Charlotte Street Partners

BEYOND THE STREET

BEYOND THE STREET

The trade-offs of trade deals

Written by Alex Massie
1 June 2021

After a long Brexit night, the first glimpse of dawn. That, at any rate, is how the British government would like us to understand the prospect of a new free trade deal with Australia. The importance of the agreement lies less in its detail or, indeed, the long-term mutual benefit that both parties may enjoy but, rather, in its symbolism. This will be “Global” Britain’s first dance. It is a coming out moment and, as such, a pointer to a future in which the United Kingdom is trading more with the far side of the world where, conveniently, much of the world’s future economic growth will be found.

In truth, the proposed Australia deal is relatively small potatoes. It cannot make up for the additional burdens placed on British business by complicating our relationship with the European Union. Geography still counts and so does trading gravity. Nevertheless, we are where we are and, this being so, even tiny tatties are preferable to no potatoes.

As always, trade-offs abound. Nicola Sturgeon is already crying “betrayal”. Just as Scottish fisheries have been doubly betrayed – first by joining the European Union (as it would become) and then, all over again, by leaving it – so Scottish farming now faces a daunting, even bleak, future. Agriculture is not much more than one percent of the British economy but it is, roughly speaking, twice as important in Scotland as it is across the UK as a whole.

Understandably, the mere rumour of such a deal causes consternation in Scotland’s already unsettled, always fretful, agricultural community. Tariff-free access to the UK market for Australian beef and lamb risks being the thin end of a pretty thick wedge. Australian imports are currently insignificant (amounting to not much more than a thousand tonnes of beef a year) and so could rise tenfold without having a major impact on the British market. More concerning, by far, for beef producers here is the prospect of what a zero-tariff, zero-quota deal with Australia might mean for potential deals with major beef producers such as Brazil and the United States.

Australia will still sell much more beef to Japan, China and South Korea than it does to the UK but, quite plainly, a greater liberalisation of the beef trade imperils already imperilled British producers at a time when many, if not most, consider themselves sufficiently under the cosh as it is. If this is true for cattle farmers, it is likely even more the case for lamb producers, most of whom farm land ill-suited to much else.

Trends are, in any case, running against the Scottish farmer. The UK is no longer a nation of beefeaters. The typical Australian eats twice as much beef (36kg) and twice as much lamb (10kg) each year than the average Briton consumes. Including seafood, Britons munch around 100 kg of animals each year, whereas the French get through 120kg and the Americans, as you might expect, 140kg of land and water-based life. (Spaniards eat twice as much seafood as Britons and twice as much pork too.)

Vegetarianism is also a trend likely to be here for some time yet and, from a farmer’s perspective, the still greater evil of veganism is an enthusiasm guaranteed to shrink the domestic market for Scotch beef and lamb. The national beef herd has shrunk by a fifth in the past 50 years and there is little evidence the food service industry – as distinguished from supermarkets where domestic produce is a badge of pride – is prepared to wean itself off an already heavy dependence on cheaper imported meat. All of this was true before Brexit and remains true after it.

And it must be admitted that Adam Smith would have little truck, as a purely economic matter, with those seeking to defend the British farmer. Rationally, there is little reason to object to food imports from countries such as Ireland – the biggest supplier of imported beef in Britain – or New Zealand (lamb) which insist upon comparable standards as those applied here. Hormone-stuffed American cattle may be a different matter but the awkward reality is that consumers will still be guided by price.

That increasingly leaves Scotch beef and lamb as a niche product: pay more for guaranteed provenance. Since producers cannot compete on price they must make their pitch on quality. There is much to be said for that, not least since other trends suggest this might be a time to sell shares in farming in any case. 

For the future seems likely to involve lab-grown meat just as much, and perhaps more so, than meat grown in fields. Although dietary supplements can reduce livestock’s gaseous emissions, lab-meat will probably prove kinder to the planet than traditional agriculture. Moreover, it seems highly probable that future generations will look upon industrial farming as an era of unconscionable barbarism. What, they will think, were we thinking?

So farming must adapt as, indeed, it has always adapted. Telling farmers to diversify is old news; many, perhaps most, already do so. Despite that, it remains the case that many sheep and cattle enterprises are only viable thanks to the subsidies they receive. Shifting the basis for those payments from production to other metrics is also likely to be part of the future for British agriculture. That is likely to pay farmers to act as countryside custodians just as much as food producers. In one sense, every farmer will one day be a hobby farmer.

Much of this will be disagreeable. But in truth it is hard to see how much of it can be avoided unless consumers are suddenly prepared to pay the full cost of domestic beef or lamb production themselves. This seems improbable, to put it mildly.

It might be different if British farmers were as militant as their French or Belgian equivalents. I think it unlikely the Royal Mile will be blocked by cattle just as it is hard to imagine farmers turning Holyrood into a makeshift slurry pit in protest at whatever indignity has been visited upon them by an out-of-touch or graceless government. 

Plainly, other countries will look at the terms of the proposed Australian deal and demand something comparable for their own producers. If trade policy is to be understood in terms of comparative advantage, fishing and farming are acceptable collateral damage when set beside the interests of, say, financial services. No-one has any kind of romantic attachment to either the idea or the reality of finance, however, whereas the land – and the seas – tug upon a sense of ourselves and our place in the world.

Even so, the Australian deal envisages moving to a zero-tariff, zero-quota arrangement for agribusiness over 15 years. That is not quite glacial change but nor is it rapid either. If it might be preferable to have a proper and thorough idea of the future for British farming before signing any new trade deals, it remains the case that this proposal is less radical – and less terrifying – than some of the headlines might suggest.

But, again, these are the trade-offs that cannot be avoided. The reality of Brexit, as distinct from its theory, is that you cannot have always have your cake and eat it. You never could, of course, but there is no longer any excuse for pretending you can. A new world, then, but also, perhaps, a more grown-up one. 

About Beyond the Street and Alex Massie

We are all guilty of being too inwardly focused sometimes, especially as we navigate these changed times. It is all too easy to be caught up in the problems close to home, and for overarching trends to pass us by.

To remedy that short-sightedness, Charlotte Street Partners has enlisted the ingenuity and talent of the writer and commentator Alex Massie. As our new correspondent at large, Alex will look at the bigger picture for us each week. We have challenged him to come up with something a bit different: broad, lateral thinking, thematic insights and a more global perspective.

Alex is a freelance journalist and commentator based in Edinburgh. Not only is he Scotland editor of
The Spectator, but he also writes a political column for The Times and The Sunday Times. He features regularly on the BBC as a political commentator and has written in the past for The Telegraph, Politico, The Washington Post, the Los Angeles Times, The New York Times, the New Statesman, The Observer, and TIME magazine, among others. He was also the Washington correspondent for The Scotsman and assistant editor of Scotland on Sunday

We hope you enjoy his work – and do feel free to forward this email on to colleagues and friends you think might be interested. They can subscribe to Beyond the Street and our other regular briefings here

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