EU buyers not committing to UK meat orders over fears of no-deal Brexit tariffs
A sense of panic is now gripping the UK meat industry as exporters see our Government frighten continental buyers with uncompromising threats of a no-deal Brexit.
The message that the UK is serious about leaving with no deal may not have convinced European politicians yet, but it has convinced continental retail buyers who are refusing to agree long term supply contracts with UK meat exporters.
If this continues, we could be witnessing the start of a structural and long-term decline in our nation’s farming capacity and heritage. Sounds dramatic? Well, it will be.
Reduced orders from our biggest and closest trading partner (which are not easily and quickly replicated elsewhere) will filter all the way back to UK farmers who will bear the brunt of this loss of trade. It will put many out of business and, once they’re gone, it won’t be easy to re-establish those farm businesses.
Turning their back on the UK
European buyers considering buying British meat are now being confronted with multiple risks which they’re not prepared to take.
Chief among them is the possibility that they may well be saddled with tariffs as high as 65% on certain imports that are due for delivery after 31 October. Committing to any orders or supply contracts that extend after the Brexit date therefore makes no sense whatsoever to our customers in Europe and, indeed, in the rest of the world.
Reduced orders from our biggest and closest trading partner will filter all the way back to UK farmers who will bear the brunt of this loss of trade.
Insurers that cover these consignments and facilitate the movement of goods between countries are refusing to indemnify against losses related to a no-deal Brexit. Couple that with a volatile exchange rate, mooted border delays and complete uncertainty surrounding whether Brexit will even happen on 31 October means the obvious solution for EU buyers is to source product from elsewhere.
This means that, come 31 October, British meat companies, who are now being forced to export day to day at ‘spot prices’, could have the rug pulled from under them and see orders simply cease with no long-term supply contracts to soften the blow.
Will America save us?
Don’t count on it. Nancy Pelosi, Speaker of the US House of Representatives, along with various influential pro-Irish committees in Congress have made it abundantly clear that they will block any trade deal if Brexit harms the Good Friday Accord. In such a scenario, a UK/US trade deal would, in Mrs Pelosi’s words, have ‘no chance whatsoever’.
Reports from the CBI, the Institute for Government and evidence from George Hollingbery MP to the Commons International Trade Committee all point to a national lack of preparedness for Brexit.
While some contingency planning has been happening, there is a limit to what canbe done and how much can be spent planning for no-deal. Cold stores up and down the country are already full in anticipation of Christmas (an added complication that wasn’t a factor back in March).
In reality, many of the problems that a no-deal exit will cause can neither be prepared for nor mitigated. This is the ‘instantaneous shock to the economy’ on 1 November that Mark Carney described in a recent interview. Meat processors must risk committing to buying stock that they may not be able to sell and then take it on the chin if their export market collapses.