EU farmers’ and agri-cooperatives organisations, Copa and Cogeca, published a “preliminary report” on Friday 28 April on the withdrawal of the United Kingdom from the EU, which will have an impact principally on the fruit and vegetables, beef, dairy and wine sectors.
Between 70-99% of all UK agricultural imports originate from the EU. Thus, the forthcoming Brexit negotiations threaten a loss of markets, the report says. Agricultural trade between the UK and the EU 27 largely focuses on five countries (Ireland, Germany, France, Spain, Belgium and the hub country of the Netherlands). Copa and Cogeca note that euro-sterling exchange rate has already had a significant effect on the prices of basic products and this will be a further volatility factor for European agricultural markets as a whole.
The cereals, vegetable oils (with the exception of olive oil) and eggs sectors are unlikely to be severely affected by Brexit. In terms of EU to UK export turnover, and is the fruit and vegetables, beef, dairy and wine sectors that could be most affected by Brexit.
Crisis management tools. Given the uncertainty over negotiations on a common customs tariff to be applied by the United Kingdom, Copa and Cogeca call on the Commission to draft 2019 and 2020 budgets with the option of putting in place appropriate crisis management tools: private storage (cheese, butter, pork) and operational funds for fruit and vegetables.
New markets. A dynamic export policy seeking new markets is needed for the pork, beef and fruit and vegetables sectors.
The possible opening of new dairy markets (Japan and the Mercosur countries) will not be enough to compensate for or limit market volatility, say Copa and Cogeca. The report also highlights the negative effect Brexit will have on the development of the European organic farming sector.
They state that the retail distribution policy in the UK could aggravate market turbulence, particularly in the meat and fruit and vegetables sectors, were national preference to be applied.
With regard to tariffs, an in-depth evaluation is required of the effects on European agricultural markets of import deferrals related to the rule on the use of tariff quotas and the generalised system of preferences applied by the EU for sugar, butter, beef and rice.
Discussions on geographical indications will be of major significance for wine and cheeses (the UK is one of the main consumer markets). Brexit could also offer opportunities on European agricultural markets as some products (wines, dairy products, and agri-food products) are sometimes re-exported from the EU back to the EU.
At the outset of the process, non-tariff issues are unlikely to present a major problem with regard to the UK’s leaving the EU in that European and UK legislations are very similar. However, in the medium term, production standards and mutual recognition of health rules will be key issues in future trade relations between the EU 27 and the UK. A future free-trade agreement between the EU 27 and the United Kingdom will have to deal appropriately with this issue, says the Copa-Cogeca report.
Copa President Martin Merrild noted that the UK is a net importer of agri-food products, worth €57 billion. Ireland, for example, exports 37% of its agri-food exports to the UK worth €4.13 billion “which have dipped by €570 already in 2016 due to the weak pound”, he warned. Agricultural trade is also important for the UK as 60% of UK agri-food exports (beef, lamb, poultry, dairy, cereals), worth £11 billion to the UK economy, go to the EU. (Original version in French by Lionel Changeur)