EU Referendum and Norfolk farmers – gambling with other people’s money

Sharing the same neighbourhood with farmers, I notice a lot of their preferences when it comes to politics. Of course voting is an individual practice so I’m sure this doesn’t apply to all farmers but some clear – local – trends are undeniably emerging. Norfolk farmers are generally pro-Leave. If this wasn’t obvious from the little conversations I have with them, the billboard size ‘VOTE LEAVE’ banners along their hedges make it fairly clear.

But what does it imply about their expectations? With Britain out of the EU there will be shortage of cheap seasonal labour (unless of course the Government exempts visa requirements for strategic sectors – which of course would defeat the objective of most pro-Leavers so it’s probably unlikely to happen). Without cheap labour Farmers will have to increase wages to attract workers. They wouldn’t be so confident in voting Leave if they didn’t expect increased domestic demand and a consequent price hike to cover these increased costs. Which of course makes sense, with competition from the EU out of the way, they should be able to increase prices – at least until the new trade agreements are signed, which might take many years.

On the other hand, they won’t be able to sell their produce to the EU (it is unlikely that strict CAP regulations are going to allow a ‘saboteur’ to carry on enjoying the benefits of having access to a large market). So there will be a drop in international demand. Again, this is only until new trade agreements are signed.

The real question is, which effect will dominate: the drop in international demand, or the increase in domestic demand? Their implied expectation is of course the latter. But they might be wrong, in which case, prices will not increase, their increased labour costs will not be covered, and they will be hit harder than any time under the protective umbrella of CAP. That is, unless the Government steps in and hands out lifesaving subsidies – which they will be free to do, having just escaped from CAP and EU State Aid rules.

So, what’s does it all mean? One thing seems clear, either the consumer loses because of higher prices, or the consumer loses because of increased taxes wasted on subsidising inefficient production. Rest assured, Farmers will be alright, at the end of the day, they’re gambling with other people’s money.

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