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Written evidence submitted by Professor Ludivine Petetin & Dr Alexander Fitzpatrick

Written Evidence: Inquiry on Farming in Wales in 2025: Challenges and Opportunities

Welsh Affairs Committee

This evidence is written by Professor Ludivine Petetin and Dr Alexander Fitzpatrick from Cardiff University’s Wales Governance Centre (WGC). They are also members of the ESRC-funded Centre for Inclusive Trade Policy (CITP). Professor Petetin specialises in trade agri-environmental issues and co-authored (with Dr Mary Dobbs) Brexit and Agriculture. She is regularly engaging with stakeholders across the UK on these matters. Dr Fitzpatrick’s research focusses on public policy, lobbying, and trade, addressing the process of how policies are made and implemented. Dr Fitzpatrick co-authored the Uneven Vulnerabilities CITP Briefing Paper with Professor Petetin, which outlined how recent UK trade agreements present challenges for the UK’s devolved agricultural sector.

This submission outlines the challenges and opportunities faced by the Welsh agricultural sector, focussing on economic, trade-based, and constitutional framework perspectives. This submission draws on research conducted at the WGC and CITP, in particular the Brexit and Agriculture book and CITP Briefing Paper mentioned. This evidence submission emphasises that these challenges and opportunities faced by the sector are exaggerated in the post-Brexit landscape.

Key points:

• Recent free trade agreements have not adequately safeguarded Welsh agricultural interests, especially for sheep and beef farmers vulnerable to competition from lower-standard imports.
• The UK’s post-Brexit trade agreements with Australia and New Zealand highlight the uneven exposure of the devolved nations to the risks of trade liberalisation.
• Tariff Rate Quotas (TRQs) on beef and sheep meat, which are goods considered to be economically critical to Welsh agriculture, are set to increase significantly. Early indicators, such as the reported rise in lamb imports and the decline of the Welsh national flock, suggest that these effects are already materialising.
• These risks are not incidental but stem from a systemic lack of devolved participation in trade policymaking because of trade policy’s reserved status. Despite their responsibilities for agriculture and related policy domains, the devolved administrations remain largely excluded from trade negotiations.
• A trade strategy that accounts for the distinct agricultural profiles and policy priorities of all UK nations is urgently required.
• Upholding the UK’s environmental and animal welfare standards within trade agreements would shield domestic producers from being undercut by lower-standard imports.
• Addressing Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT) would further support producers and empower consumers by providing clear information on food standards and production methods.
• Accession to the Pan-Euro-Mediterranean Convention and broader reforms to customs arrangements could also offer modest but valuable opportunities to improve market access post-Brexit.

Introduction

Welsh agriculture faces a complex policy landscape shaped by the UK’s withdrawal from the European Union and evolving international and intergovernmental arrangements. Agricultural policy is devolved. However, the UK Government retains responsibility for key areas that directly affect Welsh agriculture, including international trade policy, immigration and the allocation of funding. While the UK Government has provided some support through trade policy and funding, gaps remain in addressing the distinctive needs of the Welsh farming sector. Market access barriers, labour shortages and regulatory divergence continue to challenge the sector’s stability and growth. A renewed UK-EU relationship as well consideration of Welsh farming interests in trade policy-making and resulting FTAs present strategic opportunities to mitigate some of these impacts and support the long-term viability of agriculture in Wales.

A perfect storm and end of agricultural exceptionalism: the ongoing context

Since the EU referendum, the UK’s agricultural sector has been uniquely exposed to a convergence of disruptive forces unmatched by other sectors of the UK economy. This ‘perfect storm’ of challenges stems from four principal developments.

First, global pressures on food systems and climate change concerns have intensified significantly. Climate change has led to more frequent extreme weather events, shifting rainfall patterns and rising temperatures, all of which have compounded supply chain disruptions triggered by the COVID-19 pandemic[1] and the war in Ukraine and raised issues over food security.

Second, the reconfiguration of the UK’s international trading relationships – most notably with the EU – has directly impacted the import and export of agricultural products. Changes to regulatory frameworks and border requirements, including those related to sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBT), have introduced new frictions. UK farmers are also losing market protections once provided by the EU’s high import tariffs, exposing them to increased international competition.

Third, domestically, the distribution of power and trading relationships among the four nations of the UK has shifted. The establishment of the UK internal market, particularly through the UK Internal Market Act 2020, has centralised regulatory authority, often privileging UK Government positions.[2] This has led to concerns that the devolved administrations, including Wales, are constrained in their ability to diverge or develop regionally tailored agricultural policies. Divergent regulatory approaches across the UK, without adequate coordination, have complicated trade within the internal market.

