Yahoo Finance Farmers across Europe will suffer if UK drops food tariffs, report claims
Farmers across Europe will suffer if the UK unilaterally drops tariffs on food imports after Brexit, in a move that will increase competition and reduce costs for British families, new analysis claims.
Rabobank said the UK's adoption of a New Zealand-style model should not be dismissed, even though economists have warned that it would "wipe out" parts of UK agriculture.
Harry Smit, a senior analyst at the bank, said such a move would be "consistent with the UK’s historically pro-free trade approach", but would also reduce food security and make the UK more vulnerable to volatility in world market prices.
Rabobank also warned that Britons were likely to pay more for fresh fruit, vegetables and olive oil after the country leaves the EU, even if it drops tariffs.
Rabobank said the price of these products would go up as the UK had "no alternative than to source from EU countries, no matter what the scenario will be".
"Border measures" if the UK leaves the customs union would raise domestic prices and potentially hit consumption.
The EU is currently the UK’s most important trading partner for food and agricultural products.
Total imports amounted to £47.5bn in 2016, of which 71pc originated from the rest of the EU.
Mr Smit said after Brexit, EU countries would have "an interest in maintaining access to the British market, while the UK will no longer only have to look to the EU for its food needs".
Irish beef farmers and EU exporters of beef, diary, grain and sugar would be the hardest hit by more competition from countries outside the bloc, said Mr Smit.
However, British farmers would also be hit by increased competition if the country dropped tariffs on food, with most relying on financial support from the Government as the UK breaks away from the EU's common agricultural policy.
"Not all farmers will go out of business, but they will go through a difficult time," said Mr Smit, who said the turbulence could last a decade.
Rabobank also said the UK's reliance on migrant workers, particularly in the food manufacturing industry, could also raise labour costs and consumer prices after Brexit if policymakers restricted the number of foreign workers.
The primary agricultural sector employs approximately 20,000 migrants, or around 6pc of all workers in the sector, according to research by Oxford University.
Rabobank said this number was likely to be "much higher" during harvest when companies employ seasonal workers.
It added that the fall in the value of the pound had reduced the income of migrant workers in their local currencies.
"As a result, we can expect the UK’s food manufacturing industry to face higher labour costs with the lower availability of foreign labour. This will have a negative impact on the competitive position of the British food manufacturing industry," it said.
