28. United Kingdom
The United Kingdom left the European Union (EU) on 31 January 2020. As a part of its transition from the EU Common Agricultural Policy (CAP), CAP-related support measures continued during 2021 while new domestic agricultural policy measures were phased in. Where new policy measures were announced, they focus on supporting sustainable agriculture, climate change resilience, improving the environment, animal health and welfare, and reducing greenhouse gas (GHG) emissions from the sector. Almost four-fifths of support to producers and about one-fifth of general services support relate to pre-existing CAP funded measures. Figures for 2021 show that new domestic support measures equate to about 3% of support to producers and three quarters of general services to the sector.
Producer support (PSE) is estimated at around 20% of gross farm receipts for 2019-21, and has remained fairly stable since 2017. Preliminary estimates show that the PSE increased in 2021 mainly due to an increase in Market Price Support (MPS) to 30% of farm support. This originates primarily from EU border measures during 2019-21. Almost half of farm support comes through payments decoupled from current production (Figure 28.3), while 12% relates to payments based on input use.
Support for general services (GSSE) is about 3% relative to the value of agricultural production during 2019-2021, below the OECD average. Expenditure on agricultural knowledge and innovation systems accounts for slightly over half of GSSE support and shows little change over the last five years. In addition, expenditures on inspection and control services to animals and crops sub-sectors account for almost one-third of GSSE, while expenditures on marketing and promotion of farm products account for about 12%. On average, total support to agriculture (TSE) represented about 0.3% of GDP during 2019-21, less than half of the OECD average.
Agricultural policy in the United Kingdom is devolved to the governments of Scotland, Wales and Northern Ireland. The UK Government has responsibility for England’s agricultural policy.
In England, the Agriculture Act (2020) gave the government power to pay farmers for environmental improvements such as reducing carbon emissions. The government set out its plans for agricultural transition in late 2020 (Department for Environment, Food and Rural Affairs, 2020[1]), updated in 2021 (Department for Environment, Food and Rural Affairs, 2021[2]), from the EU’s Common Agricultural Policy (CAP) to the development and phasing-in of new domestic schemes. These are being rolled out and piloted, and will replace the ongoing legacy CAP Pillar 1 and Pillar 2 subsidies and schemes.
More specifically, support to farmers in England will aim to improve the environment, animal health and welfare, and reduce carbon emissions, support resilience to climate change risks, and improve the productivity and sustainability of farm businesses. The new support measures’ focus during the transition period is achieving specific targets and outcomes. For example, from 2021/22 to 2024/25, funding for environment, animal health and welfare is projected to rise from 23% of support funding to 57%, while direct payments inherited from the CAP are projected to fall from 68% to 34%.
Moreover, changes in direct payments involve simplifications by removing greening and entitlement usage rules, and extending deadlines for farmers. In addition, direct payments will be delinked from 2024, and the requirement to farm the land will be dropped. As part of these measures, a “once-off” lump sum exit scheme from farming will be introduced.
In Scotland, the CAP schemes continued for 2021, but a new Scottish Agriculture Bill with a legal framework will be introduced in 2023 to replace the CAP. The Scottish Government published it Vision for Scottish Agriculture on 2 March 2022. Policies for Scottish agriculture’s response to climate change were set out in the Net Zero Climate Change Plan 2018-2030. This Plan was further developed in 2021 (Scottish Government, 2021[3]) and outlines plans to transform support to farming and food production in Scotland, and to become a global leader in sustainable and regenerative agriculture. This commitment is part of a broader framework to underpin Scotland’s future agriculture support regime from 2025 onwards.
Wales will introduce the Agriculture Bill to the Welsh Parliament (Senedd) in 2022, and set Sustainable Land Management as the framework for all future support for farming and enable the creation of the proposed Sustainable Farming Scheme. This scheme is anticipated to support famers to produce food in a sustainable way and take actions to support Welsh Government commitments around climate change and nature emergencies, and supports the Net Zero Wales Plan. Further information on the scheme will be published in summer 2022.
The EU Rural Development Programme 2014-20 will continue in Wales until 2023. A package of support for farmers, foresters, land managers and food businesses to support the resilience of the rural economy and natural environment was announced in April 2022 to support the transition to the Sustainable Farming Scheme.
In March 2021, Wales introduced regulations in the Senedd to commit to legally binding targets that deliver the goal of net-zero emissions by 2050. Alongside the net-zero target, Wales also updated its interim targets. The Net Zero Wales Plan (NZW) (Welsh Government, 2021[4]), launched on 28 October 2021, sets out the next steps along the path (2021 to 2025) to net-zero by 2050 and has a specific chapter on agriculture covering the full range of policies to mitigate GHG emissions in the sector. It describes how actions should contribute to net-zero, aiming at a greener, stronger and fairer agricultural sector.
