Brexit: priorities for Welsh agriculture Contents

Conclusions and recommendations

The importance of Welsh agriculture

1.Agriculture is central to community life in rural Wales and the health of the Welsh language, and is at the heart of long-standing and complex supply chains which underpin the rural economy in Wales. It is also a significant contributor to the Welsh economy and job market—accounting for a higher proportion of jobs and economic value in Wales than it does for the UK as a whole. The red meat industry in Wales—and the flagship product of Welsh lamb in particular—is of singular importance to Welsh agriculture and the Welsh brand. (Paragraph 8)

2.In preparing for Brexit the UK Government must recognise the specific and unique circumstances of agriculture in Wales. These include the extent to which local communities and economies rely on relatively small farms and the supply chains that support them. Throughout this Report we highlight a number of specific ways in which the Government can respond to the particular needs of Wales. (Paragraph 9)

Priorities for UK-EU negotiations

3.The EU is the main market for exports of Welsh agricultural products; it is the destination of over 80% of Welsh food and animal exports, including over 90% of meat, dairy, egg and animal feed exports. Barrier-free access to EU markets is therefore essential to the future of Welsh agriculture. The majority of our witnesses, including the Welsh Government, believed this would best be met by continued membership of the Single Market and Customs Union, but we note that there are many different options for future trade relations between the UK and EU, and that the UK Government believes it is possible to achieve frictionless borders and tariff-free trade through a free trade and customs agreement. Whatever the UK’s future trade relationship with the EU, it must reflect the market access needs of Welsh farmers. (Paragraph 17)

4.In formulating its preferred vision for future UK-EU trade relations, the UK Government should recognise that the overwhelming view of the representatives we heard from was that they would be best served by retaining membership of the Single Market and Customs Union, in order to ensure current access to EU markets with no new barriers—be they in the form of tariffs, customs controls or other checks (Paragraph 18)

5.The European Union’s system of Protected Geographic Indicators (PGIs) and Products of Designated Origin (PDOs) protects the provenance and underlines the quality of Welsh produce. This has been particularly important for Welsh lamb, where its status has been the foundation for its export across the EU. Facilitated by these protections, Welsh agricultural produce has been exported across the EU, benefitting the Welsh economy and focusing international attention on Wales and Welsh produce. (Paragraph 21)

6.The Government must ensure that future arrangements for geographic indicators lead to no reduction in protection for agricultural producers, and that Welsh producers can enjoy continued recognition by the EU’s system of Protected Geographic Indicators. (Paragraph 22)

Responsbility for agricultural policy

7.We recognise the agreement between the UK and Welsh Governments on the approach of the European Union (Withdrawal) Bill to responsibility for areas of agricultural policy which will return to the UK post-Brexit. It is essential that any changes to the devolution settlement for Wales which result from Brexit are agreed with the Welsh Government, and not imposed by Westminster. It is regrettable that it took so long for this agreement to be reached. (Paragraph 33)

8.It is clear that, post-Brexit, UK-wide common frameworks will be required in some areas of devolved policy, to ensure there are no barriers within the UK market, that the UK is in compliance with international obligations and that the UK’s common resources are protected. We welcome the agreement between the UK Government and devolved administrations about the areas where these will be necessary. (Paragraph 39)

9.UK-wide common frameworks could be established in a number of different ways, but it is still not clear where they will apply, what they will look like, how they will work, or how any disputes would be resolved. It is imperative that these frameworks are agreed mutually between the UK and devolved governments and ensure the unique issues that face each of the administrations are given due consideration. We believe that these frameworks will need to be supported by robust and transparent intergovernmental mechanisms. We urge the UK Government to work with the Welsh Government to agree on the areas of agricultural policy to which common frameworks will need to apply, and to establish how these will work, and the mechanisms for their governance. This should be done ahead of the Agriculture Bill being introduced in the UK Parliament. The UK Government should keep us updated on the timeframes for the establishment of common frameworks, to ensure that we have an opportunity to scrutinise these arrangements before they come into effect. (Paragraph 44)

10.Post-Brexit the Welsh Government will have an increased interest in trade deals negotiated by the UK Government, and particularly their implications for devolved policy areas. Given the inter-dependencies between trade deals and devolved policy, there will need to be robust intergovernmental arrangements to ensure that Welsh interests, and the consequences of trade deals for devolved policy, are considered during negotiations. We recommend that the UK Government agree with the Welsh Government arrangements for seeking the input and consent of the devolved institutions in Wales on trade deals. (Paragraph 48)

Agricultural policy post-Brexit

11.Welsh agriculture and particularly livestock farms are heavily dependent on income from the Common Agricultural Policy. While it is widely acknowledged that CAP is not without flaws, it has been very important to a lot of Welsh farmers, and this must be acknowledged. In the long-term we believe that farm income in Wales should be underpinned by strong domestic demand, world-wide export markets, care for the environment and responsible use of land, but it is clear that in the short-term ongoing financial support will be essential to sustain the agricultural sector in Wales. (Paragraph 59)

