Brexit: UK dairy farmers are concerned

05-07-2016 | |
Photo: Shutterstock
Photo: Shutterstock

Dairy farmers in the UK are concerned the industry will take another blow following the Brexit vote to leave the European Union.

There have been many calls from various agricultural leaders and dairy lobby groups urging the government to outline how it is going to replace the Single Payment the farmers receive from the European Commission. As a whole, 180,000 farmers in the UK receive around £3 billion (€3.55 bln) in subsidies each year.

Waiting for plan

It is now up to the UK government to sit down and draw up a plan to support its main industries including agriculture. A total of 17,410,742 votes were cast to leave the EU heavily influenced by the north of England and Wales. A majority of voters in Scotland and Northern Ireland preferred to remain in the EU. Since the referendum the pound sterling has weakened against the US dollar and the euro which could signal higher exports for the UK dairy industry as prices for traders outside of the UK drop.

Impact on cheese exports

Cumulative totals show that UK cheese exports were 38,393 tonnes in the January to March period this year, which is 4% more than last year. The total exports of Cheddar were similar to last year at 17,886 tonnes. However, Cheddar exported to the EU reduced by 1,655 tonnes (12%) and Cheddar exports to outside the EU increased by 1,623 tonnes (39%).

UK exports of butter were 9,948 tonnes from January to March 2016, 1,543 tonnes (18%) higher than a year earlier. The biggest increase was in packet butter exports to non-EU countries, which increased by 1,151 tonnes (333%).

Friend to farming or not?

For farmers and other exporters, the weak pound can be extremely beneficial but with currency markets very volatile it is likely to change often. Northern Ireland dairy farmer Charlie Weir milks 600 cows and said Europe had worked ok for farmers in the past but had more recently lost its way. Mr Weir said: “It’s way too early to know if the vote to leave will be any good for farmers. It all depends on who the government is in England and whether they will be a friend to farming or not. “Europe used to work well economically but became too political and lost its way.”

Millions of pounds lost

Meanwhile, the chairman of Dairy UK, David Dobbin, has said Brexit will cost the UK dairy industry ‘millions of pounds in promotional funding’ from the EU. Dairy UK had been working with AHDB Dairy for months on a jointly funded dairy promotional campaign, which included an application to the EU for promotional funds. Speaking at the Dairy UK dinner the chairman said: “Over the years this industry has benefited from EU funding to promote agricultural products. “We were delighted when earlier this year AHDB leant their financial support, along with ours, to promote British products and to look how we could develop opportunities for British dairy, not just in the UK but abroad.

  • David Dobbin, chairman of Dairy UK.

    David Dobbin, chairman of Dairy UK. Photo: Chris McCullough

“Dairy UK, the Dairy Council and AHDB Dairy were able to lever EU support for our campaigns. But now we are no longer going to be a member of the EU we will lose significant funding for promotion and I hope Defra steps up to the plate.

“In the wake of a momentous event in UK modern history, more than ever before we need to ensure that the UK dairy industry is market led and innovative. “We also need to ensure it is internationally competitive and best in class, and most important of all, that it is open for business wherever that business takes us,” he added.  The Brexit divorce of the UK from the EU has sent shivers of fear across the now ‘European’ border into the Republic of Ireland.

Will Ireland be next?

Already this week in the corridors of Ireland’s Assembly Dáil Éireann there are whispers that Ireland could soon be next to join the UK leaving the EU. The Republic followed the UK into the European Economic Community in 1973 and since then has enjoyed a healthy dependence with the UK as its major trading partner. Ireland imports around €4 billion (£3.29 billion) of UK food products each year. Around 50% of the Irish beef produced goes to the UK along with 60% of Ireland’s cheese exports and 84% of its poultry exports.

Border with Northern-Ireland

Since Brexit, there are numerous fears that a physical border with Northern Ireland will be re-established and that trade will be hard hit. However, it is the exchange rate between the British pound and the euro that is the first major concern to Irish farmers. Ireland’s beef trade is worth a staggering €1.1 billion (£905m) to the country’s economy but Brexit has forced prices downwards. Already the uncertainty left following the Brexit has saw €0.10 (£0.08) per kilogram wiped off the price of beef at the factories in Ireland on top of a €100 (£82) per head loss for store cattle at some of the marts. With Northern Ireland and the rest of the UK using the pound which is weakening, the fears for Ireland is that export markets, including sheep exports, will be lost with buyers focusing on cheaper UK prices.

Trading tariffs is another fear for Ireland if it has to pay them with the UK leaving the EU.

IFA president Joe Healy said: “2016 is already an extremely difficult year for farm incomes. With low product prices across many sectors, the fall in the value of sterling against the euro is a further blow for exporting sectors. “For Irish agriculture and the agri-food sector, with 40% of our agri-food exports going to the UK, and a shared land border, the implications of the decisions to leave will be significant. “It is critical that steps are taken by Governments and institutions within Ireland, the UK and the EU to provide the reassurances that will minimise uncertainty and stabilise exchange rates.”

Weak pound leads to UK’s largest ever grain shipment

Following the weakening of the pound since Brexit, a UK grain exporter is sending Britain’s biggest ever grain export overseas.
Glencore Grain UK is shipping 70,000 metric tonnes of feed wheat from the Port of Immingham in the north east of England to the Asian country.
Carrying the mammoth shipment is the Trade Prosperity vessel, which will make the journey in early July.
Supply of grain in the UK is usually quite restricted at this time of year as harvest starts in July, but since the pound has weakened feed wheat has become cheaper than higher priced corn.
This huge load will have been gathered from around 18,000 acres of arable land and transported by over 2,500 lorry loads to load the ship which sits at 229m long.
The journey from the UK to Vietnam should take 34 days covering almost 12,500 nautical miles.
James Maw, managing director of Glencore Grain UK said: “The scale of this record-breaking export exemplifies the importance of access to world trade for UK growers.
“It highlights the essential role of contacts and experience offered by the global Glencore Agricultural products division in successfully negotiating the business half-way around the world, and then the immense logistics of physically delivering the supply of grain from UK farms.
“UK feed wheat is still maintaining a competitive edge in the world feed-grain market. Sterling has helped, and UK wheat is competitively priced vis-a-vis corn,” he added.  Wheat exports this season through April reached the highest since 2012 and the Agriculture & Horticulture Development Board (AHDB) expects barley shipments to climb to a 19-year high. Wheat exports in the UK through April totalled 2.2 million tonnes, 29% more than during the same period a year earlier. Traditionally, the higher end of the UK’s grain exports ends up in the EU markets but it is starting to go further afield more recently into Asia, North America and North Africa.  2 other grain companies have plans in place to ship 55,000 tonnes of grain to Indonesia and another is sending 61,000 tonnes of wheat to the US.

Chris Mccullough Freelance multi-media journalist