Just What Will Be the Brexit Impact On Food?

The Lempert Report
July 14, 2016

The reality is that the UK depends on the EU for approximately one-quarter of its foods, but only 4% from North America according to the UK Department for Environment, Food & Rural Affairs.

Britain will be effected the most as it’s the value of its pound continues to fall against the dollar and euro making the imports more expensive. 

The benefits of forming the EU for agriculture was that it made it considerably easier for the UK and the other 27 European states to buy and sell goods to each other – it was a commitment to the free movement of labor, capital, goods and services. Now, with the Brexit vote most likely forcing the departure of the UK from the EU, it is unlikely that the other UC countries will offer the UK access to the EU single market forcing them to negotiate with each country separately. No doubt the issue of allowing EU workers free movement into the UK will be a sticking point since much of the fervor leading to the Brexit vote was centered around this issue and immigration. 

Of concern for farmers is the loss of the EU’s agriculture subsidies (much like our own Farm Bill) that totaled almost 3 billion pounds to British farmers. The deputy president of the Farmers Union told the Daily Mail that “prices will have to go up to ensure farms stay in profit. Many are already being paid below the cost of production prices and that is not sustainable.” He sees the biggest price increases in fruits and vegetables. Freshfel, the European Fresh Produce Association, reports that in 2015 the UK received imports from an estimated 120 countries of more than 5.6 metric tons of fresh fruit and vegetables valued at over $7.5 billion, over half of those come from the other members of the EU. 

It is doubtful that the impact of the UK leaving the EU will have much impact on the prices on the imports to the US, in fact in the short term there might be some benefits as the British Pound continues its fall against the Dollar. The UK exports to the US total 14.5% of its total exports with the number one food export being beverages at $2.1 billion dollars just to the US.

And then there is Ireland and Scotland, both countries saying they will annex from the UK and stay in the EU and both have major food and beverage exports, which have shown significant increases over the past few years. For Ireland its dairy products, for Scotland it is Scotch.