United Kingdom: possible effects of Brexit on the EU food industry

During 2015, exports of food and beverages from the United Kingdom increased considerably, notably cocoa, food preparations, processed fruits and vegetables, milk, cereals, tea, coffee and spices.

In the 2015 year, exports from the United Kingdom to the United States represented 14,5% of the total, with beverages being the main product, for USD 2.100 million. On the other hand, imports from the United Kingdom from the European Union cover around 25%, while in North America only 4% is imported. That is why, after the announcement of the exit from the EU, it is expected that the pound will decrease against the dollar and the euro, making imports more expensive.

Among the benefits of being part of the EU, is the possibility of exchanging goods between the members in a simplified way, given the free movement of capital, services and labor. However, if the exit from the United Kingdom materializes, it will have to trade individually with each of the countries that make up the EU.

According to statistics from the European Fresh Produce Association (Freshfel), in 2015 the United Kingdom imported a total of 5,6 metric tons, equivalent to USD 7.500 billion, of which almost half came from the EU.

On the other hand, the EU must define what it will do with the Common Agricultural Policy (CAP), since it represents more than 40% of the total EU budget and more than half of the income of farmers in the United Kingdom come from of this policy, through agricultural subsidies that reach for the case of the United Kingdom, USD 4 million. As a consequence, an increase in prices is expected to ensure profitability, where fruits and vegetables should be the ones that increase the most.

Similar to what happens in Switzerland, there is a possibility that the consumption of local products in the United Kingdom may increase, thus boosting food sovereignty and consequently a rise in prices.

For the Chilean industry, the EU represents a highly relevant market, being the second main destination of Chilean forestry and agricultural exports, concentrating the 19% of the total sent in 2015. Since the entry into force of the Economic Partnership Agreement in 2003, Chilean forestry and agricultural exports to the European Union have grown from USD 1.434 million to USD 2.791 million in 2015.

During 2015, exports to the European Union suffered a decrease of 11,4% with respect to 2014, mainly due to a fall in the main four products, among which are: preparations for infant feeding, wines with denomination of origin, plywood and apples. However, products such as grapes, purees and juices from tomatoes, raisins, processed peaches, apple pulp and sparkling wine preparations, among others, showed increases in exports, when compared with the 2014 year.

For Chilean exports in 2015, the United Kingdom was the second main market within the European Union, with 19,4 concentrating% of exports, with only shipments to the Netherlands being higher.

According to figures from the Office of Agricultural Studies and Policies (Odepa) in 2015, agricultural products were exported for USD 481 million to the United Kingdom. This figure has shown an upward trend in the last ten years, considering that 2005 exported USD 319 million.

Source: Agrimundo - Forbes

 

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