Brexit: Food Prices and Availability (EUC Report)

Viscount Hanworth Excerpts

Thursday 25th April 2019 Lords Chamber

[Viscount Hanworth (Lab)]

My Lords, the difficulty of discussing the effect of Brexit on food prices and availability is that we do not yet know what form Brexit will take, if indeed it materialises. Nevertheless, I shall talk about some of the worst things that could happen. At present, we do not even know whether there will be a transition period to allow some of the outstanding matters to be settled in advance of a definitive severance. Part of the reason for the lack of detailed planning has been the unwillingness of the European Union to negotiate trade policy and other matters in advance of a settled agreement.

Another part of the problem is the lack of detailed perspective that might have been available if the Government had embarked on meaningful exercises in forward planning. Our committee has been assured by the Minister that the problems that have concerned us will be largely overcome by rolling over existing arrangements. This presupposes a ready accommodation of post-Brexit Britain by the European Union.

However, leaving the EU without establishing a customs union would pose a severe impediment to the free movement of goods. Under the arrangements of the European Union, goods that have originated therein have had free passage to anywhere else in the Union without tariffs or other impediments. The European Union is surrounded by a tariff wall that protects its economic activities from competition that might undermine them. This allows member states to pursue their comparative advantages in industry, agriculture and services, while creating a benefit for all of them.

As we have been told, the UK produces 48% of the food that it consumes and the remainder is imported. The imports come preponderantly from the European Union, which provides 30% of what we consume. Another 11% comes from non-European Union countries under terms of trade negotiated by the European Union, which have guaranteed sanitary and phytosanitary standards and, where appropriate, standards of animal welfare. These guarantees have obviated the need for inspection at our borders.

The UK also exports a substantial proportion of its agricultural output and the products of its food and drink industry. The value of these exports is about half the value of the corresponding imports, and some 60% of the exports are sent to the European Union. In the event of a no-deal Brexit, or with the UK outside the EU customs union, all these exports will be subject to the tariffs that the EU must apply uniformly to countries that are not its members. Some of the tariffs would be so high as to threaten the survival of the relevant UK industries. The import tariffs that the European Union imposes on agricultural products are among the highest. For whole milk, there is a 70% ad valorem tariff; for beef, it is 56%; for lamb, it is 40%; and for poultry, it is 14%. These tariffs are testimony to an enduring purpose of the Union, which has been to protect its farmers. Their imposition on our farmers would devastate them.

If we were to be outside a European Union free trade area, we should inevitably be imposing tariffs on our import of foodstuffs. They would be needed to protect our agriculture against the competition from cheap imports. The World Trade Organization rules oblige the UK to treat imports from the European Union in the same way as it treats imports from any other country. To the extent that we are prepared to lower our tariff barriers to protect our consumers from price increases, we should be further imperilling the livelihoods of our farmers, who would already be suffering from the loss of their export markets.

It has been widely observed that rising food prices are bound to affect the poorest members of our society the most. If we were prepared to import cheap foodstuffs that do not fulfil the European standards of quality and, at the same time, to alleviate our own quality controls, our food exports would be disbarred from the EU market.

On 13 March, the Government issued a schedule of tariffs that would apply in the case of a no-deal Brexit. This gave industry and agriculture next to no time in which to absorb the details and formulate plans in response, if 29 March had indeed been the date of leaving the European Union. High tariffs were proposed for beef, sheepmeat, poultry, pigmeat, butter and some cheeses. These were aimed at protecting the producers whose exports will suffer from the aforementioned high European Union import tariffs. To the dismay of the National Farmers’ Union, protection was not extended to eggs, cereals, fruit or vegetables.

Given that there will be no tariff at the border between Northern Ireland and the Republic, one wonders how the regime could be maintained without creating severe distortions. Perhaps in replying, the Minister would care to deal with that point, as he has been asked to by the noble Lord, Lord Teverson.

One Cabinet Minister proposed in a television interview that the UK could grow more food to keep prices down. He asserted that if supermarkets bought more at home, British farmers would produce more, and if they bought more from abroad, it would damage French and other continental producers. He seemed to be suggesting that the latter would be a desirable outcome. The derision he encountered was because he had no idea of the timescale that would be required for the necessary adaptations by our farmers. Increasing food production takes time, and it would not be possible to increase production in time to meet the demands of Brexit. Nor was he taking sufficient account of the fact that the variety of food that we presently enjoy in this country comes from our willingness to import what we cannot grow. The prospect of reverting to cabbages and potatoes in winter and lettuces and cucumbers in summer will fill many consumers with dismay. At present, we can eat whatever we wish at any time of year.

Nevertheless, it is appropriate to consider matters of self-sufficiency in food and the security of its supply in the wider perspective of global trends in agriculture. The present abundance of food is a temporary benefit. It is likely that there will be severe global shortages within two decades. The threat of global starvation envisaged at the end of the Second World War was averted by a combination of fortunate circumstances. These included the mechanisation of agriculture, an ample provision of fertilisers, the advent of hybrid varieties of cereal crops and the availability of abundant supplies of water from irrigation. The resulting period of relative abundance came to be known as the Green Revolution. It is now at an end, and many of its gains are being reversed.

The problems of soil salination, which arise from the ill-advised use of irrigation in warm climates, have severely diminished the agricultural output in many regions, including the Indian Punjab, which has been described as the Asian bread-basket. The global warming we are experiencing has made inroads into the agriculture of tropical regions that are becoming deserts. The rise in sea levels, which is the consequence of the thermal expansion of water, threatens to inundate low-lying river deltas, where much of the agricultural output originates in the developing world. A one metre rise in sea level will eliminate 30% of those low-lying croplands.

Evidence of the precariousness of our supplies of agricultural produce and their susceptibility to untoward global events has already been demonstrated by the experience of 2008, when there was a spike in food prices. To the extent that we cannot rely on global supplies, we must become more self-reliant. We can do so most effectively in the context of integrated European agriculture. A hard Brexit will make this difficult, if not impossible, to achieve in the short term, and it is uncertain how much time is available to us to secure our food supplies in future.