Brexit may affect our food export too

In a referendum held on 23 June 2016, the majority of Brits voted with yes to leaving the European Union. Now it is the turn of the United Kingdom’s parliament to act, and if they decide in accordance with the will of the Brits, the UK will soon quit the EU. This development urges experts all over Europe to analyse the possible consequences of the Brexit. Many people in the UK say that leaving the EU is a bad idea, but Brussels is urging the UK to start the Brexit negotiations as soon as possible, in spite of the fact that there is a two-year period available for these talks.

Experts in the agri-food sector are also analysing the possible scenarios. For instance an Italian analyst firm concluded that dairy companies in Ireland, France, Germany, the Netherlands and Denmark will be among the biggest market losers if the UK leaves (source: CLAL.it) – in 2015 the UK imported 494,000 tons of cheese and 106,000 tons of butter. It also matters to Hungary whether the EU’s second strongest economy and net contributor quits the community of European countries or not. Why? Because we aren’t only losing a market for our products and labour force, but as a net beneficiary of the European Union subsidies we will also suffer a setback in subsidies if the UK quits.

What is more, with one of the biggest supports of the concept of the Europe of nation states leaving the EU, Brussels might move in the direction of creating a neutral United States of Europe to the detriment of member states’ sovereignty. With the Brexit Hungary isn’t threatened by direct market loss at the moment, but other countries may easily force our products out of the British market.

The United Kingdom is one of Hungary’s top 10 export markets for agri-food products. We mainly sell agri-food products with a higher added value to them. With the exception of recession years 2008 and 2009, our export to Britain was developing steadily. In these years we also imported more and more from the UK, but this growth was less dynamic than our export performance. The value of our export to the United Kingdom in 2015 represented 224 percent of our import from there.

While our export got six times bigger between 2000 and 2015, our British import grew by 534 percent. Hungary exports a wide range of agri-food products to the UK, with the main items being meat and meat products, frozen vegetables, meat dishes, preserved fruits and vegetables, ice cream, powdered food and food industry by-products (dog and cat food). The latter, dog and cat food, represents 22 percent of our British export and we sold almost 16 percent more products in this category in Britain. Ice cream, instant soup and sauces provided for 17.2 percent of our export to the UK in 2015. In 2014-2015 Hungary exported 9,000-10,000 tons of meat to the British market and three quarters of this quantity was poultry. The three biggest export categories provided for more than half of our British export in 2015. Last year 9 percent of our total pet food export and 8 percent of our meat product export were sold in the UK.