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Brexit Brexit - Need to know

What are the implications of no-deal for the farming and agriculture industry and what can businesses do to prepare?

24 Oct 2019

Tractor in a field

Export tariffs

Export tariffs look set to rise because in a 'no deal' scenario, UK goods to the EU would face the same tariffs as goods entering the EU from third countries without an agreed tariff. EU tariffs are set out in the EU’s Common Customs Tariff (CCT) and are particularly high on the majority of meat products – 27% on chicken, 46% on lamb, and 65% on beef.

Although there is potential for the UK to open up to international markets, most trade agreements take about seven to ten years to materialise, even when counties are committed to making them happen. There are unlikely to be quick deals or solutions here, and it could be a long time before new arrangements are put in place for the UK farming community. All the trade agreements currently in place are continuity trade arrangements, rather than new arrangements, for example the UK’s trade agreement with the Faroe Islands.

Import tariffs

The 'no deal' applied tariff policy announcement from the UK Government on imports means that meat products could be imported on zero tariffs. This could affect the UK’s competitiveness within the market and lead to a greater reliance on food produced overseas.

European supply chains

Supplies that stand to be disrupted within the European supply chain include fertilisers, plant protection products, machinery parts, animal feed, as well as animal vaccines and medicines. For example, the UK imports over 90% of its animal vaccines and medicines and it has been estimated the industry could face shortages, especially on vaccines and biological products. Although the government has reassured the industry there are enough supplies for several weeks, the ability to access these and under what circumstances still isn’t clear.

How the farming community can prepare for the impact of no-deal:

  • Prepare a contingency checklist for essential supplies

    Although government has assured there will be supplies to cover the first few weeks of the UK’s exit from the EU, ensure you have a contingency plan in place for the essential supplies and requirements that your particular business depends on – whether that be fodder or vaccines for animals.

  • Review your business costs and financial decision making

    As the industry enters a period of great uncertainty it’s difficult to predict the long-term impact of the immediate loss of the EU market, which will vary from sector to sector within the industry. There has never been a greater need for a detailed analysis of your business costs. Any financial decision needs to be based on fact, data, information and advice from unions and industry bodies.

  • Apply for loans to mitigate the potential loss of financial support

    Currently, the agricultural sector receives financial support from the EU’s Common Agricultural Policy (CAP).

    There is government assurance that EU funding for rural payment schemes including the Basic Payment Scheme will continue, whether the UK leaves the EU with or without a deal.  Details are outlined in the UK government’s funding guarantee.

    Defra is preparing legislation to ensure the UK has the ability in law to continue operation of payments in a ‘no-deal’ scenario. However, some unions are advising businesses to apply for loans, in the event that there are delays to annual single payments in December – for example, The Farmers’ Union of Wales are encouraging businesses to contact Rural Payments Wales in case they need support.

  • Ensure you’ve the right documentation for the export of animals and animal products

In the event of no-deal, businesses will need to apply for an export health certificate and ensure that their EU-based import agent has informed the Border Inspection Post (BIP) in the specific country they’re exporting to. Check that your goods can be inspected and how much notice is needed.

Sources and further reading:

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