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Brexit

Unstable pound brings uncertainty in UK market

Theresa May's announcement at the Conservative Party Conference at the weekend, to activate article 50 before the end of March 2017, triggered a drop in the pound to its lowest level in 31 years.

How is this affecting fruit and vegetable businesses in the UK, who import and export on a daily basis? How do these companies see the future after Brexit? We spoke to spoke to importers and exporters, both in the UK and overseas, to get their reactions.



Unstable currency
Rob Cullum from Pacific Produce, an importer of Peruvian produce into the UK, said he is not pro Brexit just against some of the European bureaucracy and can understand why the UK population voted to leave.

"My main concern about Brexit is that it will make the currency unstable. If we know roughly what the exchange rates will be, we can all get on with our business, which is growing and selling fruit. But if we need to constantly back track and hedge money it adds complexity and risk. This volatility will bring price fluctuations in the market, big EU retailer suppliers won't be affected too much as they can ride the market price, but in the UK we work a lot on forward fixed prices which, in a volatile currency environment, will hurt the growers.

"We are now having to buy money forward to cover contracts, but if the buyer then decides to cut the order, for whatever reason, you are left holding currency which has a potentially lower value.

"The situation creates both risk and opportunity - you might have bought fruit at a high price and by the time it gets to market the price has dropped. Or you may be able to profit from a short supply elsewhere. But we will definitely see more price fluctuation than we are used to and, I would think, increased instability in the market place."

Less import regulations
But it may not be all doom and gloom. Some major exporting countries feel very restricted by the EU's rules and regulations and hope that a stand-alone UK might be a bit more relaxed when implementing their new import regulations.

According to Justin Chadwick from South Africa's Citrus Grower's Association, Brexit could be advantageous for South African citrus exports but it will depend on what the UK Government does in terms of plant health and tariff regulations. "The obvious hope we have is that the plant health regulations will change. As they don't have citrus production in the UK, CBS would no longer be an issue."

The other side is on tariff and quota issues - at the moment there is one set of regulations for the whole European Union, so it remains to be seen if they will make their own new regulations or adopt those in place in at the moment. "Our hope would that we can renegotiate the tariffs for citrus, again because they don't have any domestic producers to protect," said Justin.

Business as usual
"Everyone in the industry is talking about it and, to be honest, I feel like we will not know much for the next few months. Since the announcement we have been speaking to our French, Spanish and Dutch growers. General conversation about Brexit has been positive and we feel that there could be a benefit from leaving the EU," explains Wilf Whittle of Sharrocks, a UK fruit and vegetable distributor and importer.

"Growers who we work within Europe are quality orientated and some have invested heavily in machinery and certification just to be able to supply us. I expect our relationships with these quality driven suppliers to grow stronger as the years go on, to allow us to supply the UK wholesale and foodservice market with the very best available produce.
 
"Short term we expect to see some high currency fluctuations and the uncertainty is making it hard to predict what price European produce will be at. Long term, it is hard to predict, but at the moment it is best for us to take it one week at a time in this fresh produce game.
 
"As for longer waiting times at ports, we have seen the waiting times extend more regularly in the last few years. Delays of 6 hours are becoming the norm on some days. The problems at large ports, such as Calais, are distressing from a humanitarian point of view. Everyone I’ve spoken to within our industry is concerned at the lack of action being taken to protect drivers and migrants alike. A strategy needs to be developed and executed by the European Union, and supported by governments involved."
 
Wilf expects it to be business as usual as far supply from Europe is concerned, but will the UK consumer become more patriotic after Brexit and buy British?

"Brits have been and always will be proud to be British. Whether that’s Cheshire rhubarb in May, Scottish strawberries in July or salads from Lancashire in August. An example of this is English apples - we are struggling to keep up with the demand for some traditional varieties such as Bramleys."
 
"If the borders are closed with Europe and there is no free movement of people, I think work permits would still be granted for our seasonal produce. At the end of the day, working on produce farms isn’t too bad. I personally think it would be a good idea to introduce schemes at colleges/ schools because the majority of the general public do not know how produce farms work."

UK potentially less attractive due to unstability
Do you think it will have consequences for the South African grape industry?
"Europe and the UK still account for approximately 80% of SA table grape exports and any uncertainty or instability there will be of concern to us," said Willem Bestbier from the South African Table Grape Industry.

"We have a trade agreement with the EU, which will most probably have to be re-confirmed/re-negotiated with the UK. This could even be beneficial, as the UK have no table grape industry to protect, but a weaker or unstable Pound Sterling would make our trade more difficult and potentially less attractive."
 


Publication date: 10/4/2016
Author: Nichola McGregor
Copyright: www.freshplaza.com


 


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