Fourth, and most significantly, agricultural support policies and legal frameworks are undergoing rapid transformation. New national approaches, such as the Agriculture (Wales) Act 2023 and Sustainable Farming Scheme, signal a broader shift away from agricultural exceptionalism. The evolving financial support structures and regulatory regimes are altering the very foundations of farming practices and agri-food production across the UK.

As a consequence, agriculture is gradually being reframed as another ‘conventional’ sector of the economy, rather than one meriting distinct policy treatment and protective measures. The end of this agricultural exceptionalism[3] is evident in other policy shifts such as proposed changes to inheritance tax relief for farmers and the removal of ring-fenced funding for agriculture. These developments create uncertainty for farmers which could undermine the strategic importance of environmental protection and domestic food production in the context of climate change and national food security concerns.

Trade Liberalisation and Its Uneven Impact on Devolved Agriculture: The Case of Welsh Livestock

While trade agreements have traditionally aimed to liberalise sectors in order to expand export opportunities, the UK’s post-Brexit trade agreements with Australia and New Zealand appear to have disproportionately disadvantaged the agricultural sectors of the devolved nations. In particular, the long-term impacts of these agreements on Wales and Scotland are likely to be significant, especially in light of the phased liberalisation of Tariff Rate Quotas (TRQs) on key livestock products such as beef and sheep meat.[4]

Under the Australia agreement, TRQs for beef and sheep meat imports will increase annually over a ten-year period, eventually reaching capped levels of 110,000 and 75,000 metric tonnes, respectively. Meanwhile, the agreement with New Zealand establishes a ten-year TRQ schedule for beef and a fifteen-year schedule for sheep meat, culminating in the complete removal of tariffs – permitting unlimited, duty-free imports of these products into the UK. Similarly, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) prioritises the expansion of UK exports while simultaneously reducing tariffs, including those on products such as eggs, pork, chicken, and beef originating from Canada and Mexico.

Over time, these agreements are expected to lead to increases in imports of beef and sheep meat, with potentially adverse effects on local agricultural economies – particularly in Wales, where livestock farming is a central pillar of rural livelihoods and land use.

The impacts of such liberalisation are already becoming visible. In the 2022–23 period, UK imports of chilled lamb from New Zealand increased by 10%.[5] This development coincides with a significant contraction of the Welsh national flock, which has now fallen to approximately 8.75 million sheep – the lowest level on record.[6] These diverging trends raise serious concerns about the viability of sheep farming in Wales, particularly when viewed in the context of increased foreign competition, declining support mechanisms, and ongoing uncertainty over future agricultural funding.

The broader geopolitical and economic context further exacerbates these risks. Australia and New Zealand are highly export-oriented agri-economies and their export strategies are sensitive to shifts in global demand and diplomatic relations. Any disruption to their major trading relationships – such as a deterioration in access to the Chinese market – could result in surplus products being redirected to the UK. At the same time, unpredictability in global trade policy and an emerging international trade war, including the imposition of tariffs by the United States on trading partners is establishing an increasingly turbulent world.

Overall, the UK’s trade policy appears to have underestimated the regional consequences of liberalisation. Without stronger safeguards and mechanisms for devolved engagement in trade policy and negotiations, there is a real risk that the economic and cultural fabric of rural Wales – underpinned by livestock farming – will be irreparably weakened.

Regional and Temporal Imbalances in UK Trade Policy: Implications for Wales

The risks posed by recent UK trade agreements are particularly acute for the UK’s agricultural sector, where certain nations – including Wales – are disproportionately exposed. These risks stem from (i) the nature of agricultural specialisation across the UK and (ii) the lack of formal constitutional power given to devolved governments in the trade negotiation and trade policy-making processes. Despite their exposure to increased vulnerabilities, nations such as Wales play no direct role in shaping trade agreements with third countries and are thus limited in their ability to influence outcomes that may adversely affect their economies and rural communities.

This asymmetry is especially problematic for Wales, where agriculture occupies a central role in the economy and landscape. Approximately 84% of Welsh land is used for agriculture, with 75% of this land under permanent pasture[7] – a reflection of the sector’s reliance on livestock farming, particularly sheep and cattle. Furthermore, the agricultural sector in Wales accounts for a significantly higher share of employment compared to England, underscoring its socio-economic importance in rural areas.[8]

Recent research by CITP at Queen’s University Belfast has highlighted the constitutional tensions arising from trade being a reserved function of the UK Government and devolved powers such as agriculture.[9] These tensions are particularly pronounced as modern trade agreements increasingly encompass areas that intersect with devolved powers – such as food policy, environmental protection and agriculture. As these agreements evolve and deepen over time, their long-term effects may become more pronounced, exacerbating regional disparities in exposure and resilience.

Looking ahead to 2040, by which point the liberalisation schedules of the New Zealand and Australia agreements will be fully implemented, several key developments can be anticipated:

1) Food Sovereignty and Market Exposure: There is likely to be increased reliance on imports from countries such as New Zealand, Australia and members of the CPTPP. While these agreements may expand consumer choice and reduce prices, they risk undermining domestic producers, particularly in sectors such as lamb, beef and eggs – core components of Welsh agriculture.