In 2021, Northern Ireland initiated consultations on Future Policy Proposals for simplifications of support measures to farming during the transition. The Northern Ireland Assembly discussed new legislation to combat climate change, including defining specific targets to reduce GHG emissions. The various proposals on farming for carbon are included in the report “Consultation on Future Agricultural Policy Proposals for Northern Ireland” (Department for Agriculture, Environment and Rural Affairs, 2021[5]).
UK agricultural policies’ seven-year transition out of the Common Agricultural Policy to domestic policies began in 2021. The goal is for agriculture to contribute to the UK’s Net Zero Strategy (GOV.UK, 2021[6]) with focus on sustainable and productive agriculture, payments for public goods, environment, animal and crop health, and disease control. As agriculture is devolved to the governments of England, Scotland, Wales and Northern Ireland, the pace of transition to domestic policies within the seven-year time frame varies in the countries.
The role and contribution agriculture will make to achieve the commitments in the United Kingdom’s Net Zero Strategy are ambitious. The Strategy includes a pathway for GHG emissions reduction for agriculture, forestry, and other land use (AFOLU). The pathway shows emissions would need to fall 17-30% relative to 2019 levels by 2030 and 24-40% by 2035. Detailed agricultural support policies are being developed as a part of each of the four countries agricultural transition programme. The sector’s contribution and progress towards meeting the UK’s commitment of net-zero GHG emissions by 2050 will require the development of metrics with regular monitoring to ensure these contributions are kept under review and remain achievable for the sector in the long term.
Much of the short-term policy challenge revolves around simplification of existing schemes and support measures, and pilot testing new domestic policy measures to refine these prior to any large-scale rollout. Transition from existing CAP measures to new domestic schemes will create short-term complexity for the sector. An important challenge will be the right mix of policies to meet the stated objectives while improving policy coherence across the sector.
A range of policies are being developed and introduced to achieve coherence with net-zero commitments while ensuring high productivity and sustainability in the sector. In addition to decoupled payments to agriculture, there is increasing emphasis on enhancing agricultural education and information systems to encourage the uptake of digital technologies.
MPS, which increased somewhat in 2021, will need to be kept under review as agricultural transition programmes mature.
The United Kingdom concluded numerous bilateral trade agreements in 2021 with a view to developing export markets for a range of agricultural and food products while strengthening domestic food security. Eight trade continuity agreements were signed since the last edition of this report, and three new trade agreements (Australia, New Zealand, and a combined Norway, Iceland and Liechtenstein agreement). These are far-reaching and ambitious, and likely to significantly impact agri-food products in the coming years. Monitoring and evaluation of these will be key to assessing impacts, including positive or negative unintended consequences.
Overview of policy trends
The United Kingdom joined the European Economic Community in 1973. Since then, its agricultural policies have been shaped by the reforms of the European Union Common Agricultural Policy.
The 2009 CAP Health Check allowed Member States to adopt a selection of measures under their Pillar 2. Subsequently, elective measures were also allowed under Pillar 1 of the CAP 2014-20, covering 2015 to 2023. The United Kingdom nations’ choices of elective measures were generally aligned in this context, while specific payments were sometimes picked, such as the redistributive payment in Wales and voluntary coupled support in Scotland. The United Kingdom opted to transfer 10.8% of its broad-based direct payments envelope to targeted longer-term expenditure under Pillar 2.
The United Kingdom left the European Union on 31 January 2020. In 2021, after 40 years of implementing the Common Agricultural Policy (CAP) framework, new agricultural support systems were beginning to be made available to England, and the devolved governments of Scotland, Wales and Northern Ireland. While the overall policy framework, over the transition period, is similar across the four countries; nevertheless, the proposed timing and approaches to implementing the new policies vary substantially between the countries.
Agriculture is a devolved policy area under the Devolution Settlements for England, Scotland, Wales and Northern Ireland. Following the United Kingdom’s departure from the European Union, Ministers of the UK Government, Scottish Government, Welsh Government, and Department of Agriculture, Environment and Rural Affairs in Northern Ireland agreed to develop a non-legislative framework for UK collaboration, co-ordination and co-operation on agricultural support. This would build upon commitments already developed between the Parties to work together at a UK level. However, since agriculture policy is devolved each nation retains the powers to create and implement specific countrywide legislation with regard to agriculture.
