With only 8 more weeks to go, a possible no-deal Brexit, often referred to as a Hard Brexit, is putting pressure on UK farmers. Most of them are rushing to finish their harvest and trying to ship the surpluses abroad. Despite a very wet summer in the north of England and Scotland, experts expect a wheat surplus of 2 million tons, and 0.5 million tons of barley.
Farmers are very much worried about the politics of new Prime Minister Boris Johnson who took office in July. Johnson, a leader of the campaign to leave the EU during the 2016 Brexit referendum said he wants to take Britain out of the EU on Oct 31, with or without a deal. He said he has no intention of seeking an extension and would rather "die in a ditch" than delay Brexit.
A no-deal departure on October 31 would drastically curtail access to EU markets, with only a limited amount allowed in at a reduced tariff of EUR 16 a tonne. A report commissioned by supporters of a second referendum and remain (in the EU) activists, found out that in the event of a no-deal Brexit the EU and all the countries with whom it has free-trade agreements would immediately apply tariffs and non-tariff barriers on food imports from the UK while UK tariffs on imports would disappear. This could cause more than half of UK farms to go out of business.
“The Brexit deadline is having a severe impact with short-term pressure to execute exports before the deadline,” says Thomas Bradshaw, managing partner in a family farm in Essex and Crops Board Chair of the National Farmers’ Union. “This is meaning barley and wheat values have come under pressure and export business beyond the end of October seems incredibly difficult to execute,” the manager was quoted by The Guardian.
With access to EU markets restricted after the Brexit deadline, there are not many markets left for exporting agricultural products out of the UK. One of the markets could be North Africa. However, “not only is freight more expensive but purchasers often demand moisture content below 14% where our UK specification is 15%, and with a catchy harvest this could prove very difficult,” Bradshaw explains.
Half a year ago, the Agriculture and Horticulture Development Board (AHDB), a UK statutory levy board, funded by farmers, growers and others in the supply chain, already tried to assess the effects of a hard Brexit with no clear results. While exiting the EU with no further agreement will seriously impede the barley and malt trade between both sides, “the UK grain and oilseed rape market would be open to all global exporters after previously seeing protection from the EU’s tariffs and TRQ trade barriers.” (inside.beer, 18.3.2019)
Equally difficult to judge is the effect of a hard Brexit on beer prices. Malt prices are likely to change only slightly since nearly all of the barley and malt needed to brew beer in the UK is produced domestically. However, side effects like the fall in the value of sterling since the Brexit referendum, which hit its lowest level in 28 months at the end of July, will have a much greater effect.
Tim Martin, a supporter of a no-deal Brexit and the chief executive of UK pub chain JD Wetherspoon which is known for its cheap beers, has claimed he will be able to slash his beer prices to “an unbelievable low” in celebration of Britain leaving the European Union at the end of October. However, he has not given an answer so far to the question, on which basis he will do this.
