NFU Scotland chief executive Scott Walker's blog - July 1, 2016 

"A week on from the UK vote to leave the EU and what has happened?

David Cameron is stepping down as prime minister.  A new Conservative leader and prime minister is expected to be elected by 9 September.  Labour leader Jeremy Corbyn is under huge pressure from within his party to consider his position but he has insisted he will not step down.  Scotland’s first minister has been in Brussels for a series of talks with senior EU officials, after pledging to protect Scotland's interests in Europe.  And the European Union's top trade official says the UK cannot begin negotiating terms for doing business with the bloc until after it has left.

So where does that leave Scottish agriculture?

The first major effect for farmers and crofters has been the fall in the value of the pound.  It fell sharply against the US dollar and the euro, as well as a number of other currencies, immediately after the announcement of the referendum result.  It continues to fluctuate significantly on a daily basis with most commentators expecting that volatility in its value will be the norm for a long period to come.

Approximately a third of UK sheep meat is exported, with the majority going to countries within the Eurozone.  This means that our sheep meat industry is more heavily dependent than any other on the exchange rate between the pound and the euro.  

But it is not just the sheep industry in Scotland that the currency affects - it is all farm products.  And while the percentage of product exported may not be as high for other sectors, the movement in the pound will have an impact on all.  The decline in the value of the pound against the euro since the referendum outcome was announced will have made product from the UK more competitive in European markets.  

Currency shifts also affect imports to the UK, for example, increasing the price of Irish beef in sterling terms.  This may make the UK a less attractive market for exporters, relative to the rest of the EU, while at the same time making us more competitive in our export markets.  

However, while that may be the good news, many of our key inputs such as fuel, feed and fertiliser, may become more expensive as they have to be imported into the UK.

Much will now depend on the terms of the UK’s exit and its future trading relationship with Europe as well as the rest of the world.  We don’t expect any conclusion on these for some considerable time. In the meantime, the UK will remain a part of the EU and will continue to be bound by the existing conditions of our membership.  

This means all the schemes, rules and regulations we had before the referendum result will remain for the immediate future.  For NFUS, we will be giving the Government our list of priorities on what must be included in the new deal so that it is fair and delivers for farming.

To give more certainty, we are seeking a commitment from government that the next four rounds of payments for all schemes are delivered as planned and as budgeted.  This will provide an anchor of stability in uncertain times and ensure that there is a stable confident platform on which to negotiate future trading and domestic support arrangements that best suit farming.  

It is essential as key decisions are taken that the voices of farmers and crofters are heard.  Farming and crofting are at the heart of rural Scotland and are at the core of the rural economy."

(originally published on www.nfus.org.uk)