Main policy instruments
The CAP defined support to agriculture in the United Kingdom until the transition out of the European Union in 2020. In 2020 there were extensive negotiations with the European Union over future trade and co-operation relations, the preparation and adoption of laws to govern agriculture in the United Kingdom after the withdrawal from the European Union, and bilateral trade liberalisation negotiations with third countries. The four devolved governments of the United Kingdom are at various stages with developing and implementing their agricultural transition plans. Alongside the phasing out of the CAP measures, all of the devolved governments are taking a co-development approach with the sector and stakeholders to design and deliver their new domestic policy instruments.
In 2020, under the CAP, UK agricultural support included GBP 2.7 billion (USD 3.7 billion) in direct payments through the Basic Payment Scheme (BPS). This was four times the agricultural support for environmental protection under the Rural Development Programme (RDP). Most of the payments inherited from the CAP will gradually be replaced by payments from the devolved governments and are targeted to improving agro-environmental performance.
England
In England, the government has set out plans for a seven-year agricultural transition to the new system which will pay farmers for environmental improvements on their land. Alongside the phasing out of CAP subsidies, market support measures and schemes, a range of environmental land management schemes have been introduced. These environmental land management schemes aim to positively affect numerous outcomes relating to water quality, biodiversity, climate change adaptation and mitigation, air quality, natural flood management, coastal erosion risk mitigation and access and heritage. There are three environmental land management schemes under development, these are the Sustainable Farming Incentive, Local Nature Recovery, and Landscape Recovery Scheme.
Within these proposed reforms England is also heavily investing in research and development of agro-farming technology through the Farming Innovation Programme. Essentially, this programme aims to support ambitious R&D projects that will transform productivity, enhance environmental sustainability and net zero emissions, whilst adapting to a changing climate in the agricultural and horticultural sectors. A new “Farming Investment Fund” supports farmers’ investments in more efficient production. The Future Farming Resilience Fund (launched in August 2021), will provide support to farmers to help them navigate changes during the agricultural transition period.
Scotland
In Scotland, the Agriculture (Retained EU Law and Data) (Scotland) Act 2020 enabled the continuation of CAP schemes beyond 2021, and allows Scotland to maintain policy stability and simplicity until 2025. However, the powers of the 2020 Act only enables limited simplifications and improvements to the operation of CAP legislation and precludes substantive changes until a new Scottish Agriculture Bill is introduced. A new Scottish Agriculture Bill is expected to be brought forward in 2023 to replace the CAP with a legal framework to support the future Scottish vision for agriculture.
Scotland is taking a co-development approach, working with stakeholders to secure increased uptake of low emission farming measures through new schemes and technologies, and the development of environmental conditionality and enhanced advisory support. The landscape policies and practices are expected to further evolve in response to climate change with increasing support to woodlands, the restoration of peatlands, and land for growing biomass.
Wales
The new Agriculture Bill in Wales sets out the most important policy changes the agricultural sector has seen in decades, with the main goal of reducing the food systems overall carbon footprint. The Agriculture Bill sets Sustainable Land Management as the overarching framework for future support in agriculture and will enable the creation of future support schemes. This Bill is expected to be introduced to the Senedd in 2022.
The Welsh Government’s “All Wales Plan: Working Together to Reach Net Zero”, shows some examples of industry-led initiatives in decarbonising agriculture. The farming industry is driving these changes to a decarbonised future with the NFU pledging to reach net zero by 2040.
Northern Ireland
In Northern Ireland, the Future Agricultural Policy Framework Portfolio was launched in August 2021. The Framework sets out the direction of future agricultural policy across the following four key areas; increased productivity, environmental sustainability, improved resilience, and an effective functioning supply chain. The Department of Agriculture, Environment and Rural Affairs (DAERA) published a Consultation on the Future Agricultural Policy Proposals in December 2021. Responses to the consultation were considered and the Minister has announced 54 decisions that will contribute to the design of new domestic agricultural policy and targeted support.
Climate change mitigation policies in agriculture
The Net Zero Strategy sets-out an ambitious path to meet the Sixth Carbon Budget and Nationally Determined Contribution, cutting emissions by at least 68% by 2030 on1990 levels, and reaching net zero by 2050. The Sixth Carbon Budget (Climate Change Committee, 2020[7]) states that the UK’s agricultural emissions were 54.6 MtCO2eq in 2018. This represents 10% of GHG emissions in 2018 compared to 7% in 1990. In 2019, the United Kingdom became the first major economy to legislate a binding target to reach net-zero emissions by 2050. In 2021, the “Net Zero Strategy” (GOV.UK, 2021[6]) set out a pathway to reach the net-zero target, including sector-by-sector goals. Within this, agriculture was considered part of the larger group of sectors referred to as AFOLU, where emissions may need to fall 17-30% relative to 2019 levels by 2030, and 24-40% by 2035. Across the United Kingdom, responsibility to reduce GHG emissions in agriculture is devolved, with each country free to develop its own strategy to reach the target. Scotland and Wales both released separate Net Zero Strategies that detail how they will contribute to the UK’s Net Zero target.
