European Union-based buyers are not committing to long-term contracts with UK meat suppliers over fears of no-deal Brexit tariffs, according to industry body the British Meat Processors Association (BMPA).
The BMPA reported that European customers considering buying British meat are now being confronted with multiple risks which they are not prepared to take.
And BMPA CEO Nick Allen has warned this could have dire consequences for some British meat industry businesses.
“If this continues, we could be witnessing the start of a structural and long-term decline in our nation’s farming capacity and heritage,” he said.
“Reduced orders from our biggest and closest trading partner (which are not easily and quickly replicated elsewhere) will filter all the way back to UK farmers who will bear the brunt of this loss of trade. It will put many out of business and, once they’re gone, it won’t be easy to re-establish those farm businesses.”
Allen said that chief among European buyers’ concerns is the possibility that they may well be saddled with tariffs as high as 65% on certain imports that are due for delivery after 31 October, the date the UK is scheduled to leave the EU.
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.
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 formBy GlobalData
“Committing to any orders or supply contracts that extend after the Brexit date therefore makes no sense whatsoever to our customers in Europe and, indeed, in the rest of the world,” he said.
“Insurers that cover these consignments and facilitate the movement of goods between countries are refusing to indemnify against losses related to a no-deal Brexit. Couple that with a volatile exchange rate, mooted border delays and complete uncertainty surrounding whether Brexit will even happen on 31 October means the obvious solution for EU buyers is to source product from elsewhere.
“This means that, come 31 October, British meat companies, who are now being forced to export day to day at ‘spot prices’, could have the rug pulled from under them and see orders simply cease with no long-term supply contracts to soften the blow.”
Allen said that while some contingency planning has been happening, there is a limit to what can be done and how much can be spent planning for no-deal. “Cold stores up and down the country are already full in anticipation of Christmas,” he said.
He said meat processors must risk committing to buying stock that they may not be able to sell and then “take it on the chin” if their export market collapses.
“A sense of panic is now gripping the meat industry as exporters see our Government frighten our continental customers with uncompromising threats of a no-deal Brexit,” he said.