finance

UK Secretary of State spells out Brexit’s impact on the rural economy



The implications of Brexit for the rural economy in Scotland were explored by a Holyrood committee yesterday, as MSPs questioned the UK Government’s secretary of state for environment, food and rural affairs.

George Eustice was grilled by the Rural Economy and Connectivity Committee on the impact of the UK’s withdrawal from the European Union for Scottish agriculture, fisheries, and the wider food and drink industry.

He explained that negotiations are ongoing, with two “particularly difficult sticking points” around State Aid and fisheries partnership agreements, the latter in terms of access to UK waters and quota sharing arrangements.

“Alongside that we’ve been working to prepare industries like meat and fish processing so that they are aware of the additional documentation that will be needed for exports,” Eustice added.

He was then quizzed about tariffs affecting livestock farmers, in particular sheep, and the potential for some kind of compensation scheme.

“We want to get tariff free trade on all goods, but we accepted that the EU weren’t up for any kind of special agreement, so since then we’ve been working on a simple trade deal much like the EU/Canada one,” Eustice stated.

“You can take a horse to water, but you can’t make it drink, so if the EU are unwilling to do a tariff-free trade agreement, then we would as a country have to review what our response to that would be and we would redouble our efforts to open new markets for lamb like the US and the Middle East.”

He explained that the UK would pursue a strategy of import substitution and in the interim there would be things like movements in exchange rates to smooth the passage from one system to another.

As for a compensation package, Eustice noted that sheep farmers would not be affected until next autumn, giving time to put something together, like a possible premium scheme.

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Scottish Conservative MSP Peter Chapman asked about the desire to meet existing EU standards and remaining aligned until a deal is done.

Eustice responded that this “doesn’t make sense” as there will be things the UK will want to do differently, giving examples of the current reliance on chemical pesticides and gene editing. “We don’t want to just slavishly follow legacy EU law”, he added.

SNP MSP Emma Harper continued this line of questioning with concerns around higher levels of antibiotics in livestock products imported from other countries.

Eustice responded that livestock producers in the UK currently get financial incentives to enhance animal health and welfare, reducing the use of antibiotics and integrated pest management.

“As for imports, the SPS chapter of our agreement will look at these matters and set down standards… using a differential approach to incentivise producers in overseas countries to match our standards on things like animal welfare.”

The questioning moved onto fisheries policy, with SNP MSP Stewart Stevenson asking about issues for the processing sector, given the transport of live animals to the EU.

Eustice explained that there is an agreement not to check shipments at Calais, instead they would be diverted directly to French fish markets and any checks would take place there as the fish arrive.

“We have also developed a system whereby if there is disruption at the border, with queues of lorries, then we have developed a protocol which would allow us to fast screen lorries – averaging around 80 a day, with around half from Scotland – carrying fresh fish which need to get to market,” he commented.

As for boats fishing the UK waters, Eustice said Scotland will be able to place licensed conditions on every foreign vessel that seeks to access, enabling control over what they catch.

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“The greatest challenges will come in the channel and the southern north sea, so we’ve increased our patrol capacity by about fivefold, with additional vessels from the Royal Navy, delaying the decommissioning of existing craft and commissioning two new commercial vehicles to help, along with two surveillance aircraft,” Eustice said in terms of policing these policies.

“In the context of Scotland, it tends to be a smaller number of larger vessels, but Marine Scotland has experience of policing these sorts of agreements with the Faroes.”

For foreign firms which have bought UK licenses, Eustice said the government will require them to land at least 70% of their catch into UK ports.

On wider common frameworks within the Internal Market Bill, he said it is “open to the Scottish Government to slavishly follow European law if that is what they wish to do, but I suspect it won’t be a strategy that can be maintained in the long term because it’s only a matter of time before the EU brings forward a policy proposal that would be manifestly against Scottish interests”.

He continued: “We would seek to achieve the ability for all devolved administrations to pursue policies that work for their own landscapes and farm structures, but obviously to prevent a situation where you could get anti-competitive subsidies that would be deeply unfair on other parts of the UK.

“We’re looking to pursue this principally through the frameworks, but could have a State Aid regime as well, provided it doesn’t cause market distortions within the internal market.”

When asked about subsidies, Eustice agreed that area based payments are poor value for money and “don’t make a great deal of sense”, pointing out that they subsidise land ownership, which tends to mean that the largest payments go to the wealthiest landowners.

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“It can inflate land rents and area costs, lead to people not actively farming land and just coasting and collecting payment,” he said, adding that the English approach is now to move payments to invest in technology, research and development, supporting farmers to be more sustainable and enhance animal welfare.

“Scotland will have the freedom to do so, one of the first things I did when I became farming minister was to lobby quite hard on behalf of NFU Scotland for such support,” stated Eustice, adding that with such wide ranging landscapes in Scotland, an area based, regional approach doesn’t work.

Chapman raised concerns over a lack of fruit picking labour from the EU, noting that the UK needs about 70,000 seasonal workers, around 10,000 of which need to come to Scotland.

Eustice responded that as unemployment is set to rise as a result of the Coronavirus, people who were working in hospitality sector, “sometimes they will be Polish or Lithuanian who will be people used to hard graft”, will need to take some of this work, “while acknowledging it’s not always easy to get British people to do these seasonal jobs”.

MSPs previously took evidence from the then Secretary of State for Environment, Food and Rural Affairs, Michael Gove on 15 May 2019.

Since then, representatives from Scotland’s agriculture, fisheries and food and drink sectors have expressed concerns about continuing uncertainty as the end of the transition period on 31 December approaches, with negotiations over a trade deal with the EU ongoing and the risk of No Deal remaining.



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