Clarity needed to reassure the livestock auction sector
The Institute of Auctioneers and Appraisers in Scotland (IAAS) has launched its report on the consequences for the sector of leaving the EU without a withdrawal agreement. Despite the latest date for leaving being only just over one month away, concerns remain that leaving without a deal remains a possible outcome, with devastating consequences for the entire agricultural sector in Scotland, and with acute impact on livestock markets.
IAAS represents every livestock market in Scotland, and has issued its report “No Deal Brexit – averting disaster”, which includes recommendations for an emergency scheme to mitigate damage. The full report can be accessed here.
The livestock marts identify two major challenges for their businesses presented by a no-deal Brexit:
- The decline in sales values to be anticipated unless preventative action is taken would see unsustainable declines in prices achieved at auction, and therefore a direct proportionate reduction in the income for markets.
- Presuming that the primary production of sheep and lamb was reduced, there would inevitably be a direct reduction in throughput, and a fall in income for the marts.
The scheme recommended by the Institute has two primary red-lines – that the scheme is a UK wide arrangement, and that it focuses squarely on providing support to those who suffer actual loss. IAAS says that all too often, in the past, such measures have provided support which has been poorly targeted at those who needed the help most.
The proposed support scheme set out in the report is:
- The system should be a top-up system, working to supplement the price achieved for selling a lamb in order that the price achieved would match the price that would otherwise have been achieved had no-deal brexit not happened.
- The top-up system would be based on lambs on a fit for slaughter basis. They would be graded to provide a range of size and weight specifications that would mean that the stock would be satisfactorily entered into the top up scheme.
- The top up scheme payment would be based on the difference between the price achieved at sale and a weekly calculation of the average live weight per kilo price over the last three years.
- The top up payment would be paid to the seller, with a consequent commission payment being due to intermediaries on the sale.
- The payment would have to be subject to a full tag read on every lamb to be eligible for the top-up scheme, in order to prevent the same animal being entered into the scheme more than once.
On launching the report, Scott Donaldson, IAAS President said:
“The dark clouds that hang above the Scottish agricultural sector caused by Brexit uncertainty have the potential to deliver devastating impact on the entire industry. With only one month or so before the latest article 50 deadline for our EU departure, far too much uncertainty remains.
“The political process has been tortuous, and whilst Parliament still seems so far away from being prepared to support a deal with the EU, our members are massively concerned that a departure on no-deal terms might be the unintended and unwelcome consequence of political stalemate.
“Our report makes clear the economic impact of such an event on our clients, and as a result on our businesses themselves. Urgent action is now required to give some certainty that, whatever the outcome, the right support mechanism will be in place to support the entire sector as we face damaging world trade organisation tariffs for our produce.”
IAAS has shared the report with UK and Scottish Government ministers, and is seeking an urgent clarification on steps that would be taken by Government to provide reassurance to the market as the deadline of 31st October draws near.
