Brexit or Bremain for the UK fresh fruit and vegetable industry?

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When it comes to the contentious issue of Europe, and our place in it, the UK is about to perform the Hokey Cokey. Will it be in or out? And who will be shaking it all about on June 23, 2016 when the nation votes? The implications of Brexit or Bremain are profound for the fresh produce industry, and it’s clear come June 24 that nothing will be the same. But how should the industry vote? Produce Business UK looks at all the issues and speaks to a number of figureheads 

On June 23 the UK goes to the polls for the second time in just over a year. However, while last May’s general election – significant as it was – formed part of a general every-five-years occurrence, this year’s European Union referendum is unquestionably a once-in-a-generation decision. 

At stake is the UK’s 43-year relationship with the EU. In short, should the UK remain a member of the EU, or leave? The implications of this vote for the fresh produce industry are manifold. Leaving – the Brexit of popular usage – would clearly usher in a brand new dawn for UK horticulture and agriculture. Staying in the EU – Bremain; no it’s not as catchy is it? – while less dramatic would also have consequences for every facet of the industry and beyond.

But what will this brand new dawn or these new consequences look like? The short – and possibly trite answer – is that we don’t know. As the famed Hollywood scriptwriter William Goldman said when describing the movie business: ‘nobody knows anything’. It’s the same with the EU referendum. Uncertainty, or the great unknown, are integral components of any fresh produce venture. Growers understand risk. But this level of ambiguity is unprecedented.

Firstly, our own Government is split – and as an aside it’s clear that whichever way the chips fall on June 24, the governing Conservative party risks, at worse, civil war, or, at best, an extended period of soul-searching. The mixed messages coming out of Whitehall are only muddying the waters. Liz Truss, the Secretary of State for Environment, Farming and Rural Affairs (Defra), advocates remaining, yet George Eustice, the Farming Minster, is in the out camp.

Truss told the National Farmers Union’s (NFU) Annual Conference in February that leaving would be a ‘leap in the dark’, stating: “At a time of severe price volatility and global market uncertainty […] the years of complication and risk caused by negotiating withdrawal would be a distraction from our efforts to build a world-leading food and farming industry that brings jobs and growth to Britain.”

Eustice took a different view, arguing: “Having wrestled with all sorts of EU regulation over the last two-and-a-half years, we would do far better as a country if we ended the supremacy of Europe and shaped new fresh thinking policies that really deliver for our agriculture.”

Both arguments sound compelling; nobody wants uncertainty, risk and complication, but fresh thinking is always welcome. So where is the balanced view? Partners in Produce’s Sarah Calcutt is urging all involved in the fresh produce industry to do their homework. However with two-and-a-half months to go until ‘D-Day’ the political manoeuvrings by the likes of David Cameron and Boris Johnson still threaten to overshadow the real issues. 

Economic impact

Calcutt states: “The situation as it stands is that you have a lot of people who are listening to a lot of fairly right-wing rhetoric about how we don’t need Europe, we’re great, we’re still an Empire and we don’t want migrants and all the rest of it. I think there are still a lot of people who because June 23 is still a long way away aren’t doing any homework about the wider impact.”

Economically, the picture isn’t any clearer. The value of the British pound and interest rates – two key levers for horticultural businesses – are going to be affected. Indeed, the Bank of England has stated that Brexit and the prolonged uncertainty that would follow could prompt a credit crunch, “which would lead to a further depreciation of sterling and affect the cost and availability of financing for a broad range of UK borrowers”.

For Calcutt, it’s not as simple as ‘we’re going to regain control of our borders’ (and that is a debate all by itself – the erstwhile chair of the Joint Intelligence Committee Pauline Neville-Jones has already said: ‘Free movement actually means the ability of EU citizens to work in Britain, not to enter Britain unchecked’.). The economic impact is what concerns her most.

“We’re going to see some issues around the value of the pound and interest rates,” she explains. “If we come out and some of the predictions about the financial service institutions are true, we’re going to have until 2020 to get this in place – so three-and-a-half years of uncertainty and lots of issues. It’s going to affect how much money people have to spend on food. It’s going to affect importers’ ability to do deals and all those sort of things. It’s going to affect the price of food.”

Labour implications

And while agriculture wrestles with the current subsidy arrangements with Brussels (the Common Agricultural Policy [CAP] provides €3 billion (£2.4bn) in direct support to UK farmers), in horticulture the key dilemma is labour. In particular, the access to, and controls over, the movement of free labour. The UK fresh produce industry – and the food industry in general – relies heavily on an influx of seasonal migrant labour. If we leave the EU we might not have access to that free flow of labour.

