FDBusiness.com

A hard Brexit will have a ‘catastrophic impact’ on the European Meat Industry, according to a stark new report published tby Europe’s Meat Industry body, UECBV, as the UK and EU continue negotiations. ‘Crisis – The EU Meat Industry in a Hard Brexit scenario’ report was commissioned by UECBV and carried out by Red Flag Consulting, to analyse the potential impact of a hard Brexit scenario. It found that a ‘no-deal’ outcome would lead to:

• Trade collapsing – an 84% drop in beef trade between the EU27 and UK
• Market price shock – The value of EU pig meat production would drop by €2.3 Billion, and beef by €2.4 billion
• Job losses – at least 32,000 job losses across the EU at farm level, through processing and distribution.

In this scenario, meat products would face greater burdens than almost any other sector:

• Higher WTO tariffs than any other sector
• Additional costs of veterinary checks, in addition to the customs checks faced by all goods
• Major disruption to supply chains and chaos for just-in-time fresh meat delivery systems.
  The comprehensive report modelled the impact of a hard Brexit on trade between UK and EU for meat products and found that with increased costs imposed by tariff barriers, additional veterinary checks and increased transport costs would lead to a reduction of trade in meat from EU to UK by up to 84% for beef, 76% for sheep meat and 48% for pig meat. The price shock will decrease the value of EU meat production by €2.4 billion for beef and €2.3 billion for pig meat.

The report finds a hard Brexit scenario will have a profoundly negative impact on the EU meat market given the major trade flows between EU27 and UK. As the UK has a principally deficit meat market, the negative impacts will be felt throughout EU. As meat-processing involves the disassembly of carcass to a myriad of consumer cuts and products, it thus has to find markets for all parts of the carcass and therefore the impact will be transmitted throughout the single market to affect all countries, even those with limited direct trade with UK.

‘The magnitude of shock of a hard Brexit would be significantly greater than the industry crisis created by the Russian food import ban in 2014, and it would be much more difficult to find alternative markets for diverted products’ – the Report highlights.

In addition, there will be major disruption to modern fresh meat and just-in-time trade flows which are underpinned by sophisticated logistics systems, creating further losses for the meat sector, and depriving consumers in the UK of fresh meat supply.

The Report also concludes that solutions will be needed to minimise disruption and disaster for the European meat industry. The Report recommends:

• A timely and sufficiently long transitional period to allow businesses to adjust to new arrangements
• A future trading relationship that creates minimal burden for business, especially SMEs, and maintains current trading conditions as much as possible
• Ensure continued regulatory convergence between UK and EU
• Implement market support mechanisms including increased market access, internationally simplified transit systems, and vital investment in port facilities.

Philippe Borremans, Chairman of UECBV, comments: “A Hard Brexit represents the greatest threat to European producers, consumers and processors of meat, with a potential impact much greater than the Russian import ban. By potentially cutting off one of the largest and highest value meat markets in Europe, Brexit threatens to be catastrophic for industry across Europe and UK. In this worst case scenario, in which no deal between EU and UK is agreed, the impact to the meat sector will be devastating, due to the particular exposure of this sector to tariff burden, additional veterinary costs and increased customs and transport checks and associated logistics disruption.”

He continues: “The findings contained in this Report confirm our worst fears: A hard Brexit would send shock waves through the whole European meat industry, destroying jobs, increasing consumer prices, and devastating the livelihoods of small business owners working in our sector. The scale of this crisis is simply too great to ignore, and we implore policymakers to follow through on recommendations put forward in this Report and to protect this vital European food sector.”