Real impact of Aussie trade deal ‘to hit farmers in 10 years’

The real impact of a free-trade deal with Australia will be felt by British farmers in around 10 years’ time after the removal of direct support payments, say industry leaders.

Prime minister Boris Johnson announced last month that the UK had signed a free-trade agreement (FTA) in principle between the UK and Australia.

The government says tariffs and quotas on Australian agri-food goods will be phased out over the next 15 years “to allow farmers to adjust to the new trading environment”.

See also: NFU demands strategy to ease impact of trade deals

Farm leaders and economists were asked what this deal will likely mean for the agriculture sector, its high standards and on future trade during a cross-party UK Trade and Business Commission session on Thursday (1 July).

Former NFU chief economist Sean Rickard predicted that not much would change in the next two years, but significant change would be felt in 10-15 years’ time.

“We know there are always winners and losers when it comes to trade negotiations,” he said.

“It just seems that agriculture is going to bear a disproportionate cost of this deal, and what worries me is that it’s the templates for deals that will be done with others.”

He added: “In the next year or two, we won’t see much difference… 15 years out, you have potentially an enormous impact on an agricultural industry.

Slimmed down

“I think the government are aware of that. When you look at the Agriculture Act, it is not about producing food now. It is about encouraging farmers to do something other than produce food.

“They are preparing to slim down the agricultural industry. I think that is such a waste of enormous potential and opportunities.”

Phil Stocker, chief executive of the National Sheep Association, said Australia is a “highly efficient” agri-food exporter, and the “largest global exporter of sheepmeat”.

Bigger volumes of Australian sheepmeat imports in about 10 years’ time would depress prices, he suggested.

“This is really concerning because it is likely to happen at a time when the Basic Payment is being taken away from farmers.”

Much of the evidence we heard today pointed to the obvious benefits of the UK-Australia trade deal for the Australian market, with few details yet on what the UK will gain.

Here's one example from @jillyjillygreed, co-founder of @Ladiesinbeef1 ⬇️ pic.twitter.com/wC6uOqgpY0

— UK Trade & Business Commission (@UKTradeBusiness) July 1, 2021

Jilly Greed, a Devon beef farmer and co-founder of Ladies in Beef, described the FTA as an “absolute betrayal” by government of UK agriculture’s high animal welfare and environmental standards.

“This is like Christmas all over for Australia and then stacking up behind are the other big exporters – New Zealand, Brazil and the US,” she said.

“Currently, there is about 3,700t of Australian product coming into this country. This will increase to 45 times that amount to 170,000t in 15 years’ time.

“The current amount of total imported product is about 240,000t. We are only about 65% self-sufficient. It will have an impact without doubt.”

Three scenarios

Dmitry Grozoubinski, a former Australian diplomat and trade negotiator at the World Trade Organization, said three scenarios were possible.

First, Australia could significantly increase its red meat exports to the UK, which would depress prices and mean “Jilly [Greed] and her colleagues are going to be hurt”.

Second, Australia could continue to target its exports at its most lucrative markets in Asia, North America and the Middle East. Under this scenario, “things stay roughly as they are, which mean the consumer benefits are next to zero”.

The most likely outcome was “somewhere in the middle”, said Mr Grozoubinski, where Australian beef and lamb imports increase, offering more options for restaurateurs and packaged foods.

“The impact on farmers will really depend on how much take-up there is from Australia,” he added.

The government’s own estimates suggest that the UK-Australia deal will increase GDP by only 0.02%, but Australia is expected to enjoy an export boost six times that of Britain from the arrangement.

No impact assessment

Farm leaders say they are concerned the government had not carried out an impact assessment on the effect of an Australia FTA on the UK agricultural industry.

Caroline Lucas, the Green Party MP for Brighton Pavilion, who chaired the session, said: “In their haste to make headlines, the government compromised on our standards, our climate commitments and even the livelihoods of our farmers.

“We will use today’s evidence to make constructive recommendations on how this can be improved, but we urge the government to show some backbone and stand up for Britain in future talks rather than rolling over to make a quick deal.”

A spokesman for the Department for International Trade said: “Any deal we sign will include protections for the agriculture industry and will not undercut UK farmers or compromise our high standards.”