Leaving the EU: FAQs for farmers, growers and the industry

From markets to farm economics, our FAQs cover a wide range of topics on the EU exit and signpost to more information. 

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Markets and commodities

Exports of agriculture or lightly processed food products are in the region of £4.7bn with £3.8bn going to EU. Agri-food exports are £7.2bn, with approximately £5.4bn going to EU. 

There is uncertainty regarding many aspects of Brexit, including the UK’s future trade relationship with the European Union. AHDB’s Horizon publication Brexit prospects for UK agri-food trade provides information on how the agri-food trade could be affected under both an agreed withdrawal and under a ‘no deal’ scenario. 

The Northern Ireland (NI) protocol will ensure that there is no physical border between NI and the Republic of Ireland. This means that whilst NI will be in the UK customs territory, it will remain aligned to the rules of the single market, thus avoiding any physical checks between the two areas. 

There is no trade deal between the US and the EU, so no continuity agreement, although negotiations are at an advanced stage between the UK and the US. Equally, Australia does not have a Free Trade Agreement (FTA) with the EU but are negotiating directly with the UK at the present time. 

There are a number of steps to be followed to export live animals and animal products from January 2021. Information on certification, tagging and getting your animals and animal products checked at an EU border and customs office, can be found at: https://www.gov.uk/guidance/exporting-animals-and-animal-products-to-the-eu-from-1-january-2021#exporting-or-moving-live-animals-and-animal-products  

You can use the Transition Checker to get a personalised list of actions for trading from January 2021.  

The NFU also have a checklist to help identify business risks and the level of exposure you have to the EU market. 

Further guidance on exporting can be found on the EU Exit Food Hub. 

Our information would suggest that most traders are now as prepared as they can be and are monitoring the evolving situation as closely as possible. Information on how to prepare is available on the AHDB website: https://ahdb.org.uk/eu-exit  

EU Exit information for meat producers can be found on the British Meat Processors Association (BMPA) website: Brexit Information - BMPA 

A devaluation of sterling relative to the euro would make imports more expensive and provide support to UK dairy product prices, flowing through into farmgate price.  

A weaker pound also makes exports more competitive in global markets. Under the new Free Trade Agreement (FTA), a devaluation of sterling supports prices as it gives GB product competitive advantage in the EU and increases export sales. However, £/tonne returns would be lower.  

There is no information available on the level of export activity by individual processors, but it would be those who get the greatest proportion of their revenues from exports.

Over time, however, domestic prices will align with export prices (on average) as processors direct products to the most profitable markets. The ability to export therefore helps to keep domestic prices in line with global values, and means all processors operating in the same product market will be influenced by export prices under free trade conditions.

Outside of Northern Ireland (NI), there is minimal raw milk exported for processing in Europe. 

Under the NI Protocol, goods produced in NI can circulate freely throughout the EU. This would allow for the continuation of sending raw milk from the North to the Republic of Ireland (ROI) for processing without the addition of EU import tariffs. 

There is currently no clarity on whether products made in ROI using raw milk from NI would be recognised as EU product when exporting to third countries under Free Trade Agreements. This could potentially limit the use of milk from NI for processing in the Republic. 

In the situation that tariffs do apply to NI raw milk exports, there are two possible outcomes: 

  1. Volumes in excess of NI processing capacity could be shipped to GB for processing. This would add significant cost and put downward pressure on NI farmgate prices. 
  2. It may also lead to some restructuring of the industry – either increased investment in processing if there is export potential or a reduction of the milk pool to match domestic processing demand. 

The UK is a net importer, and our prices are typically in line with EU averages, and in particular with Ireland, especially for standard mild Cheddar.

More than half of UK cheese export volumes are Cheddar and a further third fresh cheese. The main export destination is the EU, where prices are competitive.  There are growing exports to North America and the Middle East for value-added Cheddar, which commands a premium price.

The vast majority of fresh cheese exports are directed to the EU market. The nature of EU/UK trade prior to the UK departure from the common market means prices will trend together.

Demand will likely not be directly impacted by our exit from the EU, rather indirectly through price.

AHDB analysis suggests that the price changes as a result of Brexit will depend on the trade deal we have with the EU. If we have a trade deal, price changes will be relatively small and mainly due to trade friction. If we do not have a trade deal with the EU, price changes will be much larger due to high tariff barriers and trade friction combined. The price changes will generally be downwards for sectors who are net exporters (lamb, barley) and upwards for sectors who are net importers (beef, pigs, potatoes). We will be examining the effect of future trade deals as they are agreed. 

