British farmers could get a post-Brexit income boost if the government strikes a free-trade deal with the European Union.
According to a new report by the Agriculture and Horticulture Development Board (AHDB), the average farm income could rise from £38,000 to £41,000 after Brexit.
A free-trade deal would push up the cost of imports, meaning British farmers would be free to boost their incomes by charging more for their products.
Dairy farmers would get the biggest boost from post-Brexit trade, while those dependent on exports would continue to make a stable income.
The EU’s common agricultural policy has been repeatedly criticised for reducing productivity by lessening competition and supporting inefficient farmers, which in turn results in soaring costs for consumers.
If the UK opened its borders to low-cost food producers, the average farm income could be slashed from £38,000 to £15,000 per year.
While if the UK put up protectionist trade barriers, farm incomes would drop to £20,000.
The AHDB, a farming advisory board funded by farming levies, has urged British farmers to maximise their productivity to prepare for any Brexit scenario.
The report states: “While details of the trade and policy framework are unclear, this should not stop farmers taking action to prepare for Brexit.”
Phil Bicknell, market intelligence director at the AHDB, said: “Whichever scenario is chosen, higher-performing farms remain profitable in every sector.
“These farms are best placed to weather the negative impacts of any of the Brexit scenarios. They are capable of generating positive incomes when the lower-performance farms are making losses.”
Currently, 86 per cent of the average farmer’s income is subsidised by the European Union.
However, in August research showed Britain’s farmers would be better placed to compete internationally and boost their incomes after Brexit.
Warwick Lightfoot, the Director of Research at the Policy Exchange think tank, blasted the EU’s common agricultural policy and branded it the “least successful” programme on the continent.
The think tank added: “Leaving the European Union allows us to think again about agricultural policy from first principles.
“The starting point for policy reform must be the consumer. The EU’s historic reluctance to open up trade in food products has repeatedly stymied trade deals and led to higher prices for consumers and a distorted farming industry.
“The UK can now lead the world in cutting tariffs and being a champion of free trade in agriculture.”