The Government is so sensitive to the idea of food price increases, it would likely revert to a cheap food agenda in the event of a no-deal Brexit, says senior policy adviser for the NPA, Ed Barker.
It is well understood that the UK imports a considerable amount of pork – almost entirely from the EU.
It would not be wrong to say that given this import reliance, a ‘hard’ Brexit or no-deal situation would likely see an immediate rise in the pig price and eventual retail price of pork, as a result of high tariffs on pigmeat products.
On the surface, this appears appealing for producers, however we need to consider a ‘no-deal’ cuts both ways.
The primary concern is that under a ‘no-deal’, the UK would not be able to export pigmeat to the EU. Around 65 per cent of pork exports still go to the EU, often made up of cuts which are not popular in the UK, ensuring carcase balance.
Aside exports of fresh pork and offal, one of the key export trades in pork from the UK to the EU is in cull sows.
Germany is generally the main market for cull sows, where they go to be processed into other products before being traded around the EU again.
Cull sows have very little value on the UK market (currently worth 68p/kg), and the prospect of a tariff of 45p/kg tariff under existing tariff schedules would render such exports unviable.
This loss of both these two export trades would have an inevitable impact on productivity and producer incomes.
Greater consideration has to be made over the politics of food price rises.
Given the extreme sensitivity of consumers and Government minsters to food price rises, it is entirely plausible that such increases in pork would see Government policy reverting to a total cheap food agenda – bringing with it a lowering of import standards that will allow product in from outside the EU as well.
Consideration would also have to be given to consumer behaviour in the event of price rises – will they continue to buy the products? Or would they transfer to other meat products such as lamb, which would likely see a significant price drop in the event of a no-deal?
Given the complexities of different trading models being bandied about, it is difficult to know where producers would stand in the UK, deal or no-deal.
There are a number of competing issues that equally have to be considered. One is the Irish border – both the Republic and Northern Ireland have a heavily integrated pig model that sees a free flow of live animals and processed product between the two.
In addition, the effect of sterling cannot be ignored, given how influential it is on producer incomes and the pig price.
Some traded experts have estimated that all of the gains made from lowering any tariffs on imports (to the consumer) could be wiped out by a loss in sterling’s value.
Finally, we have to remember what non-tariff barriers can do to add to cost.
While tariffs are fairly straightforward, it is much harder to quantify the added costs of paperwork, haulage, customs and VAT declarations where you are adding friction to trade.
Only time will tell what this will amount to.
Ed can be found tweeting at @edbarkerpig