2) Different Agricultural Policy Frameworks: By 2040, the four distinct agricultural policies being pursued by the UK nations will have matured. However, the absence of coherent intergovernmental coordination raises questions about the consistency and long-term viability of these frameworks. In Wales, the transition away from direct payments toward sustainable land management remains ongoing and the sector’s capacity to adapt will depend heavily on funding stability, targeted financial support, and the industry’s adoption of the new schemes.

3) Net Zero and Sectoral Resilience: Efforts to reduce agricultural emissions will continue, but their success will depend on the alignment of trade, environmental, and technological policies. If trade agreements continue to privilege liberalisation without adequate safeguards for domestic producers, achieving national environmental and economic resilience will be increasingly difficult. The cumulative pressures from climate change, market volatility, and regulatory reform may force many farms – particularly small and family-run enterprises – out of business.

Trade liberalisation is reshaping the UK’s agricultural economy, but its burdens fall unevenly. Wales, due to its agricultural profile and its exclusion from formal trade policy processes, faces disproportionate risks. Without meaningful engagement of devolved governments in trade negotiations and without mechanisms to mitigate regionally concentrated harms, the long-term sustainability of Welsh agriculture may be compromised. Addressing this imbalance requires a rethinking of governance structures, greater transparency, and regionally sensitive policy design within the broader context of the UK’s post-Brexit trade strategy.

Trade and regulatory divergence

As noted, the UK Government has negotiated trade agreements aimed at securing market access for British agricultural products. Welsh exporters face non-tariff barriers, paperwork, certification, and customs checks, when trading with the EU, particularly in perishable goods like lamb and dairy, which have intensified the administrative burden on exporters as well as leading times and delays.

Welsh agri-food exports remain heavily reliant on the EU. While diversification is desirable, non-EU markets are limited by scale and logistical challenges. FTAs with third countries have offered limited benefits and, in some cases, increased risks for domestic producers. As noted, important concerns persist about new FTAs, which allow imports that have lower environmental and animal welfare standards. As domestic producers are bound by stringent regulations, there are genuine concerns that domestic producers may be undercut by lower-standard imports.

Greater Welsh representation and consultation in UK trade negotiations are key to protect sensitive sectors and uphold high standards. Doing so will actively provide opportunities to improve the current situation, lending a formal role and voice to those most at risk of being adversely affected by UK-wide agreements. More structured intergovernmental coordination is necessary to ensure UK-wide agricultural interests are balanced with devolved priorities and concerns.

Divergence from EU standards has introduced complexity and increased costs for compliance, disproportionately affecting smaller producers, complicating both domestic operations and exports.

Policy instruments remain available to the UK Government to safeguard domestic producers and the agricultural sector more broadly. A principal mechanism is the incorporation of robust environmental and animal welfare standards within the UK’s trade policy, i.e. mirroring clauses. Ensuring that such standards are upheld in future trade agreements would allow the UK to exercise normative influence through trade, setting benchmarks that reflect domestic values and regulatory priorities.

Embedding these standards in trade deals not only prevents the outsourcing of environmental degradation and poor animal welfare practices to other jurisdictions but also ensures that imported goods competing with domestic produce are held to equivalent standards. This approach is not without precedent. The UK has previously promoted food safety and animal health standards – such as those concerning antimicrobial resistance and the use of growth promoters like ractopamine – in its trade and regulatory practices. There is a clear opportunity to extend this approach to other aspects of agricultural production that are of public interest or state concern, including biodiversity, soil health, and sustainable resource management.

Potential of a UK-EU Reset

Looking ahead and in the context of a potential reset of the UK’s trading relationship with the European Union, three policy levers merit consideration and restore smoother trade flows (from the most to the least likely).

First, the establishment of a Sanitary and Phytosanitary (SPS) equivalence zone through an UK-EU SPS Agreement would provide much-needed alignment on the regulation of animal, human, and plant health (often nicknamed although wrongly a veterinary agreement) to protect from pests, pathogens, and diseases. This would facilitate smoother trade flows and reduce the frequency of border checks and related disruptions.

When considering the possibility of an SPS equivalence zone, the recent ratification of the CPTPP means that when SPS measures do not conform to international standards, guidelines they must be ‘based on documented and objective scientific evidence’.[10] This means that the SPS restrictions cannot be based on the precautionary principle. Further, this sharply departs from Article 391 of the TCA, which creates a non-regression obligation in environmental matters and Article 356 which enables the UK to rely on precaution when there is scientific uncertainty. Therefore, agreeing on an SPS equivalence zone may be harder than it seems as the UK (England at least) is moving away from the use of precaution.

