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Producer Group sets out No Deal Brexit concerns

16th Jan 2019 / By Alistair Driver

The NPA Producer Group has highlighted the potentially severe implications of a Brexit ‘No Deal’ for the pig sector, including the likely loss of the lucrative German cull sow market.

May ChequersPrime Minister Theresa May suffered a massive defeat, by 230 votes, in the meaningful vote on her EU Withdrawal Agreement last night. The defeat was expected, although few predicted it would be on this scale, and it casts further uncertainty over the UK's immediate future. 

With Mrs May facing a No Confidence vote today, which she is expected to win, the options now include a General Election, further attempts by Mrs May to re-negotiate a deal that MPs might back, a delay to Article 50, a People's Vote or crashing out of the EU without a deal at the end of March. 

The Producer Group met in London on the day of the vote, just a short distance from where the drama was unfolding, and much of the discussion focused on the implications of a No Deal.

These could include a delay, potentially of six months, before we can export animals and animal products to the EU while the UK becomes accredited as a third country exporter and long delays at ports once exports do resume, with added bureaucracy and associated costs. There could be shortages and higher costs of inputs, such as veterinary medicines and potential labour shortages.

But producers’ biggest concern was that a No Deal will result in the imposition of debilitating tariffs on exports. This would seriously undermine the competiveness of UK pork exports, particularly cull sow meat, for which the industry is heavily reliant on the German market.

With tariffs of 45p on carcases, it is unclear to what extent, if any, we would still be able to send cull sow meat to Germany. The problem is compounded by the fact that there is little sign sales could be re-directed to the home market. It emerged during the discussion that there has been some discussion with processors, but there is no obvious plan B in place. AHDB has looked for export opportunities in other countries, such as Mexico, but the costs of exporting just don’t stack up.

NPA chairman Richard Lister said: “This is a significant concern for the pig industry. Tariffs could destroy the cull sow market overnight. The price of cull sows would crash to close to nothing, there could be a build-up of animals on farms, impacting on productivity and with few market outlets in the UK, there would be a bun fight for already limited storage capacity for carcases that are processed.

"Good open dialogue between processors and producers is therefore critical to manage supply and avoid some potentially very serious problems.”

Concerns over exports are compounded by indications from Government that it will waive, or reduce, tariffs on imports to keep a lid on food prices. This would expose the UK to competition from inferior imports, not just from the EU but from across the world as the tariffs cannot be limited to one trading bloc.

Further concerns over No Deal implications, including the availability of veterinary medicines and other inputs and any steps the industry could take to prepare, will be discussed at next week’s Allied Industry Group meeting.

Industry unites on No Deal damage

Also on the day of the vote, NPA senior policy advisor Ed Barker attended a meeting of the UK Farming Roundtable, which consists of organisations representing all UK agricultural sectors. Following the meeting, the group jointly issued a stark warning about the implications of a No Deal for farming. 

The Roundtable outlined several ‘major and immediate impacts’, including the effective export embargo, a lack of import tariffs and damaging export tariffs on the 60% of UK food, feed and drink, ranging from €172 to €1,494 per tonne in pork.

It highlighted trade barriers that could limit the availability of farm inputs such as veterinary medicines, fertilisers, plant protection products, machinery parts and animal feed and the sudden end of labour mobility from the EU.

NFU President Minette Batters said the Roundtable was concerned that ‘No Deal’ remains a real possibility in the absence of any clear majority for an alternative outcome.

She said: “The members of the Roundtable were clear in their view that a no-deal Brexit would be disastrous, not only for our farmers but for the public too, who rely on our ability to provide them with a sustainable, safe and affordable supply of high quality, British food."

In a statement yesterday, NPA chief executive Zoe Davies said a no deal could be catastrophic for the farming sector, putting ‘huge pressure on an industry where margins are already very tight, and in some cases currently, non-existent’.