12.We have heard evidence in favour of the principle of moving away from direct support to linking subsidies to public goods. It is, nevertheless, important that the public goods which are rewarded by future support mechanisms cover all of the contributions made by the agricultural sector. Future subsidies must also be designed around the UK’s long-term trade arrangements and be reactive to the market effects that external tariffs may have on exports and imports. Transitioning to a new system will need to be done in a way which ensures that farmers do not face a cliff-edge with regard to financial support. (Paragraph 60)

13.It is essential that, post-Brexit, Wales receives its fair share of funding for agricultural support. We welcome the reassurances from the UK Government that allocations for agricultural support will remain broadly the same over the next few years, but work needs to be undertaken as a matter of urgency to determine how future agricultural support will be distributed across the UK. We recommend that—before Committee stage of the Agriculture Bill in the House of Commons—the UK Government agree with the devolved administrations a mechanism for future allocations of funding for agricultural support. (Paragraph 67)

14.We welcome the commitment from the Welsh Government that any funding that is provided by the UK Government will be ring-fenced for agricultural support. This ring-fencing will be essential to ensure that farmers in Wales do not lose out compared to farmers in other parts of the UK. (Paragraph 68)

15.Farmers and the businesses they operate depend upon certainty, and it is critical for the future of Welsh farming that they can plan for the long term. Post-Brexit, it will be important that farmers and the devolved administrations have a similar level of certainty about future agricultural support as is currently provided under the Common Agricultural Policy. Urgent consideration needs to be given to how this will be achieved, particularly in relation to the process for making budgetary commitments at a UK level, and providing funds to the devolved administrations for devolved areas of spending. We recommend that the UK Government set out, in its response to this Report, how this certainty will be provided. (Paragraph 69)

Productivity, promotion and procurement

16.Many parts of the agricultural supply chain are heavily reliant on migrant workers from the EU, who are willing to work long hours for relatively low wages. We accept that the UK’s withdrawal from the EU means that, in the future, different immigration arrangements will apply to EU citizens. If the UK’s exit from the EU were to lead to a collapse in the supply of suitable workers willing to participate in physically demanding seasonal work this would increase costs for the agricultural sector and, ultimately, consumers. Such a situation must not be allowed to happen. (Paragraph 77)

17.Post-Brexit, Welsh agriculture will need to pursue greater innovation and productivity to ensure that Wales is competitive both domestically and in new international markets. It will also be necessary to ensure that the sector has access to the labour it requires, and that future trade agreements secure access to markets which provide the greatest opportunities to Wales. We believe that the UK Government has an important role in supporting this work. (Paragraph 78)

18.In light of the suggestions we have heard about how Welsh agriculture can be supported post-Brexit, we recommend that the UK Government, working in collaboration with the Welsh Government, bring forward a strategy setting out how it will support and promote Welsh agriculture—and particularly the red meat sector—once the UK has left the EU. This should cover:

19.As the UK Government pursues new trade agreements, it must not trade away the interests of Welsh agriculture. Trade deals which expose Wales to cheap agricultural goods—not produced in line with the high standards of domestic produce—in order to gain preferential access for sectors such as financial services will represent a bad deal for Wales, and must not be pursued. It would also be unacceptable if any future trade agreements resulted in Welsh producers having to compete on an unfair playing field with imports that do not meet the UK’s world-leading animal welfare and environmental standards. When securing new trade agreements the Government must not tolerate lower environmental and welfare standards for food imported into the UK, than food which is produced within the UK. (Paragraph 83)

20.We do not believe that the way in which the red meat levy operates provides Hybu Cig Cymru with sufficient resource to market and promote Welsh red meat in the way which will be required for the sector to make a success of Brexit. There is a particular unfairness that levy-proceeds from animals raised in Wales but slaughtered in England go to the UK levy body, and not the HCC. This issue has required resolution for too long—the Government said it would consult on this in 2015, but took no action—and we are disappointed by the lack of urgency with which UK ministers have approached this issue. It now threatens to be a serious impediment to the effective promotion of Welsh meat post-Brexit, when Welsh produce will need to be promoted in new markets. We recommend that the UK Government overhauls the complex framework underpinning the red meat levy so that the value accrued from the slaughter of animals reared in Wales is reinvested in the promotion of Welsh produce. We expect this problem to be resolved before the UK exits the EU, and recommend that any legislative changes which are necessary to achieving this should be included in the forthcoming Agriculture Bill. (Paragraph 86)

21.We heard encouraging evidence that public procurement can be better used to encourage the purchase of local produce, and post-Brexit there may be opportunities for increasing the flexibility of public bodies to procure local produce. The UK Government should seek to maximise these opportunities, and we recommend that, by the end of the year, the UK Government publish an action plan which details how it intends to increase the procurement of domestic produce by public bodies. As part of this action plan the UK Government, in conjunction with the devolved Governments, should provide public bodies with guidance outlining how, within existing rules, they can support the procurement of locally produced food. We also urge the Secretary of State for Wales to work with his Cabinet colleagues to explore how major public purchasers of food, such as the NHS and the armed forces, can be supported in procuring local produce. (Paragraph 88)

Published: 9 July 2018