At the recent Agri-Expo industry show at the Kent County Showground, this was one of the key points that formed the In/Out Referendum Debate. Calcutt was quite clear that the UK would not have the same amount of home-produced food without this labour and urged caution. UKIP MEP Stuart Agnew, however, was adamant that a work permit scheme would be easily implemented. If reassurances concerning this were forthcoming would it give those erring on the side of leaving more confidence to do so?

Trade flow

Another area of concern is trade. At present, the free market means exporting into Europe is fairly straightforward. Outside of this, it’s unclear how simple the arrangements will be if growers want access to this 500 million-strong market. EU requirements would still have to be met. 

“There are advantageous trade deals at the moment,” explains Calcutt. “We’re paying a 2% tariff on things that we’re exporting. That would change dramatically. Look at what happened to countries like Norway who are trading into the EU – they pay a substantially larger tariff and have to meet legislation of which they have no influence upon at all.”

Those advocating Brexit argue that we could target other markets – the US, Asia and the Middle East are often mentioned, but many deals would have to be renegotiated. While some see this as an opportunity, others see nothing but chaos. Much will depend on your appetite for uncertainty.

A recent report published by the Food Research Collaboration arrived at the conclusion that if the UK was to leave the EU, food imports would become more expensive, prices would increase and there could be major disruptions to the finely tuned just-in-time supply chains on which the UK food system now depends. 

At the NFU conference Truss expanded on the point about trade, arguing: “I believe that by voting to remain we can work within a reformed EU to reduce bureaucracy and secure further reform while still enjoying the significant benefits of the single market, which gives us access to 500 million consumers. We are able to export our high quality products freely without the trade barriers we deal with elsewhere and with a say in the rules.”

Yet her junior minister Eustice countered by stating: “The truth of the matter is if we left the EU there would be an £18bn a year Brexit dividend, so could we find the money to spend £2bn a year on farming and the environment? Of course we could,” he said. “Would we? Without a shadow of a doubt.” 

Regulation

Bureaucracy is another sticking point when it comes to the EU. But will repatriating decision-making to the UK mean we’ll be free of Brussels regulation? Food safety legislation won’t evaporate overnight. Ethical trading policies will remain. A miraculous arena of free trade and less regulation isn’t going to suddenly appear and provide a panacea for those frustrated with EU red tape – perceived or otherwise.

Industry opinion

So what are other industry figures saying about Brexit or Bremain? Many are remaining neutral. The Fresh Produce Consortium has issued a statement backing its impartiality saying: “The full considerations of whether the UK should remain in the EU or not go beyond the remit of the Fresh Produce Consortium (FPC), which is not in a position to advise the public how to vote. However, there are a number of areas which should be considered in relation the future of the UK fresh produce industry and the UK fresh produce market:

  • Customs tariffs
  • Recruitment of foreign workers
  • Regulations, e.g. food safety, plant health, marketing standards, environment
  • EU funding and Common Agricultural Policy
  • Alternative access to the EU Single Market
  • International trade agreements
  • Research and innovation

Jack Ward at British Growers is another to adopt a policy of neutrality, explaining that not pushing an agenda either way helps to foster sensible discussion. He adds: “One less person having a voice is probably a good thing too.”

Calcutt, meanwhile, is urging everyone to read whatever they can get their hands on. “There are so many things that need clarifying and that will assist people in horticulture to make their decision,” she points out. “We need clarification on what will happen with seasonal workers. Nobody in my sector will be able to make any type of informed decision until we know what that kind of landscape looks like. We’re not reliant on the subsidy end of things, although it has made an enormous difference to the horticulture sector, but what we do need clarification on is what happens with workforce.”

Back at Agri-Expo, avowed Eurosceptic Stuart Agnew was clear in his distaste for the EU and backed leaving. Arable farmer Kevin Attwood stated that free trade in Europe was critical for businesses and consumers alike. He argued: “There are frustrating aspects [of the EU], but we know what they are. What will the landscape look like if we’re out? If we’re outside of Europe we could be at a competitive disadvantage. Will we survive? Of course, but there will be enormous structural change. Why should we leave the biggest trading block in the world?”

Elsewhere in the debate at Agri-Expo, voices from the banking industries and financial sectors urged caution – and for people to think with their head, not just their heart. Questions about the UK’s participation in Europe but out of the EU were pertinently raised – will we be allowed to dabble on the sidelines for instance? Does Europe need the UK more than we need it?

One thing is clear, between now and June 23 more rational information is required – not just emotive rhetoric – to help the UK’s fresh produce sector and the wider food industry to make an informed choice. The next two months should be lively at least.

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