It is expected that Britain will formally trigger Article 50 of the EU’s Lisbon Treaty within weeks, marking the beginning of the end for Britain status as a full member of the EU.
From the moment it formally signals its intentions to leave the EU, Britain will enter a two-year negotiation phase dealing with its departure from Europe.
Hardline rhetoric of proverbially casting Britain off into the Atlantic without unfettered access to the EU market, as as a punishment, and a deterrent to other dissenting EU states has done little to shore up confidence in the European project.
Both sides (the remaining EU 27 and Britain) can threaten to inflict pain on each other, such as the EU imposing trade tariffs which would hurt the UK’s export business, or Britain entering favourable trade deals with non-EU countries.
The latter option could allow Britain access cheaper imports from non-EU countries.
Over the year 2016, month by month, figures from HM Revenue and Customs (HMRC) showed that 38% to 51% of the UK’s exports went to the EU, which accounted for 46% to 56% of imports.
Total imports by the UK far exceed total exports.
More importantly, when looking solely through an EU prism, Britain has long been a net importer from the EU.
In terms of the effect on market development, any actions taken by the EU to restrict Britain’s access to the EU market would affect the remaining EU members more than Britain.
Whatever the cause, the ramifications of a Brexit for us are undetermined, given that the whole negotiation process has not even kicked off, nor has either side given sufficient clarity on their vision for an EU without Britain.
As farmers, as individual consumers, and collectively as a nation, we should undertake our own SWOT analysis (strengths, weaknesses, opportunities and threats) to see how Brexit will affect us.
The effect of Brexit is far outside our control, individually or nationally.
But each of us can focus our concern inwardly, looking at how Brexit will affect us from a business perspective.
For example, let’s do a SWOT analyis of my dairy farm, purely from a Brexit viewpoint, starting with a few bullet points for strengths, weaknesses, opportunities and threats.
n Irish milk prices are strongly correlated to world commodity prices, therefore the impact of Brexit should have little impact on overall farm sales, in the long term.
n Global demand for milk products continues to increase, long-term prospects for dairy farming remain positive.
n Britain remains physically our closest neighbour, with whom we share language, a border and strong existing trading relationships.
These strong ties should help maintain our market share in Britain, and consequently hold up demand for our farm produce after Brexit.
n Exposure to Britain by my dairy processor is relatively high.
This may lead to short/medium term threats, in the event of a hard Brexit, as my processor must find alternative markets.
n The lead-in time for changing dairy output is significant.
Other than taking drastic actions, it is hard to govern milk output in the short to medium term.
n There is virtually no farm enterprise alternative which is insulated from the difficulties Brexit may bring about.
n As a remaining member of the EU 27, we don’t have the capacity to enter our own separate trade deal with Britain.
n Brexit may result in less liquid milk imported from Northern Ireland, which could boost retail sales of milk by Irish processors.
n The option to change enterprise remains available to me.
n I have the opportunity to diversify outside of farming.
n A rapid and hard Brexit may significantly reduce demand for our farm produce over the short term, leading to a cash-flow crisis, in the event of a significant drop in prices.
n Further deterioration of European solidarity, and the rise of nationalism may reduce demand for produce traded across borders.
n Britain’s exit may affect the overall CAP budget, meaning farm payments may be reduced.
From my farming perspective, I ultimately have a number of choices and strategy options, having undertaken a SWOT analysis.
By examining the weaknesses, I can make plans to counteract the vulnerabilities of my business.
Similarly I can take actions to avoid threats. For my farm, the plan is firstly to continue farming, with a cautious eye on the future.
Secondly, have sufficient reserves, or credit facilities available in the event of short term trading difficulties with the UK.
Thirdly, as the actual terms of the departure of Britain become clear, there will be time to assess how the changes will affect future farm profitability.
At that point, I can reassess the future impact on my farming business. How Brexit-ready is your business?
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