Welsh livestock farmers fear serious threats from Brexit
Gwyn Howells, chief executive of Hybu Cig Cymru – Meat Promotion Wales (HCC), the trade association responsible for promoting Welsh red meat, told GlobalMeatNews that sheep meat reared in Wales stands to be one of the biggest losers from a Brexit settlement that does not include a free trade agreement (FTA) with the rest of the EU.
“There is no certainty what trading arrangements will be in place between the UK and the EU after March 2019. However, independent reports have identified the sheep meat sector as one which is particularly vulnerable, due to its high dependence on exports,” Howells said.
“Currently, over a third of Welsh lamb is exported, and 95% of those exports are to the EU – to established destinations such as France and Italy, and to growing markets such as Germany and Scandinavia,” he added.
Exports key to farmgate revenue
According to HCC’s figures, which are based on HMRC (Her Majesty’s Revenue & Customs) statistics and adjusted to reflect the association’s own market and abattoir data, Wales exported more than 26,000 tonnes (t) of lamb in 2016 with a value of around £124 million (US$172m). Exports of Welsh beef were estimated at around 15,000t, worth £61m (US$84.7m).
Export figures for 2017 have yet to be published, but are expected to show an increase on the year before, HCC said.
Exports are crucial to Welsh producers’ income, as they help to balance seasonal peaks in supply and mean that more of the carcase is sold, since overseas markets prefer different cuts to UK consumers.
In the absence of an FTA with the EU, the UK is anticipated to fall back on World Trade Organization (WTO) default ‘Most Favoured Nation’ (MFN) tariffs, which are currently set at more than 40% on lamb.
A report by the independent UK-based Agri-Food and Biosciences Institute (AFBI), published in August 2017, has suggested that the imposition of MFN tariffs will have a detrimental effect on UK lamb.
“The introduction of MFN tariffs diminishes the competitiveness and thus the volumes of UK exports to the EU, which leads to increases in available supplies within the domestic market. The negative price impact is particularly marked in the sheep sector due to the large quantity of sheep meat currently exported to the EU from the UK,” the report said.
The AFBI suggested that, to avoid MFN tariffs, the UK could opt for a unilateral trade liberalisation arrangement, where tariffs on imports from the EU and the rest of the world are reduced.
However, this would make imports of lamb from other major producers, such as New Zealand, cheaper and could price Welsh lamb off UK shelves.
“The best outcome for the Welsh red meat industry would be an FTA with the EU, replicating current arrangements as far as possible. Defaulting to WTO rules (…) would make trade extremely difficult with established customers in Europe,” Howells added.