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Deal or no deal? When uncertainty’s a certainty

No industry likes uncertainty.

Of course, one of the issues front of mind for the agricultural sector, giving much of that uncertainty, is Brexit.

What we’re hearing from clients and contacts is a resounding call for clarity on what Brexit means for the farming sector here in Scotland.

Out in the field — literally — Brexit was among the most talked about issues (along with agricultural tenants’ amnesty, residential tenancy rules and workforce retention) that cropped up as we travelled the country attending a host of agricultural events across the country over the summer.

The current situation

When the Agriculture Bill was in introduced in England to the UK Parliament on 12 September, it was met with a mixed reaction.

To some extent, there seemed to be relief that a degree of headway was being made in trying to determine a future for agriculture without the influence of the Common Agricultural Policy (CAP), but there was concern about how this would affect the Scottish agricultural sector.

At the moment, the CAP determines the framework for the broad policy of support for agriculture across EU nations with implementation delivered on a national level.

The Department for Environment, Food and Rural Affairs (DEFRA) provides the devolved nations with budgets. These nations then determine how support is to be delivered within this framework.

With Brexit looming, the UK government has pledged to support agriculture with funding at least guaranteed to the end of this parliamentary term or 2022. But the question is what happens after that?

In terms of the Agriculture Bill introduced to the UK parliament, the intention is that DEFRA will provide an overarching framework and budget for support, with the devolved nations being responsible for the implementation within each nation.

The main concern within the industry is on how the share of the “agricultural pot” of funding will be determined and will be delivered on, in particular in relation to the review of convergence funding which was announced.

The political landscape

Political issues are not so simple.

In terms of The Scotland Act 1998, agriculture is not a reserved matter and primary legislation on farming matters affecting Scotland should not be passed in UK parliament without the Scottish Government lodging Legislative Consent Memorandums in the Scottish Parliament.

The Scottish Government is of the view that it should be consulted on over the Agriculture Bill as it affects Scottish matters; part seven of the bill relating to compliance with World Trade Organisation (WTO) rules is particularly problematic.

Recently, rural economy secretary Fergus Ewing reinforced the Scottish Government’s view that powers enabling the UK government to comply with these WTO obligations could constrain agricultural policy choices in Scotland and by enacting the Bill as it stands the UK parliament couldimpose unwanted policies and rules on Scottish farmers in areas of devolved competency; however, the UK government argues Scottish Parliament does not have the legal competence to act in the area of international trade as this is reserved to Westminster.

Specifically, the Scottish Government argues it should be given the power to enter into international agreements in areas of devolved responsibility including control over imports and exports and trade negotiations — all of which will have substantial relevance for the agri-food sector.

Currently the UK government needs to be able to negotiate on a UK wide basis for trade deals. A degree of uniformity within agricultural production in the UK will most likely need to be illustrated to ensure that such deals can be struck.

No doubt constitutional lawyers in both governments will be thoroughly enjoying debating the issues, but what is being asked for by the industry, and what needs to be delivered, is a framework and a degree of certainty for the industry after the UK leaves the EU in March next year.

Brexit is not far away and yet more political wrangling will only serve to put the industry and those working within it under further stress in already difficult times.

An earlier version of this article appeared in The Courier on 24 September, 2018.

Linda Tinson

Stirling-based Linda is our head of rural, land and business. She has vast experience in all aspects of business in the rural and agricultural sector. She has a strong background in property, including purchasing and sales, advising on security transactions, property development and tenancy issues. She also has experience in family business and personal succession planning.

Posted, 19 October 2018 by Linda Tinson
Categories: Private client | Rural