There will always be a market – consumers in Europe demand UK produced lamb and beef for its quality and taste, and it is highly valued in EU markets. However, the laws of supply and demand dictate that the large price rises that would result in the case of no-deal would make UK product more expensive, therefore less competitive. Hence, demand is likely to contract as consumers look for alternatives. If there is a trade deal with the EU, the price changes are likely to be smaller and the contraction in demand much smaller. However, in either case, it is prudent to explore new markets where demand for lamb and beef is growing, and there is a market for high quality, high-value product. 

Family and labour

Existing employees living in the UK before 1 January 2021 can apply for settled status, this allows them to remain living and working in the UK after 30 June 2021.  

For further information on the above, visit: https://www.gov.uk/guidance/employing-eu-citizens-in-the-uk 

Before 1 January 2021 EU, EEA and Swiss citizen job applicants can apply for a job and use a passport or national identity card as proof of right to work until 30 June 2021. You cannot discriminate against EU, EEA or Swiss applicants by asking for proof of settled status before this date.  

From 1 January 2021 EU citizens looking to work in the UK will need to apply for a skilled worker visa. To apply for this visa, they need to show a job offer from an approved employer sponsor. Therefore, if you are looking to employ EU citizens after 1 January 2021, you should look into becoming an approved sponsor.  

For further information on the above, visit: https://www.gov.uk/guidance/employing-eu-citizens-in-the-uk 

After 1 January, an EU worker will need a visa to work in the UK. They can get a visa if they have a job offer from an approved employee sponsor. To become an approved employee sponsor, please visit: https://www.gov.uk/uk-visa-sponsorship-employers 

Information for EU nationals who wish to live and work in the UK after Brexit, is available on the Government website, here: https://www.gov.uk/settled-status-eu-citizens-families.

Agricultural policy

The Government has indicated that tariffs (in the form of the UK Global Tariff) will be in place from 1 January 2021 in the event of a no-deal.  

More information on the UK Global Tariff can be found here: UK tariffs from 1 January 2021 - GOV.UK  

Products of animal origin will require an Export Health Certificate. Information can be found on the Government website here. 

For the most up-to-date information on certification, we would recommend contacting the Animal and Plant Health Agency Centre for International Trade - Carlisle

Agricultural Livestock Team (Exports of cattle, pigs, sheep and goats)

Email: Livestockexports@apha.gov.uk 

Live Animals Team (Exports of poultry and hatching eggs, birds, zoo and circus animals and all other live animals not covered by other teams)

Email: LiveAnimalExports.Carlisle@apha.gov.uk

From 1 January 2021, an export health certificate will be required for the export of products of animal origin to the EU.  Export Health Certificates are official documents confirming that products of animal origin (POAO) consignments meet the health requirements of the EU.

Our dedicated Leaving the EU: Information for meat producers and exporters web page contains the latest information and advice on exports to the EU, which includes export health certificate.

While the web page mentions meat producers – it also applies to other POAO, which includes milk.

Useful link from Defra on Export Health Certificates: https://youtu.be/5Kp8Q6t20DI

In the event of a no-deal, depending on the type of animal by-product (ABP) exported, the exporter will either need:

  • An export health certificate, which will need to be applied for in advance; or
  • A model declaration which will need to be applied for in advance; or
  • Official documentation from the competent authority permitting the export of the ABP from the UK which will need to be obtained in advance from the competent authority of the Member State of destination

Further information on animal by-product is also available at: Guidance - Export or move live animals and animal products to the EU from 1 January 2021

From 1 January 2021, businesses in Great Britain that export live sheep and goats (for breeding and production (fattening)) and their germplasm (semen, ova and embryos) to the EU will need to follow new processes. 

There will be some additional steps you will need to take before your animals can be exported to the EU, including providing signed documentation from your veterinarian. The additional requirements are listed here: 

Defra Letter to Farmers 

Defra Letter to Veterinarians 

Further information for exporters of live animals and on Export Health Certificates can be found here: Webinars for exporters of animals and products of animal origin to the EU - GOV.UK (www.gov.uk) 

At the end of the transition period, the UK’s trading arrangement with the EU will change. From 1 January 2021, businesses in Great Britain that export live sheep and goats (for breeding and production (fattening)) and their germplasm (semen, ova and embryos) to the EU will need to follow new processes. 

