Brexit and the Potato Industry Compiled by Cedric Porter & Guy - - PowerPoint PPT Presentation

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Brexit and the Potato Industry Compiled by Cedric Porter & Guy - - PowerPoint PPT Presentation

Nov 12, 2022 663 likes •1.12k views

Brexit and the Potato Industry Compiled by Cedric Porter & Guy Faulkner World Potato Markets www.worldpotatomarkets.com World Potato Markets is a weekly briefing on the price, production and trade of potatoes and potato products read by

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Brexit and the Potato Industry

Compiled by Cedric Porter & Guy Faulkner World Potato Markets www.worldpotatomarkets.com

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World Potato Markets is a weekly briefing on the price, production and trade of potatoes and potato products read by industry professionals across the world

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A reminder of last June

52% 48%

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Planned Brexit timeline

June 2017

First face-to- face EU/UK talks to take place

Autumn 2017

German election & exit terms decided. Status of EU & UK citizens in UK & EU a priority + Irish border and ‘divorce’ payment

2018

Main post-Brexit arrangements

  • negotiated. By

March companies will want to know direction of travel to help plan. Aim is for deal to be agreed by Autumn to allow UK & EU states to ratify it.

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Planned Brexit Day March 29 2019

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But after last week’s election, what now?

March 29 2019

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Island of Ireland could determine how Brexit looks

March 29 2019

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A minority Government

March 29 2019

  • Mrs May wanted to strengthen her majority of 17. She

ended up with 318 seats out of 650 and no majority.

  • She needs an informal arrangement with the Northern

Ireland Democratic Unionist Party (DUP), who have 10 seats, to govern.

  • The Conservative Party wants to control immigration into

the EU. It accepts that means the UK cannot remain a member of the EU Single Market or Customs Union.

  • This might mean conflict with its DUP partners, who want

assurances of that there will be no changes to the current Ireland/Northern Ireland border and trading arrangements

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Key UK Brexit Ministers

Boris Johnson, Foreign Secretary David Davis, Brexit Secretary Michael Gove, Environment & Food Secretary All campaigned to leave the EU and Johnson or Davis could be Prime Minister by end of the year

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EU position

  • EU wants Brexit negotiations to be conducted as soon as

possible with the aim of doing a deal that maintains strong links with the UK, but does not disadvantage the remaining 27 countries or lead to any of those countries leaving too.

  • The UK’s election probably puts the EU in a stronger

bargaining position

  • Far from being weakened by Brexit, the EU appears stronger

following pro-EU results in the Dutch and French elections and a similar result likely in Germany

  • EU economies are also recovering more strongly
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The UK potato industry

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The UK potato industry

March 29 2019

1 2 3 4 5 6 7 8 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16p 17f

UK ware and seed harvest (million tonnes) WPM Estimates

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UK: a big potato consumer

March 29 2019

20 40 60 80 100 120

Potato supply Kg/head/year (2013 UN FAOSTAT)

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A levelling off of UK consumption

March 29 2019

50 100 150 200 250 300 200 400 600 800 1000 1200 1400 1975 1980 1985 1990 1995 2000 2005 2010 2015 Processed pots & crisps/chips Fresh potatoes

Potato consumption in g/head/week. Source: Defra

Fresh potatoes Processed potatoes Crisps/chips

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Trade

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UK trade facts

  • UK is 61% self sufficient in food¹
  • Total UK exports are €380 billion a year²
  • Total UK imports are €575 billion a year²
  • 47% of exports go to the EU and 51% of imports

come from the EU²

  • Total food exports are €25 billion a year with 61%

to the EU²

  • Total food imports are €52 billion a year with 71%

from the EU²

  • 14,000 trucks operate between the UK and EU

every day³

¹NFU, ²HMRC, ³Freight Trade Association

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Total UK imports are two thirds of exports

5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 2012 2013 2014 2015 2016 2017

Monthly UK total trade in £ million (March column in black). Source: UK HMRC

Exports Imports

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Total UK imports are two thirds of exports

500 1000 1500 2000 2500 3000 3500 4000 4500 2012 2013 2014 2015 2016 2017

Monthly UK food trade in £ million (March column in black). Source: UK HMRC

Exports Imports

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The weaker pound has made imports into the UK more expensive

1 1,1 1,2 1,3 1,4 1,5

Weekly average value of euro against £ (£1=)

2015 2016 2017

The £ is 12% weaker than a year ago and 17.5% weaker than two years ago

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Higher farm and general prices since the Brexit vote

60 80 100 120 140

2012 2013 2014 2015 2016 2017

Defra total output price index. 2010=100

  • 1

1 2 3 4

2012 2013 2014 2015 2016 2017

Monthly UK inflation (CPI). Source: ONS

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Brexit & Trade

The UK Government has said that it wants to restrict the freedom of movement of EU citizens to the UK. That will exclude it from the EU Single Market and Customs Union. That means that either a new arrangement will have to be negotiated or EU/UK trade will have to take place under WTO rules.

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The UK is one of the largest potato markets in the world with exports at 45% of imports

  • 600
  • 400
  • 200

200 400 600 800 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

UK potato and potato product trade in € million Exports Trade deficit Imports

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British prices have been higher than others this year, but are now similar

50 100 150 200 250 300 350 400 S O N D J F M A M J

Weekly EU-5 price quotations, 2016/17 (€/tonne)

GB GB free Fr table Ger table Ger proc. NL proc. Fr proc. Bel proc.

