The key issues of Brexit for agri and food businesses: obstacles and opportunities

Brexit and the associated issues arising from the uncertainties of the political and commercial environment are currently the overriding concerns for food and agri businesses.

Brexit and the associated issues arising from the uncertainties of the political and commercial environment are currently the overriding concerns for food and agri businesses.

Under the Common Agricultural Policy (CAP) British farmers receive payments through the Basic Payment and Agri-environment schemes. Whether or not this will continue in any post-Brexit world, and in what forms, is uncertain; it seems likely that any 
new system will place increased emphasis on rewarding conservation of the environment. While greater flexibility for farming may result, there is likely to be additional pressure on farmers to promote efficiencies under more free market principles. Equally, there may be opportunities for new markets and exports. 

The availability of a foreign unskilled workforce, particularly if any "points" system for immigration is introduced, may be affected; at present the UK food industry employs 450,000 people and of those 130,000 are Eastern European immigrants. However, the potential for this will vary depending on the Brexit model adopted. 

For all businesses in the sector, fluctuations in prices and currencies have been the main short term consequence of the Brexit vote. Depending on currency, produce, ingredients and country of market some food companies may have seen their costs increase substantially whilst others have profited from the uncertainty of sterling. 

Supply chain contracts might need to be checked to ensure overall ongoing "Brexit-proof" clauses. Fluctuations in commodity pricing will require appropriate management of supply and distribution chains and an additional concern to ensure standards and quality are maintained. Testing to protect against fraud and/or sub-standard ingredients will need to be responsive to the market environment and regulatory standards. 

A Defra spokesperson has stated there would be "no immediate" changes to the UK’s relationship with the EU and therefore from a regulatory viewpoint things will continue "business as usual". In any event, equivalent regulatory measures will need to be maintained to allow for continued access to the EU marketplace. The ability to achieve this goal varies between the different Brexit models. A key delineator would be whether any model introduces the use of tariffs and the effect this would have on produce and ingredient prices in addition to exchange rate fluctuations. 

There have been concerns raised already relating to EU protected food names, (namely, protected designations of origin, geographical indication or traditional speciality ie, Welsh lamb, Newmarket sausage, Cornish pasty, Scotch Whisky) that provide a real commercial advantage and premium to certain foods. However, it is most likely that reciprocal arrangements will be maintained although the process of adding more names to these may become more complex. It is further possible that consumer pressure for clarity on extended country of origin labelling may result in a UK premium advantage for producers. 

Where there are obstacles there may also be opportunities, both in exports and M&A, as well as innovation in the event that the UK does move away from the more prescriptive style of EU legislation.

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