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Brexit is knocking down grain prices now – forget Project Fear, this is reality

The uncertainty surrounding Brexit and the dithering of politicians is already having an impact on grain prices, says South Norfolk arable farmer Phil Garnham.

I have been putting off writing this article until it became apparent what it was the Government and Parliament were trying to do.

 

Little did I know, they actually had absolutely no idea what they were doing or what they wanted or how they wanted to do whatever ‘it’ was.

 

And so, here we are. What can I write about Brexit and the unbelievable shambles it has shown the United Kingdom to be?

 

Sadly, whatever the outcome – deal / no deal / no Brexit – it’s exposed every single flaw of our country. Every fibre has been laid bare.

 

Self-interest

 

From the self-interest of our politicians to the bravery which has now been instilled in extremists on both sides to scream at each other in Parliament Square.

 

The eyes of the world have been watching, and like a contestant on reality TV we have forgotten the cameras were present and have revealed our true ugliness.

 

If you don’t believe me, just watch the red-faced ramblings of MP Mark Francois the next time a microphone is put in his hand.

 

Sadder

 

What makes this even sadder is that in the past, we were viewed by our continental cousins as the ‘Great Organiser’ of the world.

 

Give an issue to the UK and it would sort it out. There was nothing we couldn’t do.

 

And now, it’s become apparent that we couldn’t actually organise a knees-up in a Malthouse.

 

For an insight as to how this has altered the grain trade, I had a conversation with someone last week and asked what impact the lack of direction on Brexit has had on the markets.

 

Nightmare

 

“It’s been a nightmare. We have people who want to sell and we have people who want to buy, but what tariffs are we looking at?

 

Potentially, 53 per cent on grain going into the EU – but who pays it? Who does it get passed on to?

 

“There are businesses who have long-standing, multi-year supply agreements of malting barley who needed to price up contracts before the start of April and can’t move forward.”

 

Looking at the export situation we should be embarking on a regularly busy export period out of UK ports, but the reality is a fraction of the tonnage is moving.

 

Impact

 

And what impact has this had on the market? In January, malting barley was trading in £220/mt delivered in March/April, and now… £165/mt delivered April/May.

 

Look at the wheat markets – it’s shed £50/mt since harvest because we don’t have an export market.

 

This inability to govern, to make a decision or to concede this is a bigger picture than the Tory Party has cost the UK ag industry millions.

 

And for those who may take this as ‘Project Fear’ or me being sensationalist, let me break it down for you using grain as an example.

 

Pressure

 

If we can’t export, that puts more pressure on the market domestically.

 

That pressure sees the price of grain drop.

 

If the price drops, farmers will slow down their sales in the hope of some sort of market news to lead a recovery.

 

When farmers don’t sell, they don’t make a profit or income – which sees them reduce spending on everything from feed through to machinery.

 

Expansion

 

And this in turn has an impact on the expansion of some businesses.

 

At the end of last year, several firms were talking about employing more staff and growing their areas, but with the lack of direction these plans have had to be shelved.

 

No expansion, no growth – just stagnation.

 

It’s ok though. We got our sovereignty back.

 

Phil can be found tweeting at @TheBarleyWeasel


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