Scotland’s agri sector is facing the double whammy of plummeting farm incomes and job losses a new report has found.

An independent study on the impact of several international Free Trade Agreements (FTAs) signed by the UK following Brexit on Scottish agriculture has been published by the Scottish Government.

It warns that farm business incomes in the dairy sector could see a fall of up to 60%, while lowland cattle and sheep farmers may be hit by as much as 57%. Cereal producers could see a drop of up to 27% with all figures set against a 2019/2020 baseline.

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The report argues that without support farms will generate losses on average, with the long-term margin from agricultural production projected to be negative “underscoring the crucial role that support will play in sustaining farm incomes.”

The team of experts say The Scottish agri-food and farming industry has entered a “Decade of Disruption” and is grappling with multiple challenges arising from inflation, policy reform, structural challenges and emissions in addition to the prospect of new FTAs.

The authors analysed the deals between the UK and four other trading partners – Australia, New Zealand, Canada and the Gulf Cooperation Council.

The report found the impact of the four FTAs is ‘generally limited, but significant in some sectors’, highlighting that output of sheep and lamb meat, along with beef and wheat are projected to fall.

The FTAs with Australia and New Zealand are cited as the main drivers of decline in Scottish sheep and lamb output as New Zealand eyes a move to recapture trade with the UK lost when the UK joined the then EEC.

Although the focus of Australia and New Zealand for exports of sheep meat is currently Asia, the report finds that in the event of geopolitical changes with China, the UK could see additional volumes of sheep and lamb meat exported to the UK from the two antipodean nations.

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The beef sector will come under notable pressure. The authors say that while imports from Australia and NZ will exert significant pressure. However, a trade deal with Canada is likely to generate some export opportunities and given the brand recognition of Scotch beef, it should be relatively well-positioned to exploit these prospects.

The analysis finds that price declines are the major driver, with milk prices are forecast to decline by 5.7% versus the base year, Cattle and sheep prices are projected to reduce by 4.1% and 3.6% respectively while cereal price declines are in the region of 3.2% to 3.4%.ha.

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Job losses are also predicted. “Employment in the sheep meat sector is projected to decline by around 11%. Declines in the wheat and beef sectors are projected at 3% to 6% in the Low and High Liberalisation scenarios respectively. Conversely, dairy sector employment could rise by 9%.”

Rural Affairs Secretary Mairi Gougeon said: “This report highlights the individual and cumulative threats and opportunities of these trade deals by agricultural sector and farm type.

“While the dairy sector is best positioned to see export growth, there are some specific threats posed to Scottish sheep meat and beef, with imports from trading partners like Australia and New Zealand expected to exert significant pressure.

READ MORE: Challenges and oppos for beef industry

“The report also reaffirms that such FTAs will set important precedents to other prospective trade partners about where the UK is willing to cede in negotiations. These could weaken its bargaining position in future deals and lead to worse outcomes for those sectors already negatively affected – especially in terms of renowned brands like Scotch Beef and Lamb.

“The reports shows the current UK Government trade approach is not working in the interests of Scottish agriculture - we will continue to press for a coherent trade policy that makes agriculture a higher priority in future trade deals.

“We will use these findings to help identify future policy options to mitigate or address the differential impacts of trade, as part of delivering Scotland’s Vision for Trade.”

The UK Government has negotiated a number of FTAs, most recently with the Indo-Pacific trade bloc of 12 economies across Asia and the Pacific.