England
The government published a target to decarbonise agricultural emissions by up to 6 MtCO2eq per annum in its Sixth Carbon Budget (2033-37) (Climate Change Committee, 2020[7]). It is anticipated that this target will be met through the collective actions under new environmental land management schemes, together with the Farming Innovation Fund, which will fund the deployment of new technologies, and other farming offers, such as the Farming in Protected Landscapes scheme published in July 2021.
In addition to benefitting wildlife and the environment, the new environmental land management schemes will play a crucial role in climate change mitigation, reducing GHG emissions and increasing carbon storage. England began to pilot these schemes. For example, the Local Nature Recovery and Landscape Recovery schemes will make carbon savings through peatland management/restoration and tree planting.
Policy measures and updates announced in 2021 to contribute to climate change mitigation in England include the Biomass Policy Statement (published in November 2021), the Peat Action Plan (published in May 2021), and the England Trees Action Plan (published in May 2021).
Wales
Net Zero Wales Carbon Budget 2 (Welsh Government, 2021[4]) sets out a pathway to deliver net-zero emissions across Wales by 2050. The Carbon Budget sets out current and proposed mitigation policy across two areas: (1) low-carbon farming practices (increasing on-farm measures that reduce emissions from soils, e.g. grass leys and cover crops), livestock (e.g. animal diets, health and breeding), and waste and manure management; and (2) measures to release land from farming. Wales will consider options for converting some of agricultural land to woodland, shifting some agricultural land to biofuel production, and the restoration and sustainable management of peatland alongside greater support to the horticulture sector. The Agriculture Bill sets Sustainable Land Management as the overarching framework for future support in agriculture and will enable the creation of future support schemes. This Bill is expected to be introduced to the Senedd in 2022.
Total emissions from the agricultural sector in Wales declined by 10% from 1990 (the base year) and 2019. This was driven by decline in livestock numbers and nitrogen fertiliser use. In 2019, Welsh agriculture emissions increased 2% compared to 2018. This is attributed to an increase in sheep numbers (enteric fermentation, 2.9%), and liming activities (49%), which display high year-to-year variability.
Scotland
Scotland’s Climate Change Plan update 2020 (Scottish Government, 2021[3]) sets out six outcomes and indicators for how agricultural will contribute to reaching net-zero emissions of GHGs by 2045. For each outcome, the plan sets out policy instruments being maintained or boosted alongside instruments under development as a part of the agricultural transformation programme started in 2020.
The six outcomes set out in the Climate Change Plan are:
1. A more productive, sustainable agricultural sector that significantly contributes to delivering Scotland’s climate change and wider environmental outcomes through increased uptake of climate mitigation measures by farmers, crofters,1 land managers and other primary food producers.
2. More farmers, crofters, land managers and other primary food producers who aware of the benefits and practicalities of cost-effective climate mitigation measures.
3. Lower nitrogen emissions, including from nitrogen fertiliser, through a combination of improved understanding, efficiencies and improved soil condition.
4. Reduced emissions from red meat and dairy through improved emissions intensity.
5. Reduced emissions from the use and storage of manure and slurry.
6. Increased and maintained carbon sink through carbon sequestration and existing carbon stores on agricultural land.
The Climate Change Plan update highlights policy delivery developments. The Farm Advisory Service and Farming for a Better Climate increased the uptake and provision of advice and support. A range of research and knowledge-transfer projects were undertaken to inform low-carbon farming and develop an understanding of low-carbon technologies and the opportunities for Scotland. The agricultural sector is supported to improve efficiencies and reduce emissions (e.g. piloting the Sustainable Agricultural Capital Grant Scheme). Building on the work by farmers and crofters to reduce emissions, peer-to-peer support through Climate Change Champions and Monitor Farms was provided. The Forestry Grant Scheme and local forestry advisory initiatives each year see over 200 farmers and crofters creating new farm woodlands and diversifying their farming businesses to include forestry.
Northern Ireland
In March 2022, the Northern Ireland Assembly passed amendments to the Climate Change Bill. The Climate Change Bill completed its Final Stage on 9 March 2022, and is expected to receive Royal Assent 6-8 weeks from this date and become The Climate Change Act (Northern Ireland) 2022.
