New border controls under a no-deal Brexit would hit supplies of feed, veterinary medicines, farm unions warn

The four farming unions sent a letter to MPs yesterday [January 10] urging them to take all the necessary steps to prevent such an outcome. They warn of catastrophic impacts for the UK’s food and farming sector in the event of a no-deal exit from the European Union.

MPs are currently debating the withdrawal agreement secured by the UK prime minister, Theresa May, ahead of the crucial vote in the House of Commons next Tuesday [January 15]. 

If a no-deal Brexit comes to pass, the farming unions outlined the likely consequences:

• The UK could face a trade embargo on shipments of animals and animal products, given the fact it would no longer be listed as an EU-approved exporter.
• The UK government would likely cut import tariffs on food from the EU and other third countries to curb food inflation.
• The UK could face tariffs of 27% on chicken, 46% on lamb and 65% on beef destined for EU markets.
• Supplies of livestock and fish feed, fertilizers, and crop protection products, veterinary medicine and vaccines as well as machinery parts could be disrupted due to new border controls, with the unions noting that many such farm inputs and supplies are distributed via closely integrated and fast moving European supply chains.
• UK organic produce would not be recognized by the EU until UK organic certifying bodies were approved, a process that could take up to nine months.

Their letter outlined how agriculture is the bedrock of the UK’s largest manufacturing industry - food and drink, and it is valued at £108bn (US$138.1bn).

“Volatile farm prices and interrupted supplies risk the jobs of the four million people employed in the supply chain. The agricultural implications of a ‘no deal’ go well beyond the farmgate and the rural economy.”​

The unions said that there are some people who believe that a ‘no deal’ would be the price worth paying to secure the UK’s departure from the EU in the shortest timeframe, and that the potential negative impact is being overplayed and could be overcome fairly easily.

“We categorically do not share such a view.”​

Concerns for entire EU agri-food chain 

Meanwhile, Copa Cogeca, the European farming representatives, also released a statement ahead of Tuesday's vote, saying the European agri-food chain wants to reiterate that a no-deal Brexit would be hugely damaging for both the UK and EU agri-food sector and must be avoided at all costs. 

In 2017, EU27 agri-food exports to the UK amounted to €41bn while the UK exports to the EU reached €17bn - this trade, and the businesses behind it employ 44 million people across the EU28, reflecting the degree of integration and complexity of the food supply chain, they noted.

"The exit of the UK from the EU without a deal will inevitably lead to significant trade disruption and a lose-lose situation for the entire agri-food chain."​

Second referendum 'likely'

However, analysts at Dutch bank, ABN Amro, in a note released today, reckon another Brexit referendum is now looking more likely.

Bill Diviney, senior economist, and colleague, Nick Kounis, head of financial markets research, ABN Amro, weighed in on recent UK political developments, with opposition Labour Party leader Jeremy Corbyn yesterday calling for a General Election to resolve the parliamentary impasse over Brexit.

“With Prime Minister May’s withdrawal deal unlikely to win the support of MPs in next Tuesday’s vote, and her ‘Plan B’ now required to be put to parliament by the end of next week, Mr Corbyn was seeking to get ahead of events in proposing to call a vote of no confidence in the government as soon as it is most likely to succeed. ​

“Labour’s preference, decided at its party conference last October, has been to seek an election first (on a manifesto pledge of negotiating Labour’s own deal with the EU), and failing that, ‘all options are on the table’ – including a second referendum. Corbyn today reiterated that stance.​

“It looks likely that the confidence vote will indeed fail. While May’s government has only a slim majority, there is little appetite in the Conservative Party (or DUP) for another election, and a confidence vote would require Conservative MPs voting to bring down their own government. Assuming May’s Plan B (whatever that might entail) is also unpalatable to parliament, and with a confidence vote also failing, the last major viable option for parliament would be another referendum, which is looking increasingly likely.”​