SCOTTISH farmers need to prepare for lower returns and higher prices after Brexit, a new study has warned.

Analysis by researchers at the Food and Agricultural Policy Research Institute based at the University of Missouri, and the Agri-Food and Biosciences Institute in Belfast, suggests that regardless of what trade deal is struck after Britain quits Europe there is going to be savage disruption to the market.

Scottish sheep farmers in particular could see their livelihoods disappear.

The academics assessed three possible scenarios for post Brexit Britain, including a bespoke Free Trade Agreement with the EU, World Trade Organisation (WTO) rules, or Unilateral Trade Liberalisation.

In all three contexts Scottish farmers would lose out.

Even, in the best case scenario, where the UK government manages to achieve a trade agreement with tariff and quota free access for exports to and from the EU, there will still be significant costs.

But if the UK crashes out of Europe without a deal, and is forced to rely on WTO rules, then Scottish farmers will face goods shipped to the EU having hefty tariffs slapped onto final price.

And so too will farmers importing into the UK. In those sectors — dairy, beef, pig and poultry — reducing the number of EU imports would significantly increase producer prices.

Researchers say across the UK producer prices in the dairy, beef, pig and poultry sectors would increase by 30 per cent, 17 per cent, 18 per cent and 15 per cent, respectively.

On top of that the country will be ram-packed with sheep and lamb, lowering market prices by around 30 per cent across the UK.

Producer prices for barley will also see a steep decrease of around 5 per cent.

Grimmest of all is the the third scenario researched by the academics, the “liberalisation” of the markets where Britain becomes a red-tape free zone.

Effectively, this would mean the UK sets zero tariffs on imports to the UK from both the EU and the rest of the world, while exports from the UK face trading partners WTO tariffs.

Here producer prices in the beef and sheep sectors would decrease by 45 per cent and 29 per cent, respectively, with reductions of 12 per cent, 9 per cent and 10 per cent in producer prices for the pig, poultry and dairy sectors respectively.

NFU Scotland’s President Andrew McCornick said the research showed how vital it was for the UK to avoid the cliff edge of a hard Brexit: “A phased transition is necessary to offer certainty and stability in the short to medium term.”

He added: “UK negotiators must not underestimate the challenge that lies ahead in negotiating such a deal with the EU. A new customs agreement between the EU and the UK needs to cover 100 per cent of goods and avoid lengthy delays at UK-EU borders.”

Commenting on the report, Rural Economy Secretary Fergus Ewing said: “As is becoming clearer by the day, Brexit is by far the biggest threat to farming and to our successful food and drink sector. This important study confirms what the Scottish Government has been saying all along — that rural communities’ interests are served best by Scotland remaining within the EU.

“This report clearly shows that failure to reach a deal with the EU, combined with taking a complete free trade approach, would disrupt every single sector of agriculture, with beef production in Scotland particularly affected.

“Even if the UK fell back on WTO tariffs, the impact for some farmers would be catastrophic, with our hill farmers paying the price.

“In the best case scenario, where the UK Government secures a trade deal with the EU on close to Single Market terms, this would still lead to farmers and consumers being worse off than they currently are.

“What is clear, is that a ‘No deal’ scenario should not be considered as an option. Walking away from the EU with no deal would be disastrous for farming and food production, would harm Scotland’s economy, with consumers paying the price.”

A UK Government spokesperson said the paper was dealing in hypotheticals: “We are seeking a comprehensive free trade and customs agreement with the EU, as well as new trade agreements with non-EU countries which can be implemented after an interim period.

“This paper does not take into account either of these things.

It considers three theoretical outcomes, none of which reflect the Government’s negotiating position.”