Potato grower: no-deal Brexit case study
Greg is a seed potato grower in Angus, Scotland. On his 50 hectare farm, he has one full time worker and uses seasonal workers for the harvesting and dispatching periods.
What will happen to Greg’s business on Day 1 of a ‘no –deal’ Brexit?
Greg is unlikely to experience a significant change, although there will be major changes afoot behind the scenes.
The UK will be considered as a third country by the EU on the first day of a ‘no-deal’ Brexit and will no longer be able to export seed potatoes to the EU, unless it has been granted third country equivalence status by the EU. Varieties registered on UK National Lists but not the EU Common Catalogue would no longer be marketable in the EU, such as seed potatoes.
Around 30% of UK seed potato exports are shipped to the EU. Once the necessary paperwork for exports of seed potatoes to the EU was in place, exports would be subject to the EU’s common external tariff for seed potatoes which is 4.5%.
Exports to Egypt and Morocco account for over half of all UK seed potato exports and when the UK leaves the EU, these exports will be subject to tariffs of 2% and 2.5% respectively, rather than the tariff-free access enjoyed as part of the EU.
If exports are able to take place, with customs costs exports of seed potatoes could become more expensive, but this could be offset by currency effects if the pound weakens. However, devaluation of sterling would make costs of imports more expensive.
It's likely that the Scottish market will have a surplus of seed potatoes under these circumstances, which would put pressure on prices.
Could there be issues for Greg in the next 6 months or so?
Greg could see lower prices for his produce. The EU Commission has informed the UK government that it will not consider the UK’s application for third country equivalence status before the ongoing withdrawal negotiations have been completed. Under a ‘no-deal’ scenario, the UK will not have the right paperwork in place to continue exporting seed potatoes to the EU after 12 April 2019, however, seed potato imports from the EU may continue to come into the UK. The rationale for this unilateral approach would be to continue to provide access to European varieties for English potato growers, although this approach would stifle potential import substitution using Scottish seed potatoes. This means that Greg’s market could be oversupplied.
Greg could also find it harder to source casual labour. EU citizens already living in the UK will be able to apply to continue living in the UK after 30 June 2021. The Government has also announced a seasonal worker pilot scheme, whereby 2,500 non-EU workers would be able to stay in the UK for up to six months. However, this is for the whole agriculture sector and is unlikely to meet the requirements of the industry.
The likely devaluation of sterling will provide less of an incentive for migrant workers to come and work in the UK.
Looking further ahead
While Greg will continue to receive his current level of support payments in 2019, between 2020 and 2023, there could be some changes, such as capping. It’s unclear how Scottish agricultural policy will look beyond 2023, although it is likely that the pot of funding for agricultural payments will be lower than that under the EU’s Common Agricultural Policy.
Seed potato growers like Greg could also have lower access to new varieties and genetics as the UK would no longer be part of the EU Common Catalogue. Marketing of UK seed potatoes under the EU plant rights system would also come to an end.
What can Greg do?
Greg can start preparing by focusing on parts of his business that are in his control. Planning should start now, if this has not already started.
The AHDB Potato Data Centre provides the latest market information and prices.
‘Preparing for change: The characteristics of top performing farms’ shows where small changes can add up to a big business improvement.