Leaving the EU could force food manufacturers to become less reliant on imports, predicted a Rabobank report. Import costs for finished products would be higher than for raw materials, so UK firms could look to food manufacturers at home, it said.
But, the report warned Brexit had a “potential downside” in terms of the sector’s labour and prices.
Labour in the food and farming sector could become scarcer post-Brexit, Rabobank predicted. A boost in domestic production, combined with Prime Minister Theresa May’s pledge to leave the EU’s Single Market, meant the sector’s workers – of which about a third are EU nationals – could decrease in number. Wages could also increase for the sector’s workers.
‘Up to 8% more expensive’
The report also claimed some foods could become up to 8% more expensive, regardless of any trade deal May secured. Extra border controls would make importing olive oil, tomatoes, pears and other fresh fruit more expensive, said Rabobank.
Rabobank senior analyst Harry Smit said: “UK consumers should brace themselves for some price rises – perhaps by as much as 8% – on those products on which Britain is almost solely reliant on the EU.
“Unfortunately, whatever the outcome of Brexit negotiations, they are going to have to get used to higher prices on olive oil and many fresh fruit and flowers.
UK food prices could be kept in check by adopting a ‘New Zealand [trade] model, which would see all import tariffs for food products removed, said Rabobank.
“Much of the current focus on how Britain will trade post-Brexit revolves around the UK continuing trade with the EU, or providing additional protection to its farmers by imposing protectionist import tariffs,” said Smit.
‘Eliminates all food import tariffs’
“A third possible scenario not being as widely discussed is the New Zealand model – essentially a ‘present to the rest of world’, which eliminates all food import tariffs, possibly as a quid pro quo for receiving more favourable terms for its key export sectors, like financial services.
“This would be consistent with the UK’s historically pro free-trade approach and indicative of politicians’ keenness to keep food prices in check. But, it could be bad news for the EU, which has previously had preferential access to British buyers via the single market.”
Meanwhile, the official process for the UK to leave the EU was expected to begin at about 12.30pm today (March 29), as British EU envoy Tim Barrow will hand-deliver a letter from Prime Minister Theresa May to EU council president Donald Tusk.
Food sector post-Brexit – at a glance
- Brexit could force food manufacturers to become less reliant on imports
- Labour could become more scarce
- 8% increase in food prices
- Removing import tariffs could balance food prices