A new study by the Agriculture and Horticulture Development Board (AHDB) has investigated several Brexit scenarios and their impacts on the UK’s milling and malting sectors. The AHDB report found the outlook for the malting industry much more positive than for the milling sector, as almost all UK malt is currently exported to non-EU countries and UK malt is almost entirely made from UK-grown barley. Still, “there could be some tough decisions to be made by UK millers and maltsters in the near future depending on how Brexit pans out,” says Dr. Martin Grantley-Smith, strategy director for cereals and oilseeds at AHDB. “Up to now, our trading agreements with the EU have been on critical importance and this report clearly shows, whatever the outcome of Brexit, business-as-usual is not going to be an option.”
The AHDB, “a statutory levy board [in the UK], funded by farmers, growers and others in the supply chain to help the industry succeed in a rapidly changing world”, estimates that “malting barley prices are unlikely to experience considerable changes in the FTA scenario but could fall by 7–8 per cent under the Unilateral scenario, due to the higher-value EU export market being lost.”
Concerning the malting industry, “UK malt is arguably in the best position to weather the impact of the various scenarios. Under the mutual application of tariffs scenario, imports from the EU would cease, due to the prohibitive €152/t tariff. This would cause supply issues for processors. More English malt could also be sold into the Scottish market as there would be less competition from EU imports, if tariffs apply. The lack of competition could even result in Scottish maltsters purchasing English malt at a higher price.”
As the study concludes, “flour and malt provide interesting and contrasting examples of the impact of Brexit in the agricultural industry. UK flour is generally considered of average quality and traded almost entirely within the EU-28, while malt is a premium product traded mainly in non-EU export markets, such as Japan and the USA. UK flour is reliant on blending UK-produced wheat, with imported grains from the EU and particularly North America, while UK malt is made almost entirely from UK-grown barley. The use of imported wheat in flour means that trade, in particular flours and flour products, may be damaged by Rules of Origin (RoO) even if a Free Trade Agreement (FTA) is concluded. In contrast, barley-based products, such as malt, are unlikely to be affected by RoO.”
The whole study can be downloaded from the AHDB-website.