Charles Sercombe, a sheep farmer for 40 years, says leaving the EU without a trade deal would be a ‘nightmare scenario’
Charles Sercombe, a sheep farmer for 40 years, says leaving the EU without a trade deal would be a ‘nightmare scenario’

As people sit down to enjoy their roast lamb this Easter, sheep farmers across the UK are reaping the rewards of last year’s Brexit vote.

The fall in the value of the pound has “certainly helped bolster our export position”, said Peter Hardwick, head of exports at the industry body for beef and lamb producers in the UK, AHDB Beef and Lamb.

The UK is the third-largest exporter of lamb worldwide, after Australia and New Zealand. About a third of British lamb is exported and last year 95 per cent of exports went to other EU countries, with just over half ending up in France.

The UK also imports a similar quantity, which helps smooth out the seasonality of domestic production — most lamb eaten in the UK this weekend will be from New Zealand.

Farmers say the main effect of the weaker pound — which has raised demand by making British lamb more competitive in export markets — has been to push up prices, rather than sales volumes.

“We have as many animals as we have — it’s all about what price we can get for them,” said Charles Sercombe, one of about 70,000 sheep farmers in the UK.

Unlike pig and poultry farmers, sheep farmers have not been hit by rises in the cost of imported feed as sterling has dropped, because their animals are predominantly grass-fed.

The peak season for British lamb sales is late summer and early autumn, when spring-born lambs hit the market. Between July and October last year, the price paid to UK farmers for their sheep was 15-20 per cent higher than a year earlier.

It was a welcome respite after two years of falling prices and lower demand in some of the biggest export markets, particularly France.

The depreciation of sterling against the euro has also helped farmers across the UK because the payments they receive from the EU through the Common Agricultural Policy are denominated in euros.

But while British farmers have benefited, the Brexit vote has hit farmers in the Republic of Ireland.

The lamb produced in Ireland is almost identical to British lamb, meaning Irish farmers are directly affected when the value of sterling rises or falls.

“Our prices are running 10-15 per cent below last year . . . there is no reason in the market other than the devaluation of sterling,” said Kevin Kinsella, director of livestock at the Irish Farmers’ Association.

Despite the gains from the weaker pound, British sheep farmers are nevertheless worried about what will happen to their industry after Brexit, and whether the UK will strike an agricultural goods trade deal with the EU.

Mr Sercombe, who has been rearing sheep for 40 years and has 3,000 animals on his farm just outside Melton Mowbray in Leicestershire, says that leaving the EU without a trade deal and falling back on to World Trade Organisation terms would be a “nightmare scenario”.

Under the EU’s “most favoured nation” rules, lamb imports from outside the bloc, apart from those that fall within a quota, come with a tariff of 12.8 per cent of their value, plus a fixed charge per tonne that varies depending on the cut. The AHDB estimate that for some cuts, the taxes can equate to a tariff of 50 per cent or more.

UK sheep farmers are already working to develop new markets for British produce, including opportunities in Asia to sell offal and skins that are not popular with consumers in Europe. But British sheep meat struggles to compete on price with the major southern hemisphere producers, particularly in places such as China, where Australia and New Zealand already have free-trade agreements.

Some farmers are holding back from making major investments and are reducing their operations until they know more. The National Farmers’ Union monitors tractor purchases as an investment indicator and reported that tractor registrations were 2 per cent lower in 2016 than in 2015.

“We have cut the size of our flock by a couple of hundred ewes,” said Mr Sercombe, who had been trying to expand in recent years. “With the uncertainty, it is not worth risking . . . I am trying to put myself in a position that, if there is a big shock, we can survive.”

Get alerts on UK agriculture when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article