The Prime Minister’s much-trailed Brexit speech drew a mixed reaction from producers, exporters and those who buy from and supply goods to farmers.
Confirmation that the UK will seek to quit the EU’s single market and full membership of the wider customs union, while negotiating a free trade deal with the EU, presents a huge challenge for UK agriculture.
However, Mrs May’s desire for a phased implementation to avoid “economic cliff edges” and allow adjustment and reorganisation was welcomed.
Theresa May’s Brexit speech – her main aims for trade and the movement of people:
- Come out of single market
- Have a customs union agreement, but not full membership
- Get a free trade deal with the EU to keep barriers to trade as low as possible
- “No deal is better than a bad deal” – she would be prepared to walk away without any trade deal with the EU
- Reach an agreement over the next two years and then put in place transitional arrangements to avoid cliff edge for businesses
- Will guarantee rights of EU citizens in the UK if the EU guarantees the rights of UK citizens on the continent.
- Will not allow free movement of people. But still wants immigration from EU member states and elsewhere, but in a controlled way that meets the UK’s needs
So what did those in the industry make of it?
Jack Ward, chief executive, British Growers
Referring to Mrs May’s assertion that she would favour no trade deal over a bad deal with the EU, Mr Ward said:
“No deal may be a bad deal. They keep talking about trading with the US, Australia and New Zealand, but there is a world of difference between putting produce on a lorry, loading it at Folkestone and it being on the continent in 40 minutes – and loading it at Southampton, it sitting on the truck for 40 minutes [before shipping it to the US for example].”
But free trade with the EU was important for the UK’s horticulture sector, not so much for exports but for the importation of key inputs such as seeds, said Mr Ward.
There was a long way to go before UK horticulture would know whether a trade deal, if it was achieved, would be advantageous to the sector or not, added Mr Ward. The same was true for policy on movement of people.
“The devil will be in the detail – at the moment we’re leading with headlines,” he said.
Mrs May’s point about controlling immigration did not necessarily preclude a seasonal agriculture workers scheme, said Mr Ward, but there was no detail on whether it would include it.
David Sheppard, managing director, Gleadell Agriculture
There was no comfort in the speech for Mr Sheppard. “It seems to be a hard Brexit and that is a hell of a lot worse for our industry than a soft Brexit,” he said.
“Geography dictates that most of our export business, whether lamb, beef, cereals or oilseeds, goes to or comes in from Europe.”
Last season saw 2.85m tonnes of wheat exported from the UK with 2.3m tonnes of that going to other EU member states.
Mrs May’s position that “no deal is better than a bad deal” has set alarm bells ringing in the grain trade, too, as it heralds the possibility of trading with the EU under World Trade Organisation terms, which currently means a €12/t tax would be levied on grain exports.
In addition, such trade would have to be done under a bidding system, which would not necessarily secure business for the UK.
“You can’t suddenly pretend that you can shift most of your exports to South Korea or Saudi Arabia,” said Mr Sheppard. Apart from quality and suitability questions, only a few UK ports could handle the size of cargoes required and so grain would have to be transported further by road even if this business was secured.
Richard Clothier, managing director, Wyke Farms
“I think we need to stay positive about this. Looking through what she is saying, it looks as if we will have a deal with the customs union, which will be a good thing as it will give us access to the free market.
“I think that premium dairy products can stand a small levy, but the scale of that levy will be critical for farmers.”
Being realistic, the UK was always going to have to leave the single market if was to have any chance of forging trade deals with other big economies, said Mr Clothier.
But he warned: “The government has set its stall out and is prepared to risk the free market that we enjoy with the EU. In return they will have to land a big free trade deal with one of the big economies, such as the US or India, to prove that it has been a success.”
Now that stall was set out, it was more important for UK businesses to see the efforts and plans to build new markets and opportunities elsewhere.
“The government must commit a fund to support trade in Europe in the form of promotions and tastings in European supermarkets and trade shows to prove that, despite Brexit, the government still values our EU trading partners,” added Mr Clothier.
Mary Quicke, executive director, Quicke’s cheese makers
“She talks about getting a deal, like [with] Trump. [But] it’s not a deal, it’s a highly complex negotiation. Have we got the negotiators in place?
“Defra will do the food and agriculture negotiations. Andrea Leadsom keeps repeating that she is getting briefings from her team – I’m not convinced her team have got the capacity to conduct anything like the complexity and extent of the trade negotiations required.
“They will be negotiating with Brussels, who have been doing this stuff for 40 years. Unless we start understanding the scale of the demands, we [and our agricultural and food markets] will be toast.”
Ms Quicke said it was positive that Mrs May was talking about transitional arrangements and noted that countries had 15 years to become an EU member, so why not have 15 years to come out properly.
“If we don’t, and the EU won’t play, that will be very difficult for our EC cheese sales, and for all commodity agricultural products.”
She questioned Mrs May’s trade deal; “It sounds like she is pretending we can be part of the single market by calling it free trade.”
The substantial contribution that the food sector and farming makes to GDP was reliant on migrant labour, said Ms Quicke.
Referring to Mrs May’s comment that she wanted skilled migrant labour, Ms Quick said: “The labour we need is skilled, but doesn’t show up as skilled in the visa requirements because farming and food is not a formal profession.”