The requirements for sheep and goats and their germplasm are set out in Commission Regulation (EU) No 206/2010 (live animals) and Commission Decision 2010/472 (EU) (semen, ova and embryos). 

From January 2021, additional checks will take place prior to export:  

  • The owner and veterinarian of the premises at which sheep/goats are housed or held prior to export will need to sign a declaration to say that, to their knowledge, the animals do not have (and have not been in contact with) specific key endemic diseases (listed in the Defra letter to veterinarians) 

More information can be found here: 

Defra letter to veterinarians 

Get an export health certificate - GOV.UK (www.gov.uk) 

Webinars for exporters of animals and products of animal origin to the EU - GOV.UK (www.gov.uk) 

Information on importing and exporting plants and plant product from 1 January 2021 is available on the Government website 

From 1 January, all high-priority plants and plant products from the EU must have a phytosanitary (health) certificate (PC). You can check if plants you want to import from the EU are high priority online here 

From 1 April 2021, all regulated plants and plant products imported to England, Scotland or Wales from the EU must have PCs. You will not need a PC to import fruit and vegetables that have been processed and packaged (salads, sandwiches, frozen material) from the EU to GB from 1 April 2021. 

You can look up commodity codes, duty and VAT rates on the Government website 

If you’re not sure how to classify your goods, check how to find the right commodity code. 

Farm economics

New rules will be in place from 1 January 2021. Information on how to prepare can be found at: https://ahdb.org.uk/leaving-the-eu-prepare-January-2021.

Help prepare yourself and your business for change by reading about the characteristics of top performing farms.

The Brexit toolkit provides resources to help you look at improving various business areas.

Budgeting allows you to plan your business finances. Creating two budgets would enable you to compare the outcomes and put plans into place if the budget does not meet your financial needs. 

Alternatively, sensitivity analysis can show the impact of an increase or decrease on key incomes or costs, for example, +/-£10/t on cereals. If you know where you need your business to perform, you can then plan or change accordingly.  

The best place to start a diversification is from a profitable business that is running smoothly. If you are at this point then you need to decide what sort of diversification would suit your farm and the people involved. This may be adding value to a product, utilising buildings differently or perhaps an off-farm venture. There are many options listed in the article below and  links to possible funding support. 

https://ahdb.org.uk/business-planning/changing-your-business/diversification 

If you want to make your business more self-sufficient, a good place to start is analysing your farm’s key performance indicators and cost of production.   

Use KPI Express to understand how your business is performing: https://kpiexpress.ahdb.org.uk/Home/Index  

Farmbench can help you to evaluate your cost of production: https://farmbench.ahdb.org.uk/   

To see how changes in basic payment schemes (BPS) will impact your business, use the Business Impact Calculator 

If you are looking to increase margin within a business, there may be ways to increase the value of your product to your existing buyer/processor. Alternatively, you can look at cutting costs, which is a key characteristic of top-performing farms.  

Adding value may be possible to some commodities, but there may be a large investment of capital, time and training required to achieve this. 

Start by working out your profit requirement, the level of profit you need to cover drawings, loan repayments and tax. If the profit requirement is higher than your current profit level, you will need to increase income or cut costs.  

Increasing income could include involvement with environmental schemes. 

https://www.gov.uk/government/collections/countryside-stewardship-get-paid-for-environmental-land-management 

Our understanding of the ELMs scheme is that actions taken to provide public goods will be rewarded so the funding will be available to active farmers and land managers rather than the owners of the land. We will be making more information available as it is announced. For the latest information, please visit the AHDB website here. 

EU people living in the UK before 31 Dec 2020 can apply for settled status. Settled status cannot be applied for if not living in the UK. 

For further information: https://www.gov.uk/guidance/employing-eu-citizens-in-the-uk 

 

If you are looking to increase your farm’s performance, a great place to start is to look at your costs of production with either the KPI Express Tool or Farmbench 

Our analysis of top-performing farms shows cost control as one of the key success factors. More information can be found in the Characteristics of top-performing farms publication. 

To see how changes in basic payment schemes (BPS) will impact your business, use the Business Impact Calculator 

Inputs and suppliers

FAQs coming soon.

Useful links

Leaving the EU: how to prepare for January 2021
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