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Trade deal terms may define UK ag subsidies, post-Brexit

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The outcomes of trade deals may have a big role in defining UK farm subsidies after the country's split from the European Union, Wynnstay chief executive Ken Greetham said.

The extent to which UK farmers, who received an estimated E3.1bn ($3.5bn) in direct subsidies from the EU last year, receive support when the country quits the bloc may depend on "levelling the playing field" in international trade, Mr Greetham told Agrimoney.com.

If the string of deals the government seals, on leaving the EU, agree tariffs on trade which question whether UK produce is "commercially viable", farmers may see the dynamics "balanced by subsidies", he said.

He highlighted that the average tariff on EU food imports, for instance, was 12%, although this varied widely by commodity.

'Strategic importance'

Indeed, keeping agriculture on a firm financial footing was likely to be a key priority for politicians, who have termed the sector as being of "strategic importance", Mr Greetham said.

The ruling Conservative party, in its manifesto ahead of last year's general elections, pledged a 25-year food and farming strategy.

And George Eustice, farm minister, last year pledged action to reverse a fall in the UK's self-sufficiency in food, which has dropped to 60%, from 78%, in the past 30 years.

The need to support UK tourism, and the rural economy, would also play a part in subsidy policy, Mr Greetham said.

However, he cautioned that the allocation of "where subsidies go may vary, for example between big and small farms," with many commentators foreseeing a retreat in support for large enterprises.

'Positive view'

The comments followed a statement from Wynnstay, as it unveiled a drop in half-year profits, that it took "a positive view of prospects for UK agriculture".

While the prospect of a farm subsidy shake-up "bring uncertainty, the industry expects some degree of financial support to continue, given the sector's strategic importance", the group said.

"As the exit agreement and new trade deals are negotiated, the UK will remain an efficient producer of agricultural products to the domestic and world markets."

By Mike Verdin

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