The anticipated higher cost of exporting fresh produce to a post-Brexit UK will not necessarily help UK growers, given the pricing behaviour of large UK retailers, it has been claimed.
According to Rabobank senior farming analyst Harry Smit: "The potential impact of Brexit on food and agriculture companies in and outside the UK is huge. The UK is only 60% self-sufficient in food and is therefore a major net importer of such products." The bank's figures show that Dutch exports of the main food and farming commodities to the UK are worth £5.8bn, of which nearly one-third (£1.85bn) is made up of fruit, vegetables and flowers.
"Although we still do not know what the British trade agreements will look like after Brexit, the cost of exports will undoubtedly increase," says Smit. "Administrative checks at the border alone may lead to an extra charge of 5-to-8%, partly because food and agricultural products are subject to veterinary and phytosanitary controls. Dutch exporters might face increased competition from third countries in British markets."
According to Rabobank's analysis, exporters are facing a variety of possible trade barriers - tariffs on specific products, border controls and customs procedures. "The UK will try to retain wide-ranging access to the single market, but we believe it is unlikely that the EU will consent to this," it concluded.
For British growers this sounds, on the face of it, positive. But according to the head of the NFU's horticulture and potatoes board Ali Capper, inflationary pressures from the post-referendum weakening of the pound already affect imports. This has so far been "hidden" from consumers due to the intense price competition between major retailers "but that's not sustainable", she says. This was evident during the recent shortage of imported Spanish salads, which she says "caused a retail price spike in Europe, but not among mainstream retailers here", adding: "I would hope retailers would want to protect against continuing volatility by supporting British growers."
The underlying problem is that the price of food in British supermarkets "doesn't reflect supply and demand", she explains. "Food is cheaper than ever. We need to focus on the cost of production compared to the price paid by the consumer. The NFU board was uncomfortable with some of the low prices we saw over Christmas and could see again over Easter. While there's no evidence that these low prices are paid for by growers, it's not good for the consumer's understanding of the true price of food, which should be reflected in the retail price."
Conversely, retailers will take advantage of temporary gluts such as recently seen in the supply of some early-season crops due to the unusually fine early spring weather, leading to prices as low as 25p a head for cauliflowers. "It's better food is sold rather than wasted in the field." Capper says. "But if it's down to poor planning I am less happy. Retailers need to be more responsive to what the weather throws at us."
But overall the post-Brexit scenario for British produce growers "is complex, due to the relation between trade, tariffs and labour, which are all inter-related, and there are several very different views on this will go", she says.
"We don't know what the tariff regime with the rest of the world will throw up. Will there be an immediate switch in March 2019 or will there be, as the Government has suggested, a twoor three-year transitional phase beyond that? It would be helpful to know."
On the seasonal labour issue, the Government "has chosen not to implement a trial seasonal labour scheme this year", says Capper. "There is due to be an immigration bill this summer and we would like some clarity on that, so we can understand both what the status will be of EU nationals already working here and what's on the Government's mind for non-UK EU nationals coming here. As with so much of this, it's a waiting game."
On the current season, she adds: "We are not yet into the peak time for seasonal labour so it's too soon to say if there will be a gap. But anecdotally there is concern among those whose season has already started. Return rates so far and the numbers committed to coming are lower. They appear to be taking jobs elsewhere in the EU."
Opportunity - Call for greater investment in agricultural science after Brexit
British agricultural research "has an opportunity to become more effective at delivering what is needed" after Brexit - so concluded a workshop of around 20 UK research, technology and knowledge transfer organisations convened by Rothamsted Research and the NFU last month.
A statement from the event said a proportion of the money the UK Government will save by not contributing to the EU "should be invested in UK agricultural science in order to make farming highly competitive in the new market environment".
Such support must "facilitate and encourage greater collaboration and accelerate leaner science with more concrete outputs by being more strategic, simpler, less bureaucratic and more joined-up and accessible", it added.
It called for an agreed calculation of how much the UK should be spending on agricultural research "relative to our competitors and to meet our productivity, efficiency and environmental goals" as well as for continued access to EU and international funding streams.