With a higher percentage of exports going to non-EU countries than other farming sectors and established and developing markets outside the EU, could UK potato growers stand to gain from Brexit?
The potato sector is better placed than many other farming sectors to weather Brexit and make the most of future overseas trading opportunities, according to AHDB.
Speaking at the AHDB Potatoes Winter Forum, held at Harper Adams University, AHDB senior analyst, Sarah Baker, said she expected the UK to try to negotiate ‘some sort of preferential access to the single market’.
“The EU is a major trading partner and we need to be able to access these markets and them to be able to access ours. It is not in anyone’s interest to have huge tariff barriers.”
The potato sector already has some well-developed export markets outside the EU, she said. “Seed potatoes are a high value, important export; 60 per cent go to Egypt and Morocco and 13 per cent to other non-EU countries.”
Although the bulk of crisp exports went to EU countries in 2015, 13 per cent went to non-EU countries and demand is growing, said Ms Baker. “There is an expanding market for high value, designer crisps such as Tyrells and a growing market outside the EU, offering potential opportunities for the industry.”
After leaving the EU, the UK will also have opportunities to negotiate bilateral agreements with other countries which could mean new opportunities for agricultural products. Currently, negotiations between third countries and the EU are often complex because 27 member states need to agree. Agriculture is also often excluded due to the additional complexity of dealing with issues such as food security, non-tariff barriers - such as phytosanitary and sanitary standards (PSPs) - and technical aspects, explained Ms Baker.
“Setting them up on a bilateral basis offers an opportunity. Some countries have already indicated that they are keen.”
In the event that trade agreements with particular countries are not negotiated and WTO rules apply, tariffs that apply to the potato sector are lower than for some other farming sectors, said Ms Baker.
“The tariff for seed potatoes is 4.5 per cent which is not as dramatic as the meat and dairy industry which can be 50 per cent and beef is sometimes 90 per cent. For fresh and chilled potatoes, the tariff rate is 11.5 per cent and crisped potatoes, 14.1 per cent.
“I can see prices having to fall slightly if we are to trade at the WTO default but if we negotiate a trade agreement in the meantime it will be less severe. Potatoes are less vulnerable than many other sectors.”
There are also opportunities to capitalise on a surge in the middle class overseas, said Ms Baker. “Asia stands out. It has a huge, burgeoning middle class with an appetite for Western goods. You don’t need a trade agreement to trade with a country; you need export certificates, technical details, they come and inspect plants and agree PSPs.”
72 per cent of UK potato exports go to the EU
58 per cent of UK potato imports come from the EU
28 per cent of UK seed potato exports go to the EU
50 per cent of UK seed potato exports go to Egypt
87 per cent of UK crisp exports go to the EU
Source: AHDB Potatoes
The UK farming industry should expect a reduction in support payments after 2020, when CAP ceases to apply, said AHDB senior analyst, Sarah Baker.
“We need to prepare the industry for a reduction in level of support. If it disappeared overnight, 15 per cent of farms would be unable to survive and for crops, which includes potatoes, that figure rises to 19 per cent.”
Future payments could be based on policies requiring farmers to ‘provide the environment’ and insurance type policies, such as those operating in the USA, she said. “Insurance schemes are connected with volatility as well as support. They smooth out peaks and troughs. There is a disaster fund and when income falls below 75 per cent of the average income for the last five years, support kicks in.”