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Brexit – Where are we with funding in the agricultural sector?

26 Aug 2016

Following the UK’s “leave” decision, there has been a great deal of uncertainty about what will happen to agricultural funding once Article 50 is activated and ties are formally severed with the EU. The UK government has recently announced that they will be pumping up to £6bn a year into backing EU-funded projects which are signed before this year’s Autumn Statement. It has also confirmed that agricultural funding now provided by the EU will continue until 2020. But what will happen beyond then?

Whilst the Government has promised to meet the cost of existing funding on a short-term basis, their guarantee does not provide real peace of mind to many.

There is still uncertainty about the future of funding for the farming and agricultural sector. This uncertainty has not been helped as many existing funding programmes are currently frozen following a decision by the RPA to halt announcements. Confirmation of the success of existing applications, rather than leaving them in limbo, is vital at a time when almost 2,000 rural businesses, farmers and charities are left waiting for answers.

The current EU-backed funding regime has seen UK farmers receive large amounts of money under the Common Agricultural Policy (CAP). In 2015, £2.4million was received by UK farmers in direct payments from the EU. This equates in real terms to half of all UK farmers relying on CAP to provide the income they receive.

There is real worry in how future plans will make up any shortfall in the funding previously received under CAP. The government’s promise to bridge the EU-funding gap until 2020 seems to fall far short of expectations.

Looking beyond 2020, we are told there may be longer to wait for the government’s 25-year plan for the British food and farming industry. This plan, once published, will hopefully clarify the position in relation to funding and the future of economic growth and plans for the sector. DEFRA was hoping that the 25-year plan would be published sometime after June 2016 but it has not appeared yet.

It is not all bad news though. Moves to improve UK farming and to strengthen the industry generally have not been halted. The vote has no immediate effect on those applying for EU research funding and there are plans in the agri-tech sector for three new centres for agricultural innovation to be set-up soon. Also, The Innovative Farmer’s initiative – a group focussed on the sustainable future of farming – has recently been launched to bring together farmers who are collaborating with environmental experts to try new and improved ways of working.

So what happens now? Hopefully, the government will release more information about funding for the sector ahead of the Autumn Statement. In the meantime, organisations such as DEFRA and the National Trust have asked for clarity about future plans to help deal with the uncertainty being felt by farmers and agricultural businesses alike.

In a short period of time, Brexit has knocked confidence in funding available for the UK farming and agriculture sector. However, access to the EU single market remains until ties are formally severed between the UK and the EU and even thereafter, we are promised that funding for existing EU-backed initiatives will remain. Alas, this promise, while perhaps a little vague, is important for the farming and agricultural industry in the UK as building confidence ahead of facing the next wave of uncertainty – when we do formally leave the EU – will hopefully help farmers to face further changes for better or for worse.

For further information, please contact Alison Hall, Partner at Hay & Kilner

Call: 0191 232 8345

Email: Alison.Hall@hay-kilner.co.uk