The wheels of Brexit turn slowly

At the time of going to print, members of the UK parliament were locked in debate about whether or not to approve Prime Minister Theresa May’s draft Brexit deal, approved by the European Parliament.

A Rabobank report on the impact of this draft deal on European food and agribusiness, described it as a ‘soft Brexit’, or an orderly, managed and gradual exit of the UK from the EU, while minimising economic damage on both sides. “Under this deal, trade will continue unchanged during the transition period of almost two years, with a possible extension for another two years.”

In the long term, specific risk areas for trade in agricultural products between the UK and the EU would be veterinary, phytosanitary and food safety standards, as these could deviate between the UK and the EU. This would be detrimental for trade because exporters would have to provide guarantees that the products met the different standards of the destination country, according to the report.

Agricultural products that could be deemed sensitive from an EU point of view were sugar, beef, pork, poultry, and dairy. Sensitive products for the UK included sheep, beef and whisky, for which the UK needed access to the EU market to prevent significant price declines on the domestic market, the report said.

Overall, fresh produce would face higher costs and longer waiting periods at the border, although this would greatly depend on specific arrangements developed over time for customs controls.

European exporters of commodities such as meat, dairy products, grains and sugar would also potentially face increasing competition in the UK market. In addition, the processed consumer foods and beverages sectors could face the relocation of supply chains, with separate UK and EU supply chains. Direct payments to farmers under the Common Agricultural Policy would continue during the transition period, but the UK government’s plans after Brexit involved changing these payments from flat rate hectare premiums to compensation for services such as environmental land management, protecting habitats, contributing to flood management, and improving air and water quality.