In a Q&A with Umberto Di Pasquo, senior policy adviser at Copa-Cogeca, we look at what European agri co-ops can do to prepare for Brexit. Mr Di Pasquo explains for the agri food market could be affected by a no-deal Brexit and how Copa-Cogeca, the apex organisation of European Agri-cooperatives and farmers, is helping members develop contingency plans.
Which sectors are likely to be most affected by a no-deal Brexit?
Most of the agriculture commodities sectors will be affected as the trading relationship between EU27 and UK is very significant. By some of the latest data provided in the European Parliament report, the agri-food exports of the EU27 to the UK will decrease by US $34bn (62%) and imports by US $19bn (with the same relative decrease, 62%). The same report underlined that the most affected sectors (in value terms) would be processed food (-US$10.5bn, -4.7%), which is also the most exported (33% of EU27 agri-food exports), white meat (-US$5.2bn, – 10.5%) and dairy (-US$4.6bn, -7%). However, we also believe that the beef sector, fruit and vegetables and other perishable products will be significantly affected, especially in the no deal scenario. The EP’s report also indicates Ireland (-US$6.5bn, -71%), The Netherlands (-US$6.7bn, -66%), and France (-US$4.7 billion, -51%) as those that will undergo the largest drops in exports.
How can UK and European agri food co-ops prepare for Brexit?
At this point many countries, including non-EU states, are advising their businesses on how to prepare for a possible no-deal scenario. Many contingency plans are put in place by the several agri-food co-operatives that have established either supplier relations, or even co-operative members relations with British farmers in UK. Agri co-operatives are preparing for two and a half years now, but still the uncertainty remains on what kind of scenarios it will be, so they still seem to be waiting for the decision so they can really work on a solution. It is very difficult to come up with good and efficient contingency measures for the case of no-deal Brexit as the time is rather limited and hope for an orderly Brexit still high.
However, to mention some examples, in the Netherlands, for instance, the horticulture co-operatives are working together with the fruit and vegetables agri co-operatives on a green lane, a sort of paperless pre-clearance together with customs, so when trucks reach the harbour, it has a sort of private lane to get on the boat. Another excellent case is a merger between two Irish dairy co-operatives in the northern half of the country. This example is critical to also underline the democratic involvement of farmer-owners of both co-operatives. Both co-operatives had a powerful turnout and 96,8% of the farmer-members of both co-ops voted in favour of this merger. The merger is an important strategic decision made by the shareholders of the co-operatives to safeguard against the risks of Brexit and it offers them a new opportunity for Brexit contingency planning. It will now provide an increased safety net in relation to whatever comes out of Brexit as the co-operative will now have added facilities in both jurisdictions north and south. It means they will have processing operations in both areas, which give the enterprise tremendous flexibility.
How is Copa-Cogeca helping members to develop contingency plans?
Together with our member organisations, we are closely following the developments and sharing practices and debating options. It is very difficult to come up with good and efficient contingency measures for the case of no deal Brexit as the time is rather limited and hope for an orderly Brexit high. However, since the triggering of the article 50, Copa-Cogeca formed a Brexit taskforce, giving in such way a coordination body and a space for our members to exchange on this important issue. The discussions of the taskforce have always been reflected and communicated as Copa and Cogeca’s position. We have also enhanced our collaboration with other stakeholders in the agri-food chain in order to communicate jointly to the European Commission the position of the sector and the damaging effects Brexit will have, especially in a no-deal scenario. During the last 2 years we have meet with Mr Barnier and his team in multiple occasions, as well with representatives of the competent Commission Directorates General, in order to exchange our views on the way forward and to present to them the extreme difficulties our sector would face.
Should European agri food co-ops trading with UK companies look for alternative markets?
Of course, the European agri food co-ops will have to look for alternative markets because the effects of Brexit on their sector/productions will be very significant. The market disruption created by a disorderly Brexit would be much more significant than the market damages created by the Russian ban on EU agricultural products. Our sector took years to recover and mainly did so by finding alternative markets.
If tariffs are re-introduced, how affected will the whole European food sector be?
Umberto Di Pasquo: Any re-introduction of tariffs will have negative consequences on the agri-food sector in EU, especially for the sectors such as dairy and beef (Irish in particular). If the WTO tariffs would apply on EU27 exports to the UK, this would lead to an increase of the EU food and drink prices and a decrease of the volumes exported. This decrease would probably also be reflected in a decrease of production and, therefore, would also put jobs at risk. We believe that the EU should make structural and adjustment funding available to operators and develop supporting policies if there are negative impacts arising from the changes in the relationship negotiated between the EU and UK. An emergency Brexit funds should be set up with sufficient budget to deal quickly with any unforeseen event.