“Lambs to the slaughter”: No-deal Brexit could cause huge oversupply, warns farming union

09 Jul 2019 --- President of the National Farmers' Union (NFU), Minette Batters, has said that a no-deal Brexit would be “socially and economically disastrous” for the UK’s agricultural industry, particularly for the sheep meat sector which faces the prospect of mass slaughtering due to oversupply. The UK, she said, is unable to eat the amount of lamb it produces and depends on trade relations with France, which buys 40 percent of the nation’s sheep meat, to sell the produce. She insisted that new tariffs could see many producers unable to export their produce, with sheep farmers among those who would be worst hit. 

“We have 15 million breeding ewes in the UK and are the second largest producer of sheep meat in the world, and this is a high-quality premium protein. We’re not eating that amount in the UK and for many years we have been exporting 40 percent of what we produce to France. There is a big demand from French families to buy British lamb,” she told Sky News.

“In a no-deal situation, you cannot get over that tariff wall. There will be an oversupply in the UK market because through the tariff-rate quota (TRQ), there will still be the same amount of New Zealand lamb coming in and potentially lamb comingNFU president Minette Batters, says a no-deal Brexit would be “socially and economically disastrous” for the UK’s agricultural industry.from other areas.” 

“There is a tariff schedule out, but if you can’t get your lamb into the European market, then you go into oversupply. Many farmers will be going out of business and slaughtering a large percentage of the national sheep flock,” she explains.

Minette also stresses that UK agriculture is part of the largest manufacturing sector, which is worth more than the car and aerospace industry put together. 

The NFU warning closely follows other warnings from UK retailers Tesco, Sainsbury’s and Asda, who all agree the October deadline comes at the worst time of year as businesses will be stockpiling for Christmas. 

The three retail giants say the timing is problematic because supermarkets typically increase deliveries in preparation for the festive season. Some business had already started stockpiling before the original Brexit deadline in March.

Bord Bia’s Brexit barometer 
The Irish Food Board (Bord Bia) has also recently released its Brexit Barometer, dubbed “getting Ireland Brexit ready.” Almost three years have passed since the Brexit vote and the ever-changing political negotiations and various potential Brexit scenarios are driving high levels of uncertainty and volatility for Irish food and drink companies, the report notes. 

One of the key takeaways is how much progress has been made recently. 

A combination of Bord Bia’s risk diagnostic analysis and in-person company interviews indicates that Irish food and drinks manufacturers are proactively identifying, assessing, quantifying, and where possible, mitigating Brexit-related risks. The UK is unable to eat the amount of lamb it produces, says Batters.

“They are actively navigating challenges (and in some cases opportunities) such as customer relationships, customs and controls, supply chain, market diversification, financial resilience and emerging risks,” says the report. 

In a positive trend, over the last 12 months, 93 percent of companies have made progress in relation to Brexit preparedness:

• 65 percent have made clear progress, defined as having taken actions (a leap from 20 percent in March 2018),
• 28 percent have made some progress, defined as making plans,
• The number of companies making no progress is 8 percent, compared with 26 percent in March 2018.

The report also notes how stockpiling has taken place over the past 12 months in anticipation of a no-deal scenario. 

“In the UK grocery market, retailers have been taking measures to prepare for Brexit, such as stockpiling, simplifying imported ranges of products, and undertaking research in order to understand how their customers will react to difficult choices if products are out of stock or if their disposable income is negatively affected. A key concern for UK retailers in regards to the economic impact of Brexit is the sterling-euro and sterling-dollar exchange rates,” it says. 

Minister for Agriculture, Food and the Marine, Michael Creed, adds, “amidst the continuing uncertainty around Brexit, this report highlights the true value of preparedness. The coming months will bring another Brexit deadline, but it is encouraging to see that our industry is doing all it can to prioritize what it can control in facing these challenges.” 

By Gaynor Selby