As many as 20 per cent of Scottish farmers could quit the industry in 2017 as a result Brexit, according to a report by Scotland's Rural College (SRUC).
The report, Rural Scotland in Focus 2016, says that, whilst the outcome of the United Kingdom's decision to leave the European Union is at the moment unknown, the Brexit vote has increased uncertainty amongst farmers. One in five Scottish farmers surveyed by SRUC suggested that Brexit had increased the likelihood of them retiring from farming.
“Brexit is clearly causing uncertainty – and some farmers have told us that means they are thinking of retiring earlier than planned," said Steven Thomson, senior agricultural economist with SRUC.
Nearly a third of farmers and crofters surveyed for the report believe that Brexit will mean they will have to increase off-farm income sources or diversify their business.
Some 11 per cent of respondents thought they would need to downsize following the referendum in June in which the UK voted to withdraw from the EU by 52 per cent to 48 per cent. A majority of Scots voted to remain.
The SRUC report is the fourth of its kind published by the college, it is produced every two years, looking at key topics of rural and national importance.
Although the outcome of exit negotiations with the rest of the EU will not be know for some time - probably two years - the authors of this latest edition of the report said, "What is certain is that Brexit will cause, and already has caused, uncertainty in the sector."
Increased business uncertainty
Some 57 per cent of farmers who took part in the survey said that Brexit had increased business uncertainty.
The authors said this was something that "inevitably leads to lower on-farm investment, as witnessed during the recent CAP reforms – with inevitable impacts on the wider rural economy."
The report revealed that increased uncertainty was highest in the younger farm and croft population and on mixed farms and beef and sheep sectors.
The report said more than half of those surveyed thought that Brexit would increase the challenge of maintaining their farm or croft business. Again, this was highest in the younger generation and in the beef and sheep sector.
However, 37 per cent of respondents saw Brexit providing them with increased opportunities for maintaining their business. This feeling was higher on the larger farms.
There was lower confidence in the beef and sheep sectors.
Early retirement
The most startling finding from the report was the one highlighting the number of farmers who may quit the industry early.
One fifth of respondents overall said it was more likely they would retire following Brexit. This feeling was lowest in those under 54 years of age.
However, a quarter of farmers and crofters over the age of 55 said the referendum result may bring forward retirement. The impact on retirement plans was lowest amongst the specialist sectors – horticulture, dairy, pigs and poultry.
The report's authors said that Scottish agriculture had been used to change - some in response to market demands and environmental pressure, but also changes to various Common Agricultural Policy regimes.
“Our report shows how vital that support has been - and still is - to the industry, especially the beef and sheep sectors," said the authors.
Steven Thomson said it was not yet known what would replace CAP once the United Kingdom had left the EU. But he said: “Assume there will be budgetary pressures - meaning innovation and new approaches will be key to making farming more resilient."
He pointed to examples of agricultural sectors that had been successful without subsidies: “Being traditionally unsupported by the CAP, soft fruit growers, pig producers and others have shown the way.
“It is no coincidence they tend to be run by a younger generation – ready and able to grab opportunities, adopting new technologies and research ideas.”
Support and regulation for the future
The report argued that more control must be passed to younger people who may be more ready to adopt the new approaches that often drive business improvements.
It said that, as the implications of Brexit started to unfold, Scottish agriculture should reflect and take stock of how the sector should be supported and regulated in the future.
“As such, we should all take an opportunity to revisit the work of Brian Pack through his independent 'Inquiry Into Future Support For Agriculture In Scotland' and the 'Doing Better Initiative to Reduce Red Tape for Farmers and Rural Land Managers.' If the shackles of the EU Commission and auditors are indeed broken - providing we adhere to the minimum rules required under any future EU trade deal – then there must be opportunities to design a better agricultural support policy and make farming less stressful and bureaucratic," said the report.
They said the industry should revisit the recommendations made by Brian Pack for designing a new support policy that was fit for purpose. Reducing the red tape burden on Scottish land managers would be a logical place to start, they said.
'Viable and sustainable industry'
In 2015 the Scottish Government set out a vision for the Future of Scottish Agriculture through their discussion document.
This, and sectoral strategies, were an excellent starting point for thinking about what the industry would like a post-Brexit agricultural sector to look like in Scotland, said the authors.
“As we begin to understand the implications for Brexit it is worth revisiting the useful work that has already been undertaken and help develop a set of support mechanisms that can drive the necessary changes that build on our international reputation for quality food and drink products, and will lead to a viable and sustainable industry that best uses Scotland’s unique natural resources," said the report.
Professor Sarah Skerratt, who was the report's editor, said: “Rural communities and businesses are resourceful, innovative and co-operative. These are qualities all those involved in the rural economy must adopt. But to be effective that must be within a coherent, overarching strategy, taking account of the possible conflicts and properly monitored so it can be adapted based on real evidence."
This, she said, could create a greener, smarter and more prosperous Scotland.