Second, technical barriers to trade (TBT), particularly those relating to labelling, traceability, and certification, should be addressed through a dedicated agreement. Aligning or mutually recognising standards in these areas would improve clarity and transparency for consumers, while also enabling the UK to promote compliance with its high domestic standards on animal welfare and environmental protection. The potential for normative influence is particularly strong in light of widespread public trust in food assurance schemes such as the Red Tractor label, which signals quality and ethical production practices.

Third, the UK could explore accession to the Regional Convention on Pan-Euro-Mediterranean Preferential Rules of Origin. While the benefits of such a step would likely be modest, it could incrementally enhance market access for UK producers by streamlining rules of origin within the wider region and provide a stepping stone for a wider agreement. Indeed, and more crucially, a broader and more strategic approach to resolving customs-related challenges is essential where a customs agreement would enhance the trading relationships further and could restore competitiveness for Welsh agricultural exporters in the post-Brexit trading environment.

Generally, closer regulatory alignment would particularly benefit Welsh farming and especially SMEs in the Welsh agri-food sector who lack resources to navigate divergence.

Financial support

The progressive removal of CAP-like financial support negatively impacts a stable income stream, creating uncertainty. This is especially salient for hill and family-run farms that depended on Basic Payment Schemes.

The end of CAP direct payments has created uncertainty, with transitional arrangements in Wales not yet fully replacing the economic stability that the EU scheme previously provided. With the Sustainable Farming Scheme now due to start in 8 months but without any concrete delineation of the schemes, Welsh farmers are unable to plan and prepare for the future. In a sector characterised by a need for medium- and long-term planning to manage crops, livestock, and broader business concerns and practices, this uncertainty prevents Welsh farmers from acting now to maximise future returns.

Additionally, Welsh producers are facing different regulatory requirements relative to their counterparts in the rest of the UK. This has the potential to limit the opportunities and potential benefits of intra-UK trade for Welsh farmers and producers.

Agricultural labourers

• The end of free movement has intensified labour shortages across horticulture and livestock sectors.[11]
• Immigration rules post-Brexit have created challenges in accessing seasonal and skilled labour. The Seasonal Workers Scheme offers some relief, but it is insufficient in scope and duration for Welsh farming needs and is overly complex and insufficient in scope (as well costly to applicants).
• A tailored approach to labour mobility recognising the specific needs of Welsh farms and food processors is needed. This will further provide certainty to producers that they may ensure their goods can be grown, processed, and sent to market with minimal disruption.

Risks of Barnettised Agricultural Funding

The decision to replace ring-fenced EU agricultural funding with allocations through the Barnett formula presents specific risks for Wales:

• The Barnett formula does not reflect Wales’ disproportionately rural and agriculture-dependent economy.
• Without a protected funding stream, agricultural policy in Wales may face budgetary pressures unrelated to sectoral need ‘leading to agriculture needing to compete with other objectives (such as education or health) to obtain part of the (smaller) pot’.[12]
• This shift undermines the ability to pursue long-term rural development strategies and respond to environmental and climate objectives specific to the Welsh landscape.

Clarifying Trade Governance and Addressing Asymmetries

The complex distribution of powers in UK trade governance remains a significant concern, particularly in relation to agriculture. While trade negotiations are formally reserved to the UK Government, many of the policy areas covered in contemporary trade agreements—such as agriculture, environmental protection, and food standards—fall within devolved competences. This mismatch has created ambiguity and policy incoherence, with devolved governments bearing the consequences of agreements over which they have little formal influence.

This structural disconnect is particularly problematic for Wales and Scotland, where agriculture plays a disproportionately important economic and social role. Yet, Wales has limited institutional means to shape trade agreements that directly affect its key economic sectors. The Department for Business and Trade leads on negotiations, while substantive provisions are often managed by other UK ministries, further exacerbating the fragmentation of responsibility.

To mitigate this, stronger institutional mechanisms are needed to facilitate meaningful engagement with devolved administrations throughout the trade policy process. Developing intergovernmental networks and formalised consultation structures would improve coordination, reduce ambiguity over roles and responsibilities, and ultimately foster more inclusive and balanced trade policymaking.[13] These steps are crucial to ensuring that future liberalisation measures do not disproportionately affect specific sectors or regions of the UK.

Given the multifaceted nature of trade governance, a joined-up, cooperative approach is required—one that recognises the legitimacy and expertise of devolved governments in key policy areas. Ensuring that all governments within the UK are meaningfully involved in trade policymaking would help to distribute the benefits and mitigate the costs of trade agreements more equitably across regions, sectors, and time. Only through such an approach can the UK’s trade policy truly reflect the diversity and interests of all its constituent nations.

Prof. Ludivine Petetin and Dr. Alexander Fitzpatrick

April 2025

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