Sheep farmer: no-deal Brexit case study
Mick is an upland sheep farmer with 1,500 ewes. Mick normally lambs in March/April and may sell some of these as store lambs in the autumn along with finished lambs from the previous year.
What will happen to the business on Day 1 of a ‘no –deal’ Brexit?
The business is unlikely to feel the effects immediately, but World Trade Organisation tariffs imposed in a no deal situation could account for around 50% of the price of UK sheep meat, making it uncompetitive in the EU market (which currently accounts for around 90% of UK lamb exports.)
To export, the UK will also need Export Health Certificates agreed by the EU and there is no guarantee that these will be in place before March.
The biggest impact is most likely to come when the lambs are sold this autumn.
Could there be issues in the next 6 months or so?
Autumn lamb prices may be depressed because of the UK’s inability to export sheep meat. In AHDB’s ‘Brexit Scenarios: an impact assessment’ it was estimated that the price of UK sheep meat could fall by as much as 25% under a ‘no-deal’ Brexit.
Looking further ahead
New trade deals traditionally take many years to agree, so a short term solution to the loss of EU sheep meat markets won’t be easy. Therefore, the low autumn lamb price could persist for some time – which could impact on cash flow – leading to a need for early advice and support from Mick’s bank manager.
Under the new English Agricultural policy, the farm business income may be supported by funding under “public money for public goods”. AHDB’s report, ‘The impact of Brexit scenarios on grazing farms in the Lake District National Park’ suggested that in certain circumstances, environmental funding could protect upland farmers’ profits in a no deal scenario. However, this is still far from certain as a considerable amount of detail is still missing.
What help is available?
‘Preparing for change: The characteristics of top performing farms’ shows where small changes can add up to a big business improvement and Key performance indicators (KPIs) are the aspects of a business that can help farmers identify the strengths and weaknesses in their performance.