Farmers rely on EU subsides for 55% of their income which equates to c£3 billion per annum. Would this continue in the event of Brexit? The Farming minister (George Eustice), who supports Brexit, assured the National Farmers Union (NFU) that it would ‘without a shadow of a doubt.’ However, the NFU president has some doubts as the Treasury has questioned the value of farming subsides in the past.
There is also concern that tariffs imposed by the EU on imports would make it harder for farmers to sell their produce. Although the EU is critical for some sectors, there is some where we export considerably more than we import and therefore the EU has twice as much to lose from a tariff war.
Owners of Woodlands have the opportunity to receive direct financial support through the Governments Rural Developments Plans. For the period 2014-2020 this equates to c80m per annum. It is calculated that approximately 50% of this amount comes from the EU.
Perhaps the bigger impact would be felt on movements in currency rates. An exit is likely to lead to sterling devaluation which would be a benefit to UK producers of timber although the possibility of interest rate rises to make UK plc an attractive investment may counter some of this improvement as this is likely to lead to a slowdown in housebuilding – a major consumer of timber.
A vote to remain, conversely, is likely to lead to sterling appreciation and accordingly it would be harder for UK producers to compete with cheaper imports.
However, it should be remembered that the UK has always been a significant net importer of timber and we consume, with ease, all wood produced in the UK.
In our new forestry and farming values will be influenced by change in capital land prices rather than the income that can be generated therefrom.
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