The Spanish agri-food sector is extremely concerned about the negative impact of a no-deal Brexit. In an effort to mitigate the financial impact, the sector is already taking measures to curb the “Brexit effect”. EURACTIV’s partner EFE AGRO reports.
Alternative maritime or air routes to transport agri-products to the UK are being analysed by some Spanish companies, and new markets are sought to compensate and alleviate a drop in sales. In addition, the transport and shipment of non-perishable food is considered prior to Brexit.
According to the latest official data from the Spanish ministry of agriculture, fisheries and food (2017), the UK was the fifth destination of Spanish agri-food exports, with €3.9 million of sales (almost 11% of the total).
The most vulnerable Spanish agri-sector to Brexit is horticulture- the third most relevant export market in the UK, with €1.8 million in revenues.
A good example is Finca Las Lomas, an agricultural and livestock farm located in the Cadiz municipality of Vejer de la Frontera (Andalusia), which transports to the UK between 15 and 20 million kilos a year.
A company’s spokesman told EFE AGRO they worked with the main distribution chains, including Tesco, Sainsbury, Asda or Mark’s & Spencer, and the sales range from broccoli and cauliflower to leek, cabbages, carrots, citrus and sweet potatoes.
“We have had our own company in the UK since the 1980s to optimise this relationship”, the spokesman said.
Before the date for Brexit was officially announced, the company had already increased the volume of exports to Germany, Finland, France and Denmark, while simultaneously stepped up its efforts to penetrate the Asian and Canadian markets.
In addition, they have held meetings with the Spanish port authorities to study alternative transport routes and to know what kind of administrative procedures will have to go through.
“In case of Brexit, we do expect some impact on the sector, probably due to new tariffs,” the spokesperson said. “We produce formats and varieties adapted to customers’ demands. The UK (consumers) will continue to demand quality products,” he added.
José Miguel Flavian, a London-based consultant for Spanish food companies, said the British government had already informed importers that as soon as they activate a no-deal Brexit, there would be a period of time in which they will be able to continue exporting products as they do now. He also said new bureaucratic requirements could be solved at a later stage.
In his view, the approach to Brexit differs. There are those dedicated to perishable products as well as producers who focus on non-perishable products, which can be packed for future consumption.
Large supermarket chains and manufacturers ask to advance shipments to store surplus, to avoid a hypothetical blockade at borders.
The Catalan meat company Noel is a good example of this. In case of a no-deal Brexit, the company is already recommending its customers “to increase their safety inventory to guarantee that delays in deliveries do not affect the supply”.
Noel’s executive board members told EFE AGRO a pact between London and Brussels similar to the one already governing the commercial relationship UK-Canada and UK-Norway was still possible.
However, they acknowledge that in the case of no-deal Brexit, they will have to analyse the possibility of “adjusting prices”.
The British market is also important for Spanish meat and sausage producers (€191 million in sales) and for alcoholic beverages producers, including wine and beer, with exports worth €414 million, and for olive oil producers, with €196 million.
Spanish wine brands such as Ramón Bilbao are already preparing for the Brexit shock: they foresee a price increase regardless of whether new tariffs will be imposed or not, due to the expected depreciation of the pound against the euro.
Despite the uncertainties, the company has reinforced its investment in the UK and has two people working full time in London, because it is a market interested in Spanish red wine.
What would be the biggest risks for agri-food companies? For José María Ferrer, an agri-food law expert from the Ainia technological centre, the possibility that the UK could change the legal framework that applies to these products poses a clear threat.
New controls and requirements for food coming from external markets, not recognising protected designations of origin (PDO) or changes in labelling are some of the measures the sector fears the most.
[Edited by Zoran Radosavljevic]