View From Europe
By Colin Ley
WAITING FOR BREXIT – AT THE TIME OF WRITING! “The coming year promises to be a watershed for UK agriculture.”
“It’s rarely been as difficult to forecast the future for farmers or as crucial to keep trying to do.”
“Farmers told to prepare for a difficult and worrying 2019.”
I could go on, but these three headlines, extracted from the mass of New Year forecasts which landed on my desk during in the final weeks of last year, probably say it all. Not that I plan to be too downbeat about what lies ahead. There are always positives to be drawn from change and profits to
be made from those who ‘guess’ right. Normally, of course, I wouldn’t use such a word as ‘guess’ in the context of the high-level 2019 forecasts from which my opening three headlines were sourced. The bodies responsible for delivering such insights, after all, were:
top ranking farm business consultants, Andersons; the Agricultural and Horticultural Development Board AHDB); and one of my favourite sources of farm and feed business information, Rabobank Research, part of the Dutch-based international banking group.
At the time of writing! Starting with Andersons’ 2019 Outlook Report with its ‘watershed’ warning, it was a little disturbing that one phrase in particular was used by several of the firm’s consultants in their contributions to the 48-page assessment of what’s in store for farmers and animal feed suppliers in the year ahead. “Forecasting profitability for 2019 is rendered almost impossible by
the uncertainty (at the time of writing) over Brexit,” commented senior consultant, Richard King. He also added, however, that in the next few months we will, at last,
find out the terms of the UK’s exit from the EU, with all its implications for trade in farm products, noting that even the closest of future partnerships with Europe will be different from the current situation. As for the actual coming to pass of a ‘No Deal’ outcome, Andersons’
warned that this would result in a massive upheaval in the agri-food sector. The firm also found room for a degree of New Year optimism, however. “Although it’s a cliché, with change also comes opportunity,” they
said, adding that the next few years promise plenty of change and therefore a chance for the best businesses to grow and prosper. Graham Redman, another top Andersons’ consultant, employed
the same ‘time of writing’ line in his review of the agricultural industry’s general economic prospects. “For 2019, we find ourselves in a situation of no business clarity,
with no clues for what a post-Brexit UK might look like (at the time of writing),” he said. “This might curtail investment and delay any
PAGE 14 JANUARY/FEBRUARY 2019 FEED COMPOUNDER
improvement in productivity for another year.” Michael Haverty, charged with the task of assessing the impact
of Brexit on UK farming and feed supplies, even opened with the phrase. “At the time of writing,” he began, “Brexit negotiations are reaching
a climax, yet there is much uncertainty over the eventual future UK-EU relationship.” Later, in what amounted to his list of Brexit ‘bottom lines’, he added:
“Undoubtedly, Brexit is signifying major change within the UK food and farming industry and is understandably causing concern to many.” Despite acknowledging that UK agri-food has many strong
competitive advantages, he went on to warn that UK farm business strengths will only be exploited in 2019 if the industry is given a ‘fair chance to compete’. “Drastic changes, such as severely curtailing labour or permitting
tariff-free imports of a range of agricultural produce, often subject to lower regulatory standards, will severely jeopardise the industry,” he said. “This would be particularly so if UK policy inhibits domestic
agriculture from being internationally competitive by insisting on higher production standards than that for imports. Agricultural, trade and labour policies need to work in unison so that the UK can have a thriving and sustainably competitive agri-food industry in the long-term.” There’s a whole lot more in the report’s 48 pages, many of which
are well worth studying. Just don’t expect too many solutions to emerge; not ‘at the time of writing’ anyway.
Rarely this difficult! AHDB’s agri-markets outlook also tackled the Brexit effect, alongside the continuing fall-out from the USA/China trade dispute. “With 2018 characterised by huge uncertainty, driven by politics
and the weather, the one clear certainty is that the UK farming industry is on the brink of significant change,” said Phil Bicknell, Head of Market Intelligence at AHDB. While declaring that the outlook document was based on all the
latest data at AHDB’s disposal, input from the organisation’s own expert analysts and contributions from specialists across the agri-food industry, Mr Bicknell’s most telling comment merely stressed the extent to which we’re still all pretty much in the dark. “In the midst of volatile markets, politics and weather,” he said, “it’s no straightforward task to look ahead.”
Melting pot of risks Rabobank’s contribution to the ‘what next’ debate, while taking an altogether more global view, reached the conclusion that the future stability of world food prices is threatened by a ‘melting pot’ of risks, driven by trade wars, disease and extreme weather. Warning farmers, and all the associated industries, to be prepared
for a difficult and worrying 2019, Stefan Vogel, the bank’s head of agri commodity markets, said it was difficult to remember a time when there were so many threats emerging, across so many fronts. Listing his major concerns for the coming year as the US/China
trade dispute, African Swine Fever (ASF), Avian Influenza (AI) and the rapid approach of the next El Niño, he identified trade wars as the biggest threat, with their potential to further increase feed cost burdens on the livestock sector. With pork and poultry producers, by far the biggest consumers of
Comment section is sponsored by Compound Feed Engineering Ltd
www.cfegroup.com
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