In Northern Ireland, “carbon/GHG reduction” is a cross cutting theme within the Future Agricultural Policy Framework Portfolio (published in August 2021). This theme seeks to ensure that policy interventions reduce the carbon footprint of the agricultural industry. Proposed policy measures relate to reduction in agricultural GHG emissions (e.g. measures to support enteric methane reducing feed additives and encouraging different practices in relation to timing of fertiliser and slurry spreading), carbon storage (e.g. measures to support soil carbon sequestration and rewetting peatlands) and bioenergy feedstocks production.
Other policy streams will complement the Carbon Reduction programme, as outlined below:
1. A Farming Sustainability Payment to participate in soil testing and the Soil Nutrient Health Scheme, which assesses soil carbon and carbon in farm hedges and trees.
2. The Farming for Nature Package will focus initially on habitat and biodiversity, and is projected to increase carbon sequestration management practices.
3. Knowledge and innovation measures in education, training and knowledge-exchange to improve productivity, environmental performance and sustainability.
4. Generational Renewal to bring younger farmers into farm businesses, intended to drive the adoption of new and innovative agricultural technologies.
5. The Ruminant Genetics Programme to produce information and genetic evaluations to improve livestock productivity, health and welfare, and reduce GHG emissions.
The Carbon Reduction programme in Northern Ireland is supported by smaller schemes to drive the net-zero ambition. To complement this, the Forests for Our Future Programme launched in 2020 aims to plant 9 000 hectares of woodland by 2030. The Small Woodland Grant Scheme provides aid for woodland planting for areas between 0.2 and 5.0 hectares, with an establishment grant and annual premia.
Domestic policy developments in 2021-22
England
In 2021, under the Agriculture Act 2020, the application period opened for the first round of the Farming Investment Fund. In February 2022, the government announced the introduction of a Lump Sum Exit Scheme for farmers who wish to leave the industry. This scheme is due to open for applications in April 2022 and will run until the end of September 2022. Payments will be based on the average direct payments made to the farmer for the 2019-2021 Basic Payment Scheme years.
In July 2021, applications for the pilot for the first of England’s new environmental land management schemes were announced with agreements commencing from November 2021. The “Sustainable Farming Incentive” is designed to support farmers that generate significant environmental and climate benefits, and animal health and welfare outcomes, alongside food production. The overall target in England is to have 70% of farmland covered by this scheme, including farmers who are not currently in an agro-environment scheme. Since 2020, Defra has been publishing regular evidence reports on tests and trials (Department for Environment, Food and Rural Affairs, 2021[8]) that showed key findings from the tests and trials on the environmental land management schemes. These reports provide insight into what has been learned from the tests and trials and how the evidence is being used to inform policy decisions for scheme design and delivery.
By the close of 2021, the number of applications for England’s Countryside Stewardship (CS), which aims at protecting biodiversity and delivering environmental outcomes, had increased by 40% compared to 2020. In the future, England is looking for the new Local Nature Recovery scheme to be the improved and more ambitious successor to Countryside Stewardship.
In early 2022, the application process opened for pilot projects for the first round of the Landscape Recovery Scheme. This scheme is open to any individuals or groups of land owners or managers who want to come together to deliver large (500–5 000 hectares) scale projects. The first round of projects will be focused on two themes (a second round will commence in late 2022):
Recovering and restoring England’s threatened native species, e.g. through recovery of priority habitats and habitat quality.
Restoring England’s streams and rivers: improving water quality, biodiversity and adapting to climate change, e.g. through restoring water bodies, rivers, and floodplains to a more natural state.
In 2021, the Environment Act 20212 became law. This legislation primarily used powers from the Environment Act 20213 to create the Office for Environmental Protection which protects and improves the environment by holding government and public authorities to account. The various sections of this legislation provide a framework for environmental targets to be set for specified priority areas, fine particulate matter in ambient air, and species abundance as well as creating legislation which requires the Secretary of State to obtain and publish data for monitoring environmental improvement.
In February 2022, the UK Government published the Levelling Up White Paper (GOV.UK, 2022[9]), which sets out how the government intends to spread opportunity more equally across the United Kingdom. The White Paper sets out medium term levelling up “missions” around boosting productivity, pay, jobs and living standards, digital connectivity (GBP 1 billion – USD 1.4 billion) Shared Rural Network deal with mobile operators delivering 4G coverage to 95% of the United Kingdom by the end of 2025), improving public services in areas where weakest, restoring a sense of community and empowering local leaders and communities. Businesses, households and individuals are all expected to benefit from improved digital connectivity.
