Sheep Farming: No-deal EU Exit

Debate between George Eustice and Helen Goodman

Tuesday 3rd September 2019 Commons Chamber

[The Minister of State, Department for Environment, Food and Rural Affairs (George Eustice)]

I congratulate the hon. Member for Darlington (Jenny Chapman) on securing this important debate on a day when we have already had a lot of discussion about our EU exit. She has raised this issue in a series of parliamentary questions, and a little later I will address some of the concerns and issues she raises.

The UK sheep sector is incredibly large and important. Combined, our upland and lowland sheep production had an annual production value of around £1.26 billion in 2018, accounting for around 4.5% of all agriculture output in the UK. As a number of hon. Members have said, the sector is also responsible for some of the most iconic landscapes in the UK.

There are 16 million breeding ewes and some 70,000 sheep farms across the UK, and the sector is particularly important in some of the devolved regions. For instance, around 50% of UK sheep production and the national flock is in Wales and Scotland. The UK is the largest producer of sheepmeat in the EU, producing around 38% of all the sheepmeat and goatmeat produced in the EU last year. The UK is also the world’s third largest exporter of sheepmeat, behind New Zealand and Australia, so we are a truly global player in this sector.

Around a third of our annual production of lamb is exported, and as the hon. Member for Darlington said, over 95% of it goes to the European Union. Total lamb exports in 2018 were valued at around £384 million, with a large amount of that coming from the European Union. The main export destination for lamb in 2018 was France, followed by Germany and Belgium, but for certain parts of the industry, notably those in Wales that tend to produce smaller lambs, some of the Mediterranean countries such as Italy and Portugal are also important purchasers of our goods. Some of our heavier lamb, predominantly from lowland areas, is more sought after in northern Europe. We recognise that, because of all those factors, in the event of a no-deal exit the sheep sector is the most exposed in its trading relationship with the EU, and we have always acknowledged that.

In managing those risks, we have two important factors going for us. First, we have a large domestic market for food in general and for lamb in particular. Measured by import value, the UK is the world’s third largest market for food and drink, coming after only China and Japan, so there are many opportunities for import substitution, as we currently source a significant quantity of lamb from New Zealand.

Secondly, we have an independent exchange rate—an independent currency and a floating exchange rate. That is incredibly important for the agriculture sector. It helps as an automatic stabiliser when we have shocks. We now contemplate the prospect of having to leave the EU without a withdrawal agreement, although that is not our preference, as all hon. Members know. Having a floating exchange rate makes that easier for the farming sector than it would have been had we become trapped in the euro some years ago.

[Helen Goodman]

I am astounded by what the Minister has just said. The pound has fallen by 20% since the referendum, which means that for every export the farmers are getting 20% less money. How can that be good for them?

[George Eustice]

The hon. Lady has it the wrong way round, as it is always the case that for sectors that are producing goods, such as agriculture, a weaker exchange rate against the euro leads to higher prices. It is no secret that since the referendum result in 2016, when there was an adjustment of sterling against the euro, agriculture commodity prices in the UK have been at highs, and that has helped farm incomes. That is a recognised fact; exchange rates are a key driver of agriculture commodity prices.

We recognise that even with those important factors going in our favour, the sector is still exposed. Some modelling has been done by a number of different organisations, including the NFU. It is important to recognise that tariffs are a tax on consumers first and foremost. Some estimates therefore anticipate that were the EU to apply full most favoured nation tariffs on lamb, there would likely be an increase in consumer prices in the EU of up to about 20%. That reflects the fact that the UK is the dominant lamb producer in the EU and there are limited other options for it to source its lamb from.

Oral Answers to Questions

Debate between George Eustice and Helen Goodman

Thursday 29th November 2018 Commons Chamber

[George Eustice]

My right hon. Friend makes a good point, but I can tell him that the Bill has important provisions that will enable us to strike down and improve some retained EU law, particularly in relation to the burden of administration. We are absolutely clear that we want a totally different culture in how we regulate farmers in the future. The Bill also enables us to target support at farmers who are delivering public goods, including those in severely disadvantaged areas.

[Helen Goodman (Bishop Auckland) (Lab)]

2. What recent discussions he has had with the Secretary of State for International Trade on maintaining environmental and animal welfare standards in future trade agreements.

Oral Answers to Questions

Debate between George Eustice and Helen Goodman

Thursday 7th June 2018 Commons Chamber

[George Eustice]

I thank my right hon. Friend for raising that issue. We have no intention of rolling out badger culling throughout the low-risk area. However, in response to one single incident that we have had in Cumbria of an outbreak that has got into the badger population in a limited way, we have consulted to ensure that we have the option to deal with that following veterinary advice and the advice of our chief scientific adviser.

[Helen Goodman (Bishop Auckland) (Lab)]

The Secretary of State is using his current role to flirt with radicalism—in particular, taking cheap shots at the payments made to the landed aristocracy. Rather than capping total amounts paid in the future scheme, would it not be more sensible to look at the rate of return and the marginality of the land?

Oral Answers to Questions

Debate between George Eustice and Helen Goodman

Thursday 26th April 2018 Commons Chamber

[Helen Goodman (Bishop Auckland) (Lab)]

Teesdale farmers tell me payments that should have been made under the higher level stewardship scheme are late. They are upland farmers on the lowest incomes. Will Ministers stop blaming Europe and sort out their own administration?

[George Eustice]

We have made a number of changes and are working very hard to deal with the current problems with countryside stewardship, and progress has been made. I would simply say that we are not blaming the European Union. It is true that it has changed the rules so that all agreements must be processed simultaneously, whereas they used to be processed across the year, which has caused major administrative problems both for the Government and for farmers.

Oral Answers to Questions

Debate between George Eustice and Helen Goodman

Thursday 25th January 2018 Commons Chamber

[George Eustice]

The point I would make to the hon. Gentleman is that, when we leave the European Union, the withdrawal Bill will bring across all existing EU regulations, including those on chlorinated chicken. As my right hon. Friend the Secretary of State has said many times, animal welfare is the issue here, and the issue of chlorinated chicken can sometimes mask animal welfare concerns.

[Helen Goodman (Bishop Auckland) (Lab)]

British farmers will be completely undermined if we have a flood of imports from countries with lower animal welfare standards. Will the Minister now tell the House that that is to be one of the Government’s red lines in negotiating free trade agreements?

[George Eustice]

If the hon. Lady had listened to my earlier answer, she would have heard me say that we have no intention of undercutting our own reputation for quality by lowering our food and animal welfare standards in pursuit of a trade deal.

Oral Answers to Questions

Debate between George Eustice and Helen Goodman

Thursday 26th October 2017 Commons Chamber

[George Eustice]

As part of our work on innovation, we are considering grants to support investment in farms. Tax policy is obviously a matter for Treasury Ministers, but there are already annual investment allowances to support investment in farm machinery, and many farmers make use of them.

[Helen Goodman (Bishop Auckland) (Lab)]

The uplands have some of the most important environmental benefits in the country, but the farmers have extremely marginal incomes. Will the Minister therefore commit to making no cuts to the support for hill farmers in the uplands?

[George Eustice]

We are doing quite a lot of analysis of sectors of the industry that could be affected by any future reform in agriculture policy. The hon. Lady is right to say that some farmers in the uplands are more financially vulnerable, and we are taking that into account. We have also been very clear that any change we implement would have a transition period to ensure that people can adjust.