EU farm and food businesses may pay a big price for Brexit if new trade barriers pop up and dim the British appetite for products like Irish cheddar, French wine and Danish bacon, experts and advocates warn.
Sounding the alarm is the main European farmers’ union, COPA-COGECA, which released a preliminary 156-page report one month after Britain formally told Brussels in late March it will withdraw from the bloc.
“Farmers should not have to pay the price of a political decision,” COGECA President Thomas Magnusson warned, referring to the risk of post-Brexit trade barriers like tariffs.
Farmers in the remaining 27 European Union states could find it particularly hard to export to such an important market as Britain, a net importer, if London and Brussels fail to strike a post-Brexit free-trade deal.
Prices could increase sharply if Britain leaves the customs union under a “hard” Brexit, something British Prime Minister Theresa May has not ruled out if she does not get the new trade terms she wants.
British consumers would then likely buy fewer of the EU agriculture products they have become used to in the last four decades.
Standing to lose the most, the report’s authors warn, are producers of fruit, vegetables, beef, dairy products and wine – which account for a large chunk of the €45 billion in annual EU food and agriculture exports to the United Kingdom.
COPA-COGECA said it “strongly hoped” that the European Commission, the EU executive, will include in its 2019 and 2020 budgets “adequate crisis management tools” to aid farmers hit by any negative consequences.
With the rise of Britons consuming sophisticated specialty European products, Britain’s exit from the bloc could also hit hard cheese and wine producers who have been granted Protected Geographic Indications.
Shoe “on the other foot”
Agriculture ranks 17th in UK exports to the EU, far behind the automobile sector, while the UK is a net importer of EU agriculture products.
Alan Matthews, a professor at Trinity College in the Irish capital Dublin, said Britain’s trade position with the EU gives it “some bargaining power” entering the Brexit negotiations due to start after the June 8 British elections.
“But there are other areas where the shoe is on the other foot,” he said.
New trade barriers would also hurt the 11 billion pounds (€12.6bn) in annual UK agriculture exports to Europe, hitting mainstays like Scotch whisky and British lamb.
“It would be wrong to just look at one branch or one sector in isolation. The negotiations will not just be about agriculture, they will be about the overall economy,” Matthews said.
Five EU countries are particularly concerned with the agriculture track of negotiations: Germany, France, Spain, Belgium, the Netherlands and Ireland.
Ireland, for example, exports more than one third of all its agriculture and food products to the UK – some 37% last year.
In key sectors, it exports more than one half of its beef and more than one third of its dairy products across the Irish Sea.
Some products depend almost completely on access to the UK market, with Irish cheddar accounting for an 80% share and mushrooms 90%.
Market access, budget hole
In its Brexit impact report, the Irish government said a number of economic effects will only emerge after Britain’s departure.
However, its agriculture sector has already suffered from the lower value of the pound since Britons voted to quit the bloc in the June, 2016 referendum.
The value of Ireland’s food and beverage exports already plummeted by €570 million last year, the union said.
If the UK market becomes harder to access, Ireland could look for other outlets on continental Europe and elsewhere but additional supply there would drive down prices for fragile sectors like beef, Matthews said.
Another concern stems from the fact that Britain is a net contributor to the European budget.
A quick calculation based on Britain’s contribution and the share of the budget set aside for the Common Agriculture Policy would leave a hole of about three billion euros.
“We all know how difficult it is to persuade countries to pay more into the EU budget. That clearly is something which we don’t know what the outcome will be,” Matthews said.