Scotland
At the beginning of 2022, Scotland announced the National Test Programme (NTP) which will be phased in during 2022, with funding of up to GBP 51 million (USD 69 million) over a period of three years. The NTP is aimed at supporting and encouraging farmers and crofters to learn about how their work impacts climate and nature, including financial support to carry out carbon audits and nutrient management plans. The NTP will also work with focus groups of farmers and crofters to develop techniques to support sustainable farming.
Wales
In Wales, the Agriculture (Wales) White paper, published in December 2020, sets out the Welsh Government’s intentions to introduce an Agriculture (Wales) Bill in the sixth session of the Senedd (period 2021-26). The new Agriculture Bill in Wales sets out the most important policy changes the agricultural sector has seen in decades, with the main goal of reducing the food systems overall carbon footprint. The Agriculture Bill sets Sustainable Land Management as the overarching framework for future support in agriculture and will enable the creation of future support schemes. This Bill is expected to be introduced to the Senedd in 2022.
Northern Ireland
In Northern Ireland, the DAERA launched the Future Agricultural Policy Framework Portfolio for Northern Ireland (Department of Agriculture, Environment and Rural Affairs, 2021[10]) on 24 August 2021. The DAERA introduced legislation to give legal effect to several simplifications to the rules governing the direct agricultural support schemes for the 2021 schemes year. These simplifications include: the removal of the Greening requirements for the 2021 scheme year and incorporating the Greening Payments into the BPS entitlement unit values; continuing the ban on ploughing or conversion of Environmentally Sensitive Permanent Grassland; limiting the number of entitlements that can be allocated from the Regional Reserve to 90 for each application; limiting the number of times an applicant can submit an application for the Young Farmer’s Payment; and setting the inspection rate for the Basic Payment Scheme at 1%.
On 6 January 2022, DAERA introduced further legislation to give legal effect to additional simplifications which build on the earlier simplifications introduced in 2021. The central focus of DAERA’s agricultural measures are to develop a tailored support regime that will help farmers to become more productive and to maximise sustainable returns on their farms.
Domestic policy responses to the COVID-19 pandemic
In response to market pressures caused by the economic impact of COVID-19, England announced a package of support for the pig sector. This included the funding of a private storage aid scheme which enabled meat processors to store slaughtered meat for 3-6 months. Until 31 December 2021, the Seasonal Workers Pilot Scheme facilitated temporary visas for pig butchers to travel and work in England, helping to support the sector.
Trade policy developments in 2021-22
The EU-UK Trade and Cooperation Agreement was applied provisionally as of 1 January 2021 and entered into force on 1 May 2021. Throughout 2021, a number of specialised committees established under the Agreement met, including the Trade Partnership Committee and the Trade Specialised Committees on Goods; Custom Cooperation and Rules of Origin; Technical Barriers to Trade; and Sanitary and Phytosanitary Measures.
From 1 January 2021, the trade agreements that the United Kingdom was party to as a Member State of the European Union no longer applied. However, the United Kingdom has sought to maintain these trading agreements with rollover deals negotiated with third countries to ensure the continuity of trade.
In addition to the agreements secured in 2019 and 2020 providing continuity for trade (Department for International Trade, 2020[11]), in 2021 the United Kingdom signed trade continuity agreements with Mexico, Turkey, Moldova, Viet Nam, Albania, Cameroon, Ghana and Serbia. In July 2021, the United Kingdom signed a Free Trade Agreement (FTA) with Norway, Iceland and Liechtenstein, further developing trading relationships which the United Kingdom had when part of the European Union and placing them onto a solely UK footing. This was followed by two new FTAs, with Australia in December 2021, and New Zealand in February 2022.
The UK Government’s Impact Assessments (Department for International Trade, 2021[12]; Department for International Trade, 2022[13]; Department for International Trade, 2021[14]) of the FTAs shows the following for the agricultural sector:
The Norway, Iceland and Liechtenstein agreement creates new opportunities for UK meat exporters (pork meats, sausages, and poultry) to export duty-free to Norway through duty-free quotas. For the dairy sector the agreement reduces tariffs for exporters to Norway of specific UK hard cheeses. The agreement also maintains a duty free quota for all cheeses and allows improved duty-free market access through a new duty-free quota for the UK export of eggs to Norway.
