ao link
Farmers Guardian
Over The Farm Gate

Over The Farm Gate

This Is Agriculture - Sponsored

This Is Agriculture - Sponsored



Auction Finder

Auction Finder

LAMMA 2021

LAMMA 2021

How will Brexit affect your business? We ask the experts

The UK must now work harder than ever to promote British produce overseas following the vote to leave the European Union.


While outgoing Prime Minister David Cameron promised to ’steady the ship’ as the UK gradually broke away from the union and Bank of England governor Mark Carney moved to reassure businesses overseas trade would not be disrupted, the agricultural sector has said its leaders must quickly rise to the challenge and fight for market access.


Triumphant Leave campaigner Boris Johnson sought to allay fears the UK would be cut off from the EU’s access to 500 million consumers, highlighting Britain’s power as a large player Europe. He also said there should be ’no haste’ in leaving the union.


However, his speech came at the same time a joint statement from EU chiefs urged the UK to cut ties with the union as soon as possible.


European Council President Donald Tusk, European Parliament President Martin Schultz, EU Council President Mark Rutte, and EU President Jean-Claude Juncker said: "In a free and democratic process, the British people have expressed their wish to leave the European Union. We regret this decision but respect it.


"We now expect the United Kingdom government to give effect to this decision of the British people as soon as possible, however painful that process may be. Any delay would unnecessarily prolong uncertainty."


Industry experts have been analysing the morning’s events.


Charles Baughan, managing director of Devon based Westaway Sausages which exports its products around the world, said: "If we look at the price of pork into Hong Kong, our customers are paying 10 per cent less today.


"We have to capitalise on these advantages. We have to really fight for market access into these places. We need to have the right people in the right places with the right skills to get the access for the fantastic products we produce in this country and sell to the world market."


Read more - Brexit Briefing: What are the UK’s trading options?

Impact on trading agreements - Sian Edmunds, partner at Burges Salmon

It is probable that the UK will now have to renegotiate terms of trade agreements previously concluded by the EU.


To what extent and on what terms non-EU countries will be willing to establish trade agreements direct with the UK remains to be seen.


Existing tariffs imposed on goods coming into the UK from outside the EU would be significantly reduced if default World Trade Organisation rules were applied without the UK adopting its own tariff regime.


This could result in cheaper imports undercutting UK food producers but might also be beneficial to manufacturing and food service businesses further along the food supply chain.


The UK will certainly have to negotiate new trading terms with the European Single Market and the level of tariffs to be levied on goods imported into the EU from the UK will be significant for many in the food and drink sector.


The EU currently levies tariffs on many food products coming into the single market, so this could have a negative effect on the sector unless the UK is able to negotiate beneficial terms.

Mr Baughan said while prospects remained good for his business, which has successfully exported around the world for several years, he said he was ’seriously concerned’ the UK may not have the ability and the bargaining power to boost total exports.


"We are not very good at shouting about our high quality, high welfare, sustainable produce," he added.


"We need to get better at selling that. There is a differentiation between us at the EU and my concern is that we are not going to make enough of it."


Migrant labour


Mr Baughan highlighted the decision could have a major impact on migrant labour, potentially making some businesses, particularly in the horticulture sector, less competitive.


"About 35 per cent of our staff come from the EU and have traditionally earned money to send back to their families. Today they are sending 10 per cent less home. That will impact on how keen those employees are to remain here.


"This is something that will be felt across the UK agricultural community."




Jeremy Moody, secretary and adviser to the Central Association of Agricultural Valuers, agreed it was up to British businesses and advisers to 'seize the opportunity to shape the future'.


Trade agreements were clearly going to be important and it was to early to tell which model the UK would adopt, warned Mr Moody.


“Our share of trade with the EU is slowly declining – it’s at 45 per cent now and on a 15-year forecast it’s at 30 per cent. But farmers are distinctively exporters to the EU and agricultural products face high import tariffs. That is an immediate issue to face up to.”


The sharp drop in the value of the pound would help UK exporters and buoy agricultural commodity prices in the short-term, he added. “But we are heavily dependent on migrant workers.


"It is very easy to make the case for highly skilled workers but we need people on the farms, and they would fail a visa test, so we need to look very closely at that.”




The business community has reacted fairy positively to the impact of the vote on exports short term, but many were in agreement that more volatility would ensue.


Benjamin Bodart of CRM AGriCommodities said: "The consequences of such an important vote are still unknown but short term we could see a rise in commodities exports as a weak sterling makes UK wheat more competitive when traded in dollars or euros.


"However, our fundamental view has not changed overnight. The world is awash with wheat with record yields reported in Russia and the US, more feed wheat in Europe and Ukraine and improving conditions in Canada and Australia.


"We anticipate an increase in volatility but bearish fundamentals are still present and undeniable. When the currency markets settle down and supply is known we can focus on demand and continue our sales when opportunities present themselves."


Weak pound


Charlie Mack, arable farmer and qualified accountant added: "The pound is weakened. It’s going to be and everyone is going to be panicked.


“But, there’s no reason why the pound can’t do what the Swiss Franc did when they left the Euro. That fell and then recovered, there’s no reason why that can’t happen.”


Mr Mack added that leaving the EU brought new opportunities, for example, with GM crops.


“We’ve had a farcical situation. Romania was growing them before they joined the EU and now they’re no longer allowed so we have a situation where they are importing them from Brazil," said Mr Mack.


“Places like North America and South America can grow them. We can now compete with them.”


Adrian Cannon, rural partner at consultancy firm Tayler and Fletcher and chairman of the British Institute of Agricultural consultants, said he had ’grave concerns’ over financial instability.


"The key now the decision has been made will be how the Government will act in the best interests of the nation to take us through this uncertain period, but I think it is predictable that will now enter a period of economic instability," said Mr Cannon.


"There can be no doubt this will indeed be extra pressure on the rural sector."


Welsh exports


A period of uncertainty for red meat exports from Wales following the EU referendum vote is being forecast by Hybu Cig Cymru, the Wales-based red meat promotional agency --but it has pledged to leave no stone unturned in securing its European markets.


“Hybu Cig Cymru’s focus remains on securing the best deal for levy-payers and a sustainable future for the Welsh red meat industry,” said chairman, Dai Davies.


“While the result will undoubtedly lead to a period of uncertainty, HCC has an important role to play in mitigating any instability and ensuring the maintenance of current trade.


“Our essential task in the long-term is securing the best trading deals for Wales – maintaining our existing export markets in Europe and continuing our work in developing new trading relationships further afield.


“HCC will play an active role in finding solutions to the key issues which are in the best interests of the red meat industry," said Mr Davies, adding these solutions included the terms of access to the European single market, the future of participation in existing CAP and RDP programmes, and the future of PGI certification.


Post a Comment
To see comments and join in the conversation please log in.

Most Recent