Sheep Farming: No-deal EU Exit

Tonia Antoniazzi Excerpts

Tuesday 3rd September 2019 Commons Chamber

[Jenny Chapman]

My hon. Friend makes an important point. Yes, in theory and given enough time, it may be possible to find new markets, but it will be too late by then, because our flock will have been decimated and will take decades to rebuild. Should the situation improve in future years, with new markets, it might just be possible to re-establish the flock, but it really is not likely. Once the breeding ewes have gone and their special characteristics have been lost, it will take years to recreate the unique features of our national flock. Tens of thousands of jobs and our treasured landscape would be lost, and this is all so preventable.

A minimum of a two to three-year transitional deal is needed, and we need agreements that recognise the safety and quality of our produce. Critically, we must increase the capacity of essential cold storage facilities now. When Ministers reassure me and try to reassure farmers, they need to explain what precisely they intend to do.

[Tonia Antoniazzi (Gower) (Lab)]

This is an important debate, particularly for my Gower constituency, where the lamb industry is very vibrant. Does my hon. Friend share my concern about the amount of cold storage that will be needed and about the Government’s plans to meet that need? Does this country have enough cold storage for medicines post Brexit?

--- Later in debate ---

[George Eustice]

Yes, absolutely, there is discretion, and the UK Government have already indicated what our tariff schedule would be in a no-deal scenario. Governments have the opportunity to have a lower applied tariff—lower than the bound tariff set in the WTO. The option is also open to any Government unilaterally to suspend tariffs. Indeed, should it wish, tariff suspension would be open to the EU, which I think is unlikely. Alternatively, and more likely, is the creation of an autonomous tariff rate quota for lamb that would be open to the whole world, including the UK. There are many options that both the EU and the British Government have unilaterally to apply tariffs that are lower than the WTO bound tariff.

However, as I said, it is important to recognise that we are the dominant producer. The EU could source more product from New Zealand, provided it had access to the ceiling currently set under the EU tariff rate quota. In the medium term, countries such as Spain could increase their production, but they are unlikely to be able to do that in the short term. For those reasons, it is likely that there would be an increase in consumer prices in the European Union as a result of its applying the full MFN tariff.

It is important to recognise that that increase in price would dampen demand in the European Union. Modelling suggests that that would increase supply in the domestic market and that as a result prices in the UK could fall by up to 30%. To put that into context, that means prices going back down to roughly where they were in 2015, which was a difficult year for the sheep sector. We are talking about a significant potential reduction, but it is not unprecedented. It would simply be going back to levels prior to the referendum result.

[Tonia Antoniazzi]

The Welsh Affairs Committee recently went to New Zealand and visited the sheep and beef industry, which was very interesting. Our farmers worry that our markets are going to be flooded with cheap New Zealand lamb. What can the Minister say to allay our farmers’ fears?

[George Eustice]

The Government have already made it clear that because of the particular sensitivity, we will apply full MFN tariffs on lamb, so there will not be any additional imports to the UK beyond those we already have. There is a splitting of the existing TRQ for New Zealand lamb between the UK and New Zealand—a combined total of around 250,000 tonnes—but there will be no additional lamb because we will apply full MFN tariffs outside that TRQ.

[Tonia Antoniazzi]

How is the tariff going to work between Europe and the UK? Has it been decided what percentage of the tariff is going to go to the UK or to Europe?

[George Eustice]

Yes, that has been decided. One of the few areas in which the European Union has from the very beginning being willing to work with the UK is on agreeing a splitting of the tariff rate quota schedules, and those have already been lodged with the World Trade Organisation.

As I said, we recognise that in a no-deal scenario we will have to show some solidarity with the sector, which will nevertheless face potentially significant falls in prices to levels not seen since 2015.