Modelling of the impact of the FTAs between the United Kingdom, Australia and New Zealand suggests the potential for an increase in competition for some agricultural products, notably cattle and sheep meat (beef/lamb). It concludes that the potential and scale of any long run increase in imports are uncertain. Increased imports of these products could bring benefits for consumers across the whole of the United Kingdom via lower prices and increased choice. However, there is a risk that any adjustment costs which arise are borne by import-competing producers and in localities where production is concentrated.
Under the Australia and New Zealand FTAs tariff liberalisation for sensitive goods will be phased in over time. The United Kingdom’s most sensitive products such as beef and sheep meat will be subject to measures including tariff rate quotas (TRQs) and product specific safeguards. These measures will limit the volume of duty-free imports permitted and in the case of beef and sheep meat will be in place for 15 years. An additional general bilateral safeguard mechanism will also be in place for all products, providing a temporary safety net for domestic producers if they face serious injury, or the threat of serious injury, from increased imports as a direct consequence of the FTAs. This protection will last for a product’s tariff liberalisation period plus five years in order to allow domestic producers time for readjustment. This means a total of 20 years of protection for sheep meat (15-year TRQ plus 5 years of extra bilateral safeguards) for New Zealand.
The United Kingdom’s FTAs with Australia and New Zealand cover non-regression and non-derogation clauses for animal welfare. This will help ensure that neither country lowers their animal welfare requirements in a manner which impacts trade.
In October 2021, the UK Government announced the launch of a new United Kingdom Trade and Agriculture Commission (TAC) (GOV.UK, 2021[15]). This was part of the United Kingdom’s response to the previous recommendation from the pre-existing United Kingdom Trade and Agriculture Commission report published in March 2021 (GOV.UK, 2021[16]). The new TAC’s role is to provide scrutiny of new trade deals once they reach the signature stage, helping to ensure compliance with the new domestic high-quality agricultural standards.
The TAC will prepare independent advice on FTAs and matters covered by Section 42 of the Agriculture Act, excepting human health. Advice from the TAC will therefore inform the government’s reports on standards in FTAs as required under Section 42 of the Agriculture Act. In addition, the TAC’s advice and advice from the Food Standards Agency and Foods Standards Scotland on human health, will be published alongside each Section 42 report. This independent advice will inform Parliamentarians as they scrutinise an FTA in advance of ratification, under the Constitutional Reform and Governance Act (CRaG).
In November 2021, the UK Government announced eight new agri-food and drink attachés (GOV.UK, 2021[17]) to areas identified as priority export markets, as part of a wider plan to boost exports, unlock barriers to trade, and open up new exporting opportunities. Attachés are based in UK Embassies and High Commissions overseas.
Economic growth, as measured by GDP, has remained steady at 2%-4% in the United Kingdom over the last 20 years, with the exception of the financial crisis in 2008 and 2009, and the COVID-19 pandemic which started in 2020. In 2008, economic activity fell by about 5%, but rebounded during the following years to reach its long-term trend rate. However, in 2020 the combination of different health measures to contain the spread of the COVID-19 had a major impact on the UK economy, and GDP fell by about 10%. In 2021, with the easing of the restrictive health measures, and driven by a high level of pent-up consumer demand, the economy rebounded and GDP grew by 7%.
The rate of unemployment has fluctuated around 5% since 2000, and increased to more than 8% after the financial crisis for a number of years before dropping to the long term trend rate of about 5% in 2013. However, with the onset of the pandemic in 2020, the unemployment rate increased before dropping in 2021 as economic activity recovered. The rate of inflation in the United Kingdom has fluctuated within a narrow range up to 4% over the last 20 years.
The agricultural sector is relatively small in the United Kingdom and accounts for less than 1% of GDP and total employment, which is significantly less than the OECD average. The share of livestock in total agricultural production has increased to 63%, while the share of crops has fallen to 37%. Over the last two decades, the share of agro-food exports and imports in total exports and imports has risen, with exports now exceeding 7%, and imports at about 10% of the total (Table 28.3).
Overall the United Kingdom is a net importer of agricultural goods. The value of agricultural trade has remained remarkably stable over the last 20 years as shown in Figure 28.5. The value of agro-food exports in 2020 from the United Kingdom to the rest of the world amounted to USD 27 billion, while the value of agro-food imports were more than double, at over USD 64 billion. The composition of agro-food trade in 2020 shows that the majority (73%) of exports are goods processed for consumption, whereas 14% of goods exported are processed for industry. In terms of imports, the majority (56%) are goods processed for consumption, followed by primary goods for consumption which account for 21% of imports.
Over the period 2010-19, the output growth for the United Kingdom was 1%, less than half of the global average (Figure 28.6). Total factor productivity (TFP) growth over the last decade has been close to zero, and production growth was entirely driven by increased use of both primary factors and intermediate inputs.