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EU/UK trade in fresh potatoes

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What would a 11.5% WTO tariff add to the cost

  • f UK fresh potato exports to the EU?

3 4 5 6 7 8 9 10 20 30 40 50 60 70 80 2012 2013 2014 2015 2016 2017

Possible tariff in € million Exports € million

UK fresh potato exports in € million

EU tariff at 11.5% Exports total Exports to EU

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What would a 11.5% WTO tariff add to the cost

  • f UK fresh potato imports from the EU?

0,0 5,0 10,0 15,0 20,0 25,0 0,0 50,0 100,0 150,0 200,0 250,0 2012 2013 2014 2015 2016 2017

Possible tariff in € million Exports € million

UK fresh potato imports in € million

EU tariff at 11.5% UK Imports total UK Imports from EU

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An 11.5% WTO tariff would be similar for exports and imports

5 10 15 20 25 2012 2013 2014 2015 2016 2017

UK EU fresh potato tariff calculations at 11.5% in € million UK export tariff UK import tariff

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EU/UK trade in seed potatoes

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What would a 4.5% WTO tariff add to the cost

  • f UK seed potato exports to the EU?

0,000 0,200 0,400 0,600 0,800 1,000 10 20 30 40 50 60 70 80 90 2012 2013 2014 2015 2016 2017

Possible tariff in € million Exports € million

UK seed potato exports in € million

EU tariff at 4.5% Exports total Exports to EU

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What would a 4.5% WTO tariff add to the cost

  • f UK seed potato imports from the EU?

0,0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 2 4 6 8 10 12 14 16 2012 2013 2014 2015 2016 2017

Possible EU tariff in € million Exports € million

UK seed imports in € million

EU tariff at 4.5% Imports from EU

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A 4.5% WTO tariff would add a small cost to UK exports and imports

0,000 0,200 0,400 0,600 0,800 1,000 2012 2013 2014 2015 2016 2017

UK EU seed potato tariff calculations at 4.5% in € million

UK export tariff UK import tariff

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EU/UK trade in fries

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What would a 14.4% WTO tariff add to the cost

  • f UK frozen fry exports exports to the EU?

1 2 3 4 5 6 7 10 20 30 40 50 2012 2013 2014 2015 2016 2017 Possible EU tariff in € million Exports € million

UK fry exports in € million

EU tariff at 14.4% Exports total Exports to EU

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What would a 14.4% WTO tariff add to the cost

  • f UK frozen fry imports from the EU?

0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 0,0 100,0 200,0 300,0 400,0 500,0 2012 2013 2014 2015 2016 2017 Possible EU tariff in € million Imports € million

UK fry imports in € million

EU tariff at 14.4% Imports from EU

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An 14.4% WTO tariff would impact imports much more than exports

10 20 30 40 50 60 70 2012 2013 2014 2015 2016 2017

UK EU seed potato tariff calculations at 4.5% in € million

EU export tariff at 14.4% EU import tariff at 14.4%

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Other Brexit Issues

  • Brexit means the UK will leaves the Common Agricultural Policy. The

Conservative Government has committed to preserving support payments to 2022. This could mean the EU reforms support before the UK

  • The UK contributes €10 billion to the EU budget. The country’s exit

could impact on funding, including for agriculture

  • Restricted access to EU labour could impact on British agriculture –

there are 100,000 EU farm employees on UK farms and 40% of food manufacturing jobs are taken by EU citizens. A scheme to give access might be needed.

  • The UK will be responsible for regulations now covered by the EU.

But rules will probably need to comply with the EU if the UK wants to trade with the EU

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Brexit opportunities?

  • The UK will remain a large and perhaps growing market for EU

suppliers

  • There could be processing and packing investment
  • pportunities in the UK
  • Eventually the UK may be able to trade more freely with other

parts of the world. It may provide opportunities for EU countries operating in the UK

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Forget Brexit. The real potato opportunities are

  • utside Europe

10 20 30 40 50 60 70

Asia Africa Europe EU Latin America & CarribeanN America Oceania

% of world population by region. UN calculations

2015 2030 2050

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Forget Brexit. The real potato opportunities are

  • utside Europe
  • 20

20 40 60 80 100 120 1 2 3 4 5 6 Asia Africa Europe EU-27 S. America N. America Oceania % change 2015:50 Population in billions

2050 Population by continent and % change to 2050. Source: UN

Billion people % change

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What might that mean for potato production?

50 100 150 200 250 China India Europe EU (inc UK) Africa N America S. America World Potato Markets estimates of future potato production, based

  • n UN population growth figures and historic changes in
  • consumption. In million tonnes

2015 2030 2050

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Final thoughts

  • Brexit is still most likely to happen. But the chances of a Breturn

have increased.

  • The UK Parliament will want to approve the Brexit deal and

there will now be stronger calls for another referendum to vote

  • n a deal
  • Brexit could disrupt trade between the UK and EU, adding to

costs and administration. Those costs could be higher for the EU

  • The EU and UK will still be able to trade with each other
  • A Brexit that ends up with similar arrangements to now is more

likely after last week’s election

  • Brexit will mean significant changes for UK farmers
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Finally, we now have a monthly Brexit newsletter especially for the food & farming industry

See: www.brexitfoodandfarming.com for more

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Thank you Cedric Porter and Guy Faulkner World Potato Markets Agri Markets Ltd Tel: +44 1892 543444 www.worldpotatomarkets.com Email: info@worldpotatomarkets.com