Friday, 16 August 2019
With political turmoil still providing no answers to how the UK will exit the European Union, it may be prudent to plan for the worst and hope for the best. The option of the UK leaving the EU with no deal on 31 October remains a possibility. Should this happen, what might be the barriers to European trade (specifically exports) faced by the potato industry?
Day one phytosanitary issues
As it stands, the UK will be unable to export fresh and seed potatoes into Europe for an unknown period following a no-deal Brexit.
- If the UK leaves the EU without a deal, it will be considered a third country for phytosanitary purposes. As such, the UK would have to apply for “third country equivalence”. The EU would need to investigate the UK’s phytosanitary protocols to ensure they meet the EU’s phytosanitary standards.
- The critical point is that in the absence of a deal being reached, the EU has refused to grant the UK this status or start the process until after the UK exits the EU.
- How long the process will take and whether or not it will be a day one priority is also unknown. Therefore, there is little clarity on when exports of fresh ware and seed potatoes may be able to resume.
- It is important to note that due to a separate phytosanitary protocol, exports to the Canary Islands will be able to continue in a no-deal scenario, though tariffs may apply.
The increased cost of doing business
- The EU will put in place a set of tariffs on all potato and derived products in a no deal Brexit. The full list of tariffs can be found here.
- The UK government is not planning to apply tariffs on any imports of potatoes or derived products of EU origin.
- In addition to tariffs, logistical delays and increased red tape around the border will add to the cost of doing continental business. This is applicable for both importers and exporters.
Potential impact on farm profitability
Farm Business Incomes (FBI) for potato enterprises in England could fall by 31% in 2022 even if there is a free trade deal with the EU. Under a ‘no-deal’ Brexit scenario, FBI could fall by 23% in 2022 according to AHDB’s latest modelling work.
The main drivers for the changes is an increase in labour costs and reduction in direct payments.
Potato Enterprise: Farm Business Income per hectare (2022)
Source: AHDB Horizon Report "Understanding Brexit: An impact assessment for England farm types" (April 2019)