Sheep Farming: No-deal EU Exit

Part of Election of Select Committee Chairs (Notice of Election) – in the House of Commons at 10:37 pm on 3rd September 2019.

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Photo of George Eustice George Eustice The Minister of State, Department for Environment, Food and Rural Affairs 10:37 pm, 3rd September 2019

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.