After Senegal, the United Kingdom is the second largest export destination for Dutch onions. Last year, total exports to the UK increased by more than a third compared to the year before, so that exports amounted to more than 140,000 tonnes, about 14 per cent of the total exported volume of Dutch onions. All in all, these figures are positive, but what are the consequences of Brexit on this flow of export?
Due to a fall in the value of the British pound, importing agrarian products will become more expensive for the British. It is expected the rate will drop even more next year, which will have a negative effect on export. Yet Arie van Baalen of River Onions isn’t worried about a decrease of onion export to the UK. “The UK is an import country, and nowhere near self-supporting. I haven’t noticed much zest for expanding the onion production yet either. After an expensive year, the so-called hog cycle enters into play, so that there will be an area expansion next year, and that often results in lower prices.”
“Brexit might be causing economic instability, but I don’t think it’ll have much effect on the buying behaviour for onions. A characteristic of the onion prices is that they fluctuate a lot throughout the season. A drop or rise often has much more effect than the pound becoming roughly ten per cent more expensive. The price difference of the product is often much larger than the currency difference. When the onions are low in price, the pound rate per balance doesn’t make much difference,” Arie says. “Of course, it’s important to cover your currency risks by means of currency insurance. You have to be on top of that, but it’s a must in the onion trade with its many export destinations in any case. If requirements regarding documentation and transport become stricter, it could have a limiting effect on exports.”
“You’ll see that we, as an exporting country, will manage to find our way again in the UK after a Brexit. It’ll only be over for us if the country implements an import ban for Dutch onions, but I think that’s very unlikely. Before the referendum, Brexit was a hot topic, but as a British customer said to me at the time: ‘It’ll cost me tomorrow, but the day after tomorrow we’ll happily continue with a different rate level.’”
More information:
River Onions
Arie van Baalen
arie@river-onions.com
www.river-onions.com