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Looking to the future: What a no-deal Brexit means for UK farming

Although MPs from all parties are working to avoid a no-deal Brexit, leaving the EU on March 29, 2019, is still the legal default for the UK – with or without a deal.

 

Abi Kay explores what Brexit without a withdrawal deal would mean for agriculture...


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Looking to the future: What a no-deal Brexit means for UK farming

TARIFFS

 

IF the UK leaves the EU without a withdrawal agreement, it will fall back on to World Trade Organisation (WTO) rules.

 

This means the EU will apply its common external tariffs to UK exports and the UK will apply the same tariffs to EU imports.

 

  • Butter tariff: €1,896/tonne (£1,672/t)
  • Cheddar tariff: €1,671/t (£1,473/t)
  • Beef tariff: 12.8 per cent, plus a fixed amount ranging from €1,414-€3,041/t (£1,247-£2,681/t). This tariff adds 50 per cent or more to the value of imports
  • Sheepmeat: 12.8 per cent, plus a fixed amount ranging from €902-€3,118/t (£795-£2749/t). This tariff adds 50 per cent or more to the value of imports
  • Cereals: Grains and oilseeds are relatively free-trading commodities, but tariffs could have an impact on businesses processing them

 

In order to keep food prices low in a no-deal Brexit, the UK Government may decide to unilaterally drop all food tariffs, but it could not do this just for the EU.

 

WTO rules dictate tariffs would have to be zero for all other 163 members should Ministers choose to do this, which would make imports from across the world competitive on the UK market.

 

Source: AHDB

 

 

EXPORT LISTING

 

ALL UK exports of animals and animal-based products would effectively be stopped from entering the EU temporarily in a no-deal Brexit scenario, while the UK is ‘listed’ as an approved country for export.

 

According to the NFU, this process, which cannot be started until after Brexit, could take a minimum of six months.


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SHEEP

 

  • With 35 per cent of UK sheepmeat exported, and 95 per cent of this going to the EU, waiting to be ‘listed’ for export approval would cause significant problems for the sector
  • After listing, access to the EU market would be regained, but quite possibly with tariffs of about 45 per cent of the product value
  • If the Government decided to drop tariffs, modelling has shown domestic prices would drop as imports enter the UK market
  • The meat processing industry would be unlikely to be able to hire enough workers without access to EU labour

 

Source: Phil Stocker, National Sheep Association

 

 

DAIRY

 

  • Waiting to be ‘listed’ for export approval would cause big problems for the dairy sector, as the EU accounted for 92.7 per cent of UK dairy exports in 2017
  • The cheese industry would lose access to Irish processing capacity, increasing the potential for liquid milk to enter the English and Welsh market from Northern Ireland, with clear implications for price from oversupply
  • After the UK received approval to export to the EU, all dairy products would be subjected to new sanitary and Rules of Origin checks, creating delays at the border and adding costs into the supply chain
  • New tariffs would be applied to dairy products, with UK cheese producers facing additional costs equivalent to 14ppl
  • Customs procedures would require UK businesses to hire customs brokers, freight forwarders or logistics providers
  • Protection for UK Geographic Indicators is not guaranteed in the event of a no-deal scenario. Products may need to be registered with the UK scheme before they can apply to the EU scheme, which would cause delays and costs

 

Source: NFU Dairy Board

BEEF

 

  • Increased tariff barriers, customs checks, veterinary requirements and transport costs would make it hard for imported beef to compete with UK beef. Some research suggests EU exports to the UK could fall more than 80 per cent, providing an opportunity for import substitution and increased UK processing capacity over the long-term
  • With tariffs in place, prices for cattle and beef are likely to rise sharply, but this could mean consumption drops. Processors are already increasing supplies of frozen product to deal with price increases
  • If the UK drops all tariffs or negotiates quotas there could be a sizeable rise in imports from lower cost producers, such as Australia and the US
  • Markets for offal would decrease until new agreements with Asian and African markets could be developed

 

Source: Chris Mallon, National Beef Association

VETS

 

  • Overseas-graduated vets make up about 30 per cent of the veterinary workforce, so there is concern about labour shortages in the event of a no-deal Brexit
  • It is estimated the need for veterinary certification for British food exports could increase by 325 per cent, putting additional pressure on an already overstretched profession
  • The UK will lose access to the EU-wide Animal Disease Notification System, but Defra’s chief vet has insisted this will not increase risk as officials would still be able to use World Organisation for Animal Health systems

 

Source: British Veterinary Association and Environment, Food and Rural Affairs Committee evidence

 

 

ANIMAL MEDICINES

 

  • In October 2018, potential supply issues had been identified for 14 veterinary medicines, but AnimalhealthEurope, an association which represents manufacturers of animal medicines, was confident most of the issues could be resolved before March 29, 2019
  • One big potential hurdle is multi-lingual packaging on medicines, which allows manufacturers to supply smaller markets alongside more commercially viable larger ones
  • This could cause problems for Ireland, where 73 per cent of veterinary medicines are dual-labelled for the UK, but work is ongoing to deal with the problem
  • The National Office for Animal Health is now calling for veterinary medicines to be given customs priority alongside human medicines to reduce any potential disruption to supply in the event of a no-deal Brexit

 

Source: AnimalhealthEurope and National Office for Animal Health

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ORGANIC

 

  • For the UK to export to the EU, the bloc would need to recognise the organic status of products certified in the UK – a process which could take nine months
  • The Soil Association has said even a fraction of this time without EU trade would be ‘devastating’ for many organic businesses

 

Source: Soil Association

 

 

BIOFUELS

 

Farmers growing combinable crops and sugar beet will have continued access to the European biofuels market until December 2022, even in the event of a no-deal Brexit

 

Source: Red Tractor

 

 

CROP PROTECTION

 

  • There would be potential for UK farmers to have earlier access to new active substances and innovative technologies, but the consequences for trade in commodities grown using such chemicals or techniques are not yet clear
  • There would also be a possibility for the UK to become a ‘global leader’ in crop protection research and development, but to realise this opportunity, the Government would need to adopt a science-based approach to policy-making

 

Source: Crop Protection Association

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POULTRY

 

  • Nearly 60 per cent of British poultry meat workers are EU nationals, so the sector is preparing for a ‘crisis scenario’, where non-UK labour falls by half in a no-deal Brexit
  • A loss of workers on this scale would increase production cost
  • Poultry meat would face export tariffs which would increase the price of chicken by 27 per cent

 

Source: British Poultry Council

 

 

CEREALS

 

  • Leaving the EU without a deal would result in tariffs on UK grain exports, which are important in keeping the UK market balanced
  • The UK would have to compete with other ‘third countries’ for EU import quotas, which allow access at tariff levels of €12/tonne (£10/t) for wheat and €16/t (£14/t) for barley
  • Out of quota, the tariffs would jump to €95/t (£83/t) for wheat and €93/t (£81/t) for barley, making trade unviable

 

Source: Tom Bradshaw, NFU crop board chairman

 

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