Uncertainty is the watchword as the UK and the EU digest British voters plumping for Brexit in yesterday’s (23 June) referendum. In an exclusive column, analysts at Rabobank set out how they think the UK’s departure could impact certain parts of the food sector.

Too many variables make it tough to make hard predictions

Over the past few months, dozens of studies have been published about what would happen if there is a Brexit, but in reality, nobody knows exactly what is going to happen now the UK has voted to turn its back on the EU. There are just too many variables and unknowns. What level of import duties and/or quotas to expect for what type of product, for example, or when this will be implemented? Will investments be delayed, cancelled or relocated? Will farmers lose out on CAP subsidies? Redirection of good flows can cause prices to go up or down, which will also cause follow-on effects. However, we can flesh out some potential ramifications of Brexit.

Prices in the UK

The UK is a food importing country. Its isolation from the internal EU market after Brexit is likely to increase its costs of sourcing food products, while it also increases the costs of the technology needed to produce food.

Last year, the National Farmers’ Union warned the UK might need to import over half of its food within a generation. The NFU claimed that 60% of foods consumed in Britain are grown in the UK, as compared to 80% in the mid-1980s. This decrease is a combination of a growing population and stalling farm productivity.

The fall in sterling in the wake of the referendum result raises the prospect of the UK importing inflation. Over time, the UK’s decision to leave the European Union will most likely result in higher costs of trading. As such it will impact trade flows and prices of food and agricultural products, both within and outside the UK. Historically, the UK had a global empire that supported its cheap food policy. Today, the world market is not such a reliable low-cost sourcing partner anymore.

In the longer term, the UK also risks higher costs, and later availability, of new agricultural production technology. The EU stamp of approval no longer suffices in the UK. Suppliers will have to invest in getting a stamp of approval for the UK market, too. It may well be that technology providers choose to not apply for a UK registration or certification especially in the early stages.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData

The potential implications for a selection of food and agriculture sectors

Animal proteins

The UK is well known for its bacon imports with only 55% self-sufficiency. In the short term we do not expect a dramatic drop in trade, though prices may go up if new border measures increase costs.


The UK is a net importer of dairy products, even though it is the third-largest milk producer in the EU. Its main dairy import requirement is cheese, particularly Cheddar, although it takes a wide variety of soft cheeses, too. The main contributors to these UK imports are Ireland and France. Another important dairy import for the UK is butter and again Ireland provides the bulk of this. Brexit could provide significant challenges for Ireland and, to a lesser extent France, given their level of exposure to the UK market. Given the volume of import required, it is likely that trade would still continue. Clearly, it would be done under different agreements and on a country-by-country basis. The UK may use something like quotas.

Private Label

Brexit could potentially impact sales volumes and profitability of companies active across consumer foods, foodservice, food retail and wholesale in the UK, as well as on the Continent. Changes in currency rates could have a major impact on flows of consumer products. Private-label production could be significantly impacted. In times of a weak currency, UK food retailers reduce their buying of private-label products from producers with facilities are based on the Continent. Companies that produce for the European Union might decide to postpone, cancel or redirect investments for new or extra production capacity to regions within the EU instead of the UK. On the other hand, some new capacity might also be planned for the UK to limit the impact from EU regulation. If the pound continues to depreciate against the euro, it might result in UK food retailers looking for alternatives when buying private label and that could mean more investment needed in the UK to supply these food retailers. On the other hand, that would also mean excess capacity on the Continent.

Farm Inputs

Seeds, crop protection products, fertilisers and machinery are not subject to the Common Agricultural Policy. As such, Brexit is not likely to change anything for farm inputs. However, a weaker pound will mean higher prices for imported products. Most farm inputs in the UK are imported.

In the longer run, the fact that the UK is no longer part of the UK market will increase the costs of selling farm inputs products in the UK market. For example, files to get a registration for crop protection products will have to be filed separately for the UK market – with all the related costs of building research files to illustrate the safety and efficacy of a product. Some inputs may simply not become available in the UK market as the costs are prohibitively high in relation to the potential sales in the UK, especially in the case of new innovative technology for which a market is not yet established. These costs occur in many farm inputs sectors where intellectual property rights, safety and efficacy play a key role in the performance of a product.


Exporters of fruit, vegetables and flowers to the UK could be impacted as a result of bureaucracy/documentation at the border and a potential devaluation of the British pound following the Brexit. However, many exporters have been used to significant currency swings in the past and as such this is not something new to them.

The best-case and worst-case scenarios

In the best-case scenario, the UK becomes a member of the European Economic Area like Norway, which has the best possible trade agreement with the European Union. However, food and agri is not part of it. Norway still has some import tariffs on agriculture and fisheries, as well as some quotas. There have been trade issues with Norway in the last few years, quotas implemented, anti-dumping with salmon. 

Then you have Switzerland, which has a bilateral free-trade agreement with the European Union but that also means there are import tariffs on agriculture and fisheries here and there and it all depends on negotiations.

The worst-case scenario is no trade agreement and that could lead to 3-3.5% higher prices in the UK and the EU – and that is simply to get the products into the country; whatever then happens depends on competition and other elements. It could raise prices a lot. Now, it’s all up to politicians. There’s a fair chance the European Union will be tough on the UK because, if they’re not, there might be other countries who want to leave if they see the UK gets the best deal without all the obligations of being a member, that could send the wrong message.