Leaving the single market and customs union poses potential risks to Scottish farming, a new study has concluded.
The study, by Scotland’s Rural College (SRUC), analysed the potential economic impact of three potential post-Brexit trade scenarios on four farm types – beef, sheep, dairy and crops.
These included a bespoke free trade deal with the EU similar to the single market, World Trade Organisation default Most Favoured Nation tariff and Unilateral trade liberalisation.
The report found that in every scenario Scotland’s farmers would be worse off compared to under the current trade arrangement, with some or all producers facing lower returns.
Steven Thomson, Senior Agricultural Economist at Scotland’s Rural College, said Brexit is an "extremely complicated" process, particularly when it comes to agriculture due to the EU’s protection for the sector.
“Our results highlight the potential threats, and opportunities, to the profitability of different Scottish farming sectors under possible post-Brexit trade and policy scenarios,” Mr Thomson expplained.
“The findings reiterate how vulnerable hill farming systems are to trade deals and policy choices, stressing the need to take the disadvantaged areas into account during the Brexit process.”
Commenting on the report, the Scottish Government's Rural Economy Secretary Fergus Ewing said the study "confirms once again" that the interests of farmers are "best served by remaining within the EU".
“In all scenarios, failure to replicate the current trade arrangements with the EU will have a detrimental impact on farmers, with our sheep sector under particular threat,” Mr Ewing said.
“Furthermore, if any of these scenarios were combined with the removal of direct support payments at current levels, the financial consequences for Scottish farms would be much more significant, with pronounced reduction in net profitability across beef, sheep, and crop sectors.”
