No Deal Brexit - Digesting the DEFRA papers

We have all become a little Brexit weary during the course of the last 12 months. The newspapers provide us with a seemingly shifting commentary on a daily basis. At present we appear to be  bound for the Chequers Brexit or nothing. In response to the possibility of the No Deal scenario we have now been given the rather cheery news that the Government is to publish some 84 papers on the impact of a No Deal Brexit.

Several have already been produced in relation to the agricultural and farming sector helpfully dovetailing with the publication of the new Agriculture Bill 2018 which will be the basis for Agricultural and Farm Policy whichever form of Brexit comes to pass. It is sensible, in our view, for businesses in the sector to look at their present business model, contracts and relationships in order to be more responsive to any situation that arises. That said it remains vital that we look at the briefing information being produced.

To date, several Government No Deal briefing papers have been produced relating to the sector, in particular those in relation to:

1. Farm Payments

2. Receiving Rural Development Funding

3. Production and Processing of Organic Food

The papers themselves are available to be read online and in effect are documents that run to a couple of papers rather than a weighty tome. In truth the documents as to finance and payments do little other than re-iterate in writing the position set out by Michael Gove in speeches upon the funding of Agriculture post-Brexit. Chequers deal or not, the funding position is now clear.

Farm Payments

Eligible beneficiaries will continue to receive payment to the terms of the UK Government’s funding guarantee. The Government has pledged to continue to commit the same cash total in funds for farm support until the end of this parliament expected in 2022; this includes all funding provided for farm support under both Pillar 1 and Pillar 2 of the current CAP. Such commitment applies to the whole of the UK. Domestic legislation, in the form of the Agriculture Act 2018 will require the beneficiaries to ‘conform’ to the same standards that they do currently if payments are to be received.

Receiving Rural Development Funding

In both Chequers and No Brexit scenarios, the following has been confirmed that:

• Any project where funding has been agreed before the end of 2020 will be funded for the duration of the scheme.
• The funding guarantee means that DEFRA and/or the devolved administrations can continue to sign new projects after the UK leaves the EU during 2019 and 2020 up to the value of the programme allocation.
• Farmers, land managers under all businesses with agreements funded by the UK rural development programmes do not need to take action at present. There is no substantive change for farmers, land managers and rural business of agreements funded by the UK rural development programme due to finish after 29 March 2019.
• Programmes will continue to be managed to ensure appropriate audit, monitoring and evaluation arrangements are in place and that spending delivers good value for money and meets Government priorities.

The Government, through DEFRA and devolved bodies, will ensure an uninterrupted flow of funding to farmers, rural business and communities to ensure stability and continuity. As such there is to be no knee jerk change in any circumstance. The Agriculture Bill advances the position further in that from 2021 when the system of direct funding will cease to be replaced by a transitional period of some 7 years. Regulation in respect thereof will be forthcoming in due course. At the conclusion of the 7 year transition period direct payments will cease to be replaced (in respect of which consultation shall take place with farmers) with contracts between government and farmers whereby funding will be provided where farming activities are seen to enhance the environment. Payment for benefit.

Production and Processing of Organic Food

Currently, all food and feed is sold as organic must be produced in accordance with standards set out in EU Law on organic production. Labels on food sold as 'organic' must indicate the organic control body with which the processor or packer is registered. Similarly at present products sold as organic must carry the EU Organic logo. If the UK leaves without a deal whilst the actual processes will remain the same some processes will need changing including:

UK organic operators would not be permitted to use the EU Organic logo. UK organic operator may continue to use their control body’s logo. UK businesses would only be able to export the EU if they were certified by organic control body recognised and approved by the EU (it is not clear what approval and indeed whether such approval would continue via those control bodies). As such the UK will need to maintain its standards of food production. As stated UK organic growers/producers would be certified by the UK trade bodies. We are advised that the UK intends to continue to recognise those countries currently equivalent to the EU. To that end the import and export of goods to countries such as the USA, Japan, Canada and South Korea should not be disrupted at all.

It is anticipated that UK would continue to accept EU organic products in a no deal situation but again. It is however noted that UK bodies that do not at this time have EU approval will not be make applications to the EU for their own approval until the UK becomes a third country. Approvals of this type at present take some 9 months. In those circumstances the government are looking at ways within and around the framework to speed this along.

Conclusion

At present we know little save the manner in which funding will be provided going forward. The initial instructions from government merely back previous announcements and look logically at labelling arrangements and the like. A common sense approach prevails.