporting on food security; marketing standards and ensuring compliance with the WTO Agreement on Agriculture.

The section dealing with English farm policies now includes a requirement for Defra to “have regard to the need to encourage the production of food by producers in England and its production by them in an environmentally sustainable way’” - marking a significant improvement from the previous incarnation of the Bill.

The Welsh Government should clearly set out similar obligations when it comes to drafting a Welsh Agriculture Bill to avoid disadvantaging Welsh farmers compared with the other UK nations - but in evidence submitted to the Welsh Assembly and the UK Parliament, the FUW has also argued that the Bill should recognise the intrinsic value of supporting family farms and the rural communities of which they are an inherent social and economic part.

It has been confirmed that Welsh agriculture will receive 2020 funding at the same rate as 2019, therefore around £243 million. However as this would have normally come from the 2021 EU CAP budget, the Direct Payments to Farmers (Legislative Continuity) Act 2020 has been passed by Parliament to allow this to come from domestic funds. There are intentions to fund agriculture at the same rate for the remainder of this parliamentary period - so until 2024 assuming there is no early election and that the 5 year fixed parliamentary term remains in place.

The FUW has long highlighted the need for UK financial and policy frameworks which respect devolution but also limit divergence between our four nations in order to ensure farmers are not faced with unfair competition from other parts of the UK.

The Direct Payments to Farmers Bill illustrates our fears regarding the need for financial frameworks, as it removes the EU Pillar 1 financial ceilings to allow Scotland to pay more money to farmers following Lord Bew’s review of payments.

Lord Bew recommended that an extra £25.7 million be given annually to Scottish farmers, and an equivalent amount for Welsh farmers of just £2.6 million, increases that would not have been allowed under EU financial rules. If the increases are applied to Pillar 1 payments, the average Scottish BPS will increase by around £1,300 while the increase for Welsh farmers would be around £160, making the average Scottish BPS payment worth around £10,000 more than the average Welsh payment.

Such further divergence highlights the FUW’s concerns that the threat of market distortion and unfair competition between UK farmers is not being taken seriously, and the FUW has told Wales’ Climate Change, Environment and Rural Affairs Committee and the House of Commons Public Bill Committee:

“The FUW has major concerns regarding the degree to which the Bill would in future allow far greater divergence between regulations, budgets, minimum and maximum spending thresholds and other policies and approaches implemented in the four UK nations than would have been allowed under EU regulatory frameworks.”

“The scale of such divergence could potentially be unprecedented in recent history and have the effect of distorting markets and effecting unfair competition between businesses in different parts of the UK."

“As an organisation which fully supports Welsh devolution, the FUW recognises that divergence is an inherent part of devolution. However, this has previously happened within the boundaries set by EU frameworks, and the Bill and related legislation effectively removes or fails to replace the vast majority of such boundaries, either immediately or over time.”