The impact of Brexit on Scottish dairy farm incomes

Published 17 November 17

AHDB’s latest horizon report, downloadable here, shines a spotlight on the implications of Brexit for Scottish agriculture. We have previously looked at the modelled effects of three Brexit scenarios on UK dairy farms, and this new analysis allows us to look at the modelled impacts for Scottish Dairy farms in particular.

Like for the UK as a whole, the Scottish model results showed an increase in Farm Business Income (FBI) for Scottish dairy farmers under Scenario 1: Evolution and Scenario 3: Fortress UK. This increase mainly comes from higher dairy prices as a result of higher import costs, with the loss of pillar I support limiting the overall gain in Scenario 3. The absolute value gain in both of these scenarios is lower than for the UK as a whole, but because Scotland has a lower baseline FBI the gains represent a higher percentage increase in income, up 52% under Scenario 1 and up 37% under Scenario 3.

2017.11.23 Brexit Scot 1

In contrast, Scenario 2: Unilateral Liberalisation results in significant losses to FBI, driven by the removal of pillar I support payments. The loss for Scottish farmers is larger compared to the UK both in value terms and in relative terms, at a £31,000 (88%) decline in FBI. With the modelled Scottish dairy farm left with just £4,375 in income, unilateral liberalization represents an extremely challenging scenario for the Scottish dairy sector.

2017.11.23 Brexit Scot 2

An archive of all published Horizon reports can be found here