Environmental indicators point to improvements from 2000 to 2020. The nitrogen balance fell by around 20%, the phosphorous balance declined by about 40%, and the share of agriculture in water abstractions fell by 19% as the agricultural irrigated area was halved. At the same time, the sector’s share in the country’s energy use increased by 20% and the share of its GHG emissions grew by just over 40% (Table 28.4). Total GHG emissions from the agricultural sector equate to about one-tenth of the total GHG emissions in the United Kingdom.
References
[7] Climate Change Committee (2020), Sixth Carbon Budget, https://www.theccc.org.uk/wp-content/uploads/2020/12/Sector-summary-Agriculture-land-use-land-use-change-forestry.pdf.
[5] Department for Agriculture, Environment and Rural Affairs (2021), Consultation on the Future Agricultural Policy Proposals for Northern Ireland, https://www.daera-ni.gov.uk/consultations/consultation-future-agricultural-policy-proposals-northern-ireland.
[2] Department for Environment, Food and Rural Affairs (2021), Agricultural Transition Plan: June 2021 progress update, https://www.gov.uk/government/publications/agricultural-transition-plan-june-2021-progress-update.
[8] Department for Environment, Food and Rural Affairs (2021), Environmental Land Management Tests and Trials Evidence Reports, https://www.gov.uk/government/publications/environmental-land-management-tests-and-trials.
[1] Department for Environment, Food and Rural Affairs (2020), Agricultural Transition Plan 2021 to 2024, https://www.gov.uk/government/publications/agricultural-transition-plan-2021-to-2024.
[13] Department for International Trade (2022), Impact assessment of the FTA between the UK and New Zealand, https://www.gov.uk/government/publications/uk-new-zealand-fta-impact-assessment/impact-assessment-of-the-fta-between-the-uk-and-new-zealand-executive-summary-web-version.
[12] Department for International Trade (2021), Impact assessment of the FTA between the UK and Australia, https://www.gov.uk/government/publications/uk-australia-fta-impact-assessment/impact-assessment-of-the-fta-between-the-uk-and-australia-executive-summary-web-version.
[14] Department for International Trade (2021), Summary of the impact assessment of the UK-Norway, Iceland, and Liechtenstein free trade agreement, https://www.gov.uk/government/publications/uk-norway-iceland-and-liechtenstein-fta-impact-assessment/summary-of-the-impact-assessment-of-the-uk-norway-iceland-and-liechtenstein-free-trade-agreement.
[11] Department for International Trade (2020), UK trade agreements with non-EU countries, https://www.gov.uk/guidance/uk-trade-agreements-with-non-eu-countries.
[10] Department of Agriculture, Environment and Rural Affairs (2021), Future Agricultural Policy Framework Portfolio for Northern Ireland, https://www.daera-ni.gov.uk/sites/default/files/publications/daera/21.22.086%20Future%20Agriculture%20Framework%20final%20V2.PDF.
[9] GOV.UK (2022), Levelling Up White Paper, https://www.gov.uk/government/news/government-unveils-levelling-up-plan-that-will-transform-uk.
[6] GOV.UK (2021), Net Zero Strategy: Build Back Greener, https://www.gov.uk/government/publications/net-zero-strategy.
[17] GOV.UK (2021), New support for UK’s world-leading agri-food and drink industry, https://www.gov.uk/government/news/new-support-for-uks-world-leading-agri-food-and-drink-industry#:~:text=Network%20of%20agri%2Dfood%20and,promote%20trade%20and%20boost%20exports.&text=The%20Government%20has%20today%20announced,thrive%20in%20a%20Global%20.
[16] GOV.UK (2021), Trade and Agriculture Commission Independent Report, https://www.gov.uk/government/publications/trade-and-agriculture-commission-tac.
[15] GOV.UK (2021), Trade and Agriculture Commisssion, https://www.gov.uk/government/groups/trade-and-agriculture-commission.
[3] Scottish Government (2021), Securing a green recovery on a path to net zero: climate change plan 2018–2032 - update, https://www.gov.scot/publications/securing-green-recovery-path-net-zero-update-climate-change-plan-20182032/.
[4] Welsh Government (2021), Net Zero Wales, https://gov.wales/net-zero-wales.
Notes
← 1. A person who rents and works a small farm, especially in Scotland or northern England.
← 2. The Environment Act 2021 (Commencement No. 1) Regulations 2021 which came into force on 17 November 2021.
← 3. The Environment Act 2021 (Commencement No. 2 and Saving Provision) Regulations 2022 was established on 17 January 2022.