Loss of CAP payments in the UK could cost 250,000 non-farm jobs

The loss of Common Agricultural Policy (CAP) payments in the UK could result in the loss of 250,000 non-farm jobs there, according to a recent report published by the National Institute of Economic and Social Research.

Discussions surrounding the loss of CAP payments in the UK and the need for other policy instruments to facilitate the post-Brexit adjustments have taken a very narrow farm perspective, the report suggests.

However, research carried out by academics from the University of Kent has indicated that the “potential consequences could be felt far wider”.

The report highlighted that CAP payments to the UK, which total £2.9 billion (€3.34 billion), currently represent 73% of total farm incomes.

As most CAP payments relate to land area, larger farmers do receive the “lion’s share” of the budget and smaller farmers still struggle to survive in the industry, the report added.

Some farms would be unviable without these subsidies; the UK government estimates that fewer than 50% of UK farms cover their inputs costs from the market alone, according to the report.

The report states that under all possible Brexit scenarios, the UK will be outside the EU CAP.

Meanwhile, the academics from the University of Kent, as part of their research, analysed the relationship between regional CAP receipts and employment in non-farm small and medium-sized enterprises (SMEs).

They reportedly carried out this analysis by considering both the direct and indirect effects of farmers’ purchasing power.

The removal of CAP payments, without replacing them with a national policy, would result in a 1.6% fall in employment in non-farm SMEs in the UK, the results of the research allegedly showed.

To put this into context, this would represent a loss of about 250,000 jobs and a decrease in annual employment growth of about 0.2%, according to the report published by the National Institute of Economic and Social Research.

It added that the largest number of jobs lost – 200,000 – would be concentrated in rural area. As a result, the negative impact on the rural job market might be ‘very significant‘.