Brexit and the food industry

Brexit: four key questions for the UK food industry

By Michael Stones

- Last updated on GMT

The EU referendum could take place as early as this summer
The EU referendum could take place as early as this summer

Related tags Eu European union

Answering four key questions will help the UK food and drink industry decide whether or not to vote in favour of quitting the EU, in a referendum, which chancellor George Osborne has described as “a once in a life-time opportunity”.

The questions, which emerged in a debate on EU membership at the Oxford Farming Conference last week, focused on whether EU institutions help or hinder the food sector’s performance, the UK’s access to European consumers, EU membership and international trade deals and the UK government's support for the food and farming industry.

On opposing sides of the argument were former environment secretary Owen Paterson and EU agriculture commissioner Phil Hogan. Read how each respectively set out his case, in an attempt to persuade conference delegates of why Britons should vote in favour of quitting the union or opt to retain membership.

While acknowledging the decision to reject or retain EU membership was a matter for the British people, Hogan argued the balance of benefits, both for the UK and the EU, lay in this country’s  continued membership.

Help or hinder?

1. Do EU institutions help or hinder the food sector?

Paterson:“Agriculture and food production is hampered by our membership of the Common Agricultural Policy ​[CAP]. CAP negotiations between 28 countries inevitably mean that we have to accept compromises. These are at best deeply unsatisfactory and at worse actively damaging to UK farmers​ [and the food industry].”

Hogan: “The CAP has become more liberal, more flexible and more out looking – more focused on trade and the global market place.

“We now have a market-orientated policy, which means that farm businesses decide for themselves what they want to produce on the basis of what they are good at and where they can get a good price, rather than looking to Brussels to see what support is available or being hemmed in by quotas.

“I remain adamant that the stability brought by CAP has provided and is providing, the foundation for economic growth and jobs in rural areas and all along the food chain.”

2. Access to EU consumers?

Paterson:“The EU and the European market are not one and the same. We can leave the politician arrangements of the EU, but still enjoy access to the European market, trading freely with us. 5M Europeans depend on sales to the UK; they have a vast strategic selfish interest in being able to export to us. So those who trade with Europe have nothing to fear.

“Today the CAP is morphing from a regime of subsidised food production and employment protection, into to one imposing common environmental outcomes across a vast and disparate geographic area encompassing 28 countries – from the olive groves of Andalucia with temperatures of 45​°C  to the frozen forests of north Sweden with temperatures of -45​°C.”  

Hogan: ​“Outside the EU, Britain would still want access to the union’s internal market. But that comes at a price – ask Switzerland and Norway. Would the British Exchequer be prepared to pay a price that fully guaranteed your access for agricultural products? Would it expect farmers to pay part of the access fee through higher taxes?”

3. Would quitting impact international trade deals?

Paterson:“The UK, freed from the encumbrance of the EU will be able to develop bi-lateral trade deals. We would not be waiting for lengthy complex all-encompassing treaties such as TTIP ​[Trans Atlantic Trade and Investment Partnership] that are held up by the Greek definition of feta. We could trade with like-minded countries that wanted our products.

“Outside the EU, we would be able to take a full seat on the world bodies that determine global regulation. The UK is currently represented by just one 1/28th​ of a seat by the EU at the WTO ​[World Trade Organisation], the OIE ​[World Organisation for Animal Health], the world organisation for animal disease, and Codex Alimentarius, the body which regulates guidelines relating to foods, food production and food safety.”

Hogan: “Europe is, and has always been, a vital part of British produce. Today the UK exports more to Ireland than it does to China, Japan, Canada, Russia, Saudi Arabia and South Korea combined. The EU accounts for 60% of the UK’s food exports.

​How would Britain, with a population of 60M fare in negotiating with countries like China, with a population of 1.3bn? In the EU it punches at a weight of 500M, almost twice the size of the US. It could take years to negotiate deals with Korea, Canada and so on – deals the EU has already successfully negotiated.”

4. Would government support the food industry after a vote to leave?

Paterson:“Outside the EU it will be essential to continue a significant level of support from the UK Exchequer and to reassure farmers that payments would be made by the UK government in the same way that Switzerland, Norway and Iceland currently do.

“In fact payments made by these countries are actually more generous than those paid by the EU member states. The EU currently contributes £2.9bn to the UK via the CAP and related subsidies, accounting for 55% of total income from farming. Yet the UK’s estimated net contribution to the EU budget is more than three times that figure at £9.8bn.”

Hogan: “The CAP is a legally binding contract between the EU and farmers up to 2020 under the multiannual financial framework. The CAP cannot be cut by the Commission or any government during this period.

“However, outside the EU, agricultural spending would be subject to the same annual review by the British Treasury as any other department. Can farmers compete with doctors, nurses and schools in such a review? This is especially relevant in the light of the fact that the DEFRA ​[Department for Environment, Food and Rural Affairs] budget is already down a third since 2010, while other departments, such as Health, Education, Defence and Overseas Aid, are ring-fenced from cuts.”

At least agreed

While clashing on the merits of membership, both politicians at least agreed on the importance of the referendum vote. Paterson told delegates: “The decision before the British public on the leave or remain referendum is arguably the biggest historic decision since the Reformation – what sort of country is this and who will run it?”

Earlier this week Prime Minister David Cameron confirmed a vote on EU membership could take place as early as this summer.

Meanwhile, read why quitting the EU could spell “heaven or hell​ for UK food and drink”​ manufacturers.

Four food industry questions

  1. Do EU institutions help or hinder the food sector?
  2. How would access to EU consumers be affected?
  3. Would quitting impact international trade deals?
  4. Would government support the UK food industry after a vote to leave?

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