A new study has revealed the full extent of Brexit’s potential implications for British beef and lamb supply chains.

The study explores the impact of tariff and non-tariff measures (NTMs) in both deal and no deal scenarios on beef and sheepmeat trade.

It was commissioned by levy bodies AHDB, Quality Meat Scotland (QMS) and Hybu Cig Cymru – Meat Promotion Wales (HCC) and conducted by The Andersons Centre.

The most detailed analysis of its kind – encompassing a literature review, primary research and development of a new model to understand the costs of continued trade with the EU27 – it concludes with seven recommendations for the industry to help mitigate the challenges posed by Brexit.

These include a call for the UK and EU to reach a robust mutual recognition agreement to reduce the need for official controls and minimise trade friction, and a fast-track or lighter- touch Authorised Economic Operator (AEO) system to help businesses overcome some customs measures; implementation of an e-Certification system.

It also called for better communication between UK and overseas regulatory authorities and training for exporting businesses to better understand regulatory procedures, as well as making developing overseas markets a priority.

“This analysis suggests that the impact of a No-deal Brexit in October would be deeply felt by sheep and beef farmers in Wales,” said John Richards, Industry Development Manager at HCC.

“This research has shown that exports to Europe, which is currently the destination of over nine tenths of our overseas trade, could fall by around 92%.

“The report estimates that this would lead to a 24% fall in prices for lamb, at the time of year when thousands of lambs are coming onto the market every day. This would have a major impact on farm incomes.

“As well as offering a sharp warning of the impact of WTO Tariffs on the Welsh livestock sector, the report also contains valuable analysis of the effect of other non-tariff barriers and how exporters can prepare.”

Key findings 

Trade impact under a Brexit deal scenario is relatively small for both beef and sheepmeat, although slight decreases in exports (1.1%) are expected due to non-tariff measures adding inefficiencies to just-in-time supply chains.

A no deal Brexit would cause significant upheaval for both beef and sheepmeat trade, with exports to the EU falling substantially. Some trade with the EU would continue for beef, with the EU’s Tariff Rate Quota (TRQ) allowing market access.

A new UK TRQ for beef imports would be open to all countries, causing a dramatic rise in non-EU imports, lowering prices and driving up domestic consumption by 7%. Domestic consumption of sheepmeat is expected to rise by 14% due to lowering prices.

The overall impact on the value of domestically produced meat is expected to be -4% for beef and -31% for sheepmeat.

At farm-level, Andersons’ Meadow Farm model sees profitability fall from £93 per hectare to £68 per hectare in a deal scenario and -£45 per hectare in the event of no deal.

Frictionless trade with the EU27 as a third country is not currently possible and the development and implementation of the required technology could take a decade.

Value deterioration, especially for fresh meat, arising from border-related delays due to physical checks and sampling accounted for more than 60% of NTM costs on checked loads. Smaller businesses are likely to be disproportionately impacted by NTMs, due to the regulatory burden and the cost of more checks over fewer loads.

Trade barriers will exert inflationary pressure on inputs imported from the EU27, which farmers would bear the brunt of due to tight industry profit margins.