Farming: Impact of Brexit

Earl of Kinnoull Excerpts

Thursday 21st July 2016 Lords Chamber

[The Earl of Kinnoull (CB)]

My Lords, I declare my interests as set out in the register, particularly my own farming interests and as a trustee of the Blair Charitable Trust and its 70,000 acres. I too congratulate the Minister on his new appointment. Everyone that I speak to very much feels as I do: this is a case of round hole and round peg, and it is good news for the House. I also congratulate the noble Baroness, Lady McIntosh of Pickering, on yet again enabling us to debate rural and farming affairs. I say again that I do not think we do enough of that in this House. The balance is not quite right, and I urge the usual channels to seek to address that.

I was only going to make one point today: the necessity of an early and clear communication to, and reassurance of, the farming community, particularly post-Brexit, in respect of the subsidy regime and foreign seasonal labour, so ably already put by the noble Baroness. I thought, however, that it was worth reporting on some of the many discussions I have had in farmhouse kitchens—and, in one instance, on a cricket pitch—about what Brexit means for farming. I shall distil those discussions down to three main points.

The first discussion, which was on the cricket pitch, was with a soft-fruit farmer. His business is of course labour-intensive and capital-intensive; Perthshire soft-fruit farming benefits from perfect conditions. He in particular needs foreign seasonal labour, which tends to come from poorer EU countries. He puts them up on a full-board basis, as do many other people in the area, and the arrangement is very satisfactory to everyone. His business is going so well that he would like to invest in increasing it. That is quite expensive, as it costs around £20,000 an acre to put up polytunnels and produce satisfactory irrigation and so on. He would have to invest in the accommodation as well. However, he is not going to do that because at the moment he is not confident of the availability at similar cost of skilled EU labour in future.

The second conversation was with a gentleman who has a successful livestock business, both sheep and cattle. He was thinking of an investment in his cattle court of around £100,000. He was not going to proceed, either, because he was not confident that the subsidy regime would be there in the future, and if the subsidy was removed from his future cash flow the returns would be so thin as to not make the investment worth while. Therefore he was holding off. Those are both examples of what I call loss of opportunity.

My final example is more worrying, because it is an example of damaging the existing business. This discussion was with the manager of a successful mixed organic farming business. This manager, whom I have known for many decades, was sitting down to fill in the forms for the overdraft renewal for his business. He was particularly concerned about the three-year cash flow that has to be included in those forms because he did not know how to fill in the third year. He had also had a discussion with his relationship manager at his major clearing bank and was under the impression that the bank was out to reduce his overdraft limit because of the uncertainties surrounding the future cash flow. If that is bank policy, it means that a constraint on cash and overdraft facilities for successful farms—and this is a deeply successful farming business—are being put in place, which damages our industry and is particularly not welcome when farm prices at the farm gate are so disappointing.

In closing, I therefore ask something similar to that asked of the Minister by the noble Baroness. When does he feel it will be possible to give clear assurances to the farming community post-Brexit, first, on the foreign seasonal workers point, and secondly, on the subsidy regime?