UK poultry farmers set to struggle in post-Brexit landscape

19-04-2019 | Home | News

Profits for poultry farmers will dip under any post-Brexit scenarios, according to a report published this week by the Agriculture and Horticulture Development Board (AHDB).

The study looked at how different farms would cope with various post-Brexit trading arrangements, analysing two potential outcomes – a free trade agreement (FTA) and reverting to World Trade Organisation (WTO) tariffs.

Using a baseline indicator of £30.55 income per 1,000 birds, the study found that under the UK-EU FTA arrangement for 2022, the average farmer would lose £32 per 1,000 birds, while under the WTO UK tariffs scenario, the farm baseline indicator would be zero.

The main driver in the reduction in income per 1,000 birds is regular labour costs which is set to increase by £60 per 1,000 birds and around £10-11 for feed, fertiliser and plant protection costs.

Under the UK-EU FTA scenario there is an increase of more than £8/1,000 birds in production revenue, but this is insufficient to offset the increases in labour costs.

Under the WTO scenario the almost £40 increase in production revenue is just enough to prevent income per 1,000 birds becoming negative, although this is not sufficient to deliver a positive income.

Maximising labour efficiency

The report argues that the change in Farm Business Income on poultry units means there will be pressure to minimise increases through maximising labour efficiency, possibly through increasing output with the same labour component.

“In terms of trade, the UK is a net importer and production revenues rise due to rising poultry prices in both scenarios. This is caused by trade friction on imports under both scenarios, and the imposition of tariffs for trade outside the 0% TRQ under the WTO: UK tariffs scenario,” the report said.

The National Farmers’ Union said the modelling work reinforced its position about real concerns of the catastrophic damage leaving the EU without a deal would have on British farming.

Minette Batters, NFU president, said: “Across all farming sectors and a number of enterprises, the AHDB’s results show a significant decline in farm business income under both scenarios modelled, predominantly as a result of increased costs of labour and pressure on farm-gate prices.

“It is no exaggeration that entire enterprises, for example poultry production, could be unviable if the assumptions in the model were correct and ever realised.”

The British Poultry Council has urged parliamentarians to take action to prevent the UK from leaving with no deal. Richard Griffiths, BPC chief executive, spoke last month of his concern that leaving with no deal could result in export tariffs being imposed on poultry meat that goes to the EU (27% increase in chicken).

“In the event of a no-deal Brexit, there will be increases in the costs of production which would be reflected in the price of fresh UK chicken. We estimate in the worst case no-deal scenario, the price of breast meat could rise by 25%,” he said.