Meat sector can live with no-deal Brexit

With the turn of the year approaching, the 'Brexit tension' is rearing its head again. After all, a transition period ends on Friday 1 January 2021. Despite this, Dutch exporters of meat are still quite relaxed. Not much will change for them on January 1, says Frans van Dongen on behalf of the Central Organization for the Meat Sector (COV). "We can also live with a peaceful no-deal."

After almost 3,5 years of negotiations, there is still no prospect of a deal between the European Union and the United Kingdom. It remains to be seen whether it will still be closed in December. Wednesday evening leaders Boris Johnson and Ursula von der Leyen will talk again. The general public seems to have already given up hope for white smoke. Van Dongen hopes that the chat between the British Prime Minister and the German President of the European Commission will not escalate.

'As long as there are no tariffs'
Van Dongen does not think that the European Union and the United Kingdom will reach a deal after all. If it does come to a deal, it will be a kind of declaration of intent not to make it too difficult for each other in terms of trade from January. According to him, the meat sector can also live with a peaceful no-deal, as long as there are no import duties on meat. "The chance of free trade between the 2 regions is greater than the launch of import duties," Van Dongen expects. Tariffs can arise out of teasing, however, when the relations become more grim.

Although the transition period formally ends on January 1, not much will change for the meat sector. It has been agreed that export certificates should only be used in the meat trade from April. "The first quarter of 2021 can be seen as the stoppage time of the transition period that ends at the end of this year." According to the COV spokesperson, the meat sector will therefore be fairly relaxed in the coming period.

The meat sector is aware that annoying 'hiccups' can arise in logistics, as is currently the case in the form of long so-called 'Brexit traffic jams' on the routes to the United Kingdom. Vion does not notice excessive demand from hoarding Brits in the final phase of the transition period, the spokesman for the slaughterhouse said when asked. Vion, which generates about 3,5% of its turnover from the United Kingdom, also says it is well prepared for Brexit in any form. 

Interests are great
Long-term tension is definitely noticeable. After all, the export interests are large. The British import €600 million worth of meat products every year. Pork is the largest Dutch-produced agricultural product sold in the United Kingdom. The interests in other sectors (such as floriculture) are also large, but according to Van Dongen this concerns more re-exports. In 2021, the COV expects export volumes to the United Kingdom to hold up reasonably well. In subsequent years, competition from other meat exporters (such as the United States, Australia and Brazil) is expected to increase. Those countries will undoubtedly want to conclude trade deals with the United Kingdom.

Nevertheless, Van Dongen does not foresee any clear cuts for Dutch meat sales to the United Kingdom in the coming years. "The Dutch exporters have the advantage that they can supply fresh meat." Another advantage, according to Van Dongen, is that exporters have a lot of experience in supplying third countries, something that the United Kingdom will soon become. For a goods exporter who only has experience within the European Union, the impact will be much greater.

"After China, the United Kingdom will suddenly become a very large sales market outside Europe. It is important that British demand does not disappear, because you will not easily find another market for mediums (bacon)", Van Dongen says. Sales in the United Kingdom are also very important in terms of sustainability. "The requirements set by the British provide an incentive for livestock farming in our country to become more sustainable. Moreover, the British are prepared to pay for additional requirements."

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness. He also focuses on dairy, pig and meat markets. He also follows (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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