Brexit – what does it mean for agriculture and global markets?
Does the UK’s vote to leave the European Union present disaster or opportunity?
Commentators worldwide, from Chicago to Pretoria, give their thoughts on Brexit, and what it means for agriculture.
Agbiz, Pretoria, South Africa
“For South African agriculture, the most exposed sectors to the British market are fruit and wine industries.
“Overall, South Africa’s agricultural exports to Britain have averaged 7.4bn rand over the period 2013-15. This equates to 25% of total EU agricultural imports from South Africa.
“An exit of Britain will benefit some sectors in South Africa, such as the citrus industry, as they will no longer have to comply with some of the tough EU quality standards and regulation.
“However, South Africa’s bottled wine exports might be negatively affected due to a gap in the wine quota, which might be left unfilled.”
Jonathan Armitage, head of agribusiness, Bidwells, UK
“Whilst an expected fall in sterling may give a small lift in [UK] commodity prices and, indeed, in support payments, which are set in euros, the overriding theme will be huge uncertainty.
“We expect this to lead to reduced activity in the sales and letting markets and a reduced level of investment generally.”
“The pound will continue to fall, at least in the short term, but that does make the UK more attractive to overseas investors.
“Many global investors will take advantage of this, just as they did in the immediate aftermath of the last financial crisis.
“While currency rates stabilise and confidence returns to the property market, the clearing economic outlook should present a great opportunity for those bold enough to seize it.”
John Clemmow, commodities commentators, Barclays, UK
“The political landscape in the UK may have fissured but, for now, Britain remains within the EU and will do so for the next 29 months, possibly for even longer.
“So, for now, the immediate economic consequence of Brexit is a sharp devaluation of sterling and further downward pressure on gilt yields.
“Neither of these moves is catastrophic for he the UK economy. In fact you could spin them as being positive for certain sectors.”
Pekka Pesonen, secretary-general, Copa & Cogeca, Brussels
“A key point for us will be to avoid any further disruption to the European agriculture market, given the importance of the economic ties across the Channel and the current agricultural market crisis.
“It’s crucial to maintain market stability. Over half of UK food and drink exports currently go to the EU and the UK market is also a big export market for food and drink exports from other member states.
“We will work hard to ensure that the farming community in the EU or the UK are not the ones to pay the price for international politics and the impact on trade is minimised.”
Nick von Westenholz, chief executive, Crop Protection Association, UK
“The EU referendum has provided a welcome opportunity to scrutinise current agricultural policy, and shortcomings in the way poorly managed regulations damage the competitiveness of UK farming has been a key concern.
“We now have a unique opportunity to shape the regulations governing our farming sector for the benefit of UK farming.
“We need a regulatory environment that fosters innovation and incentivises the development and adoption of new technologies in pest control and crop science.”
Brian Richardson, chief executive, H&H Group, UK
“This morning’s referendum result to exit the EU will cause much short term turmoil and upheaval to markets and speculation as to what the future holds for the UK.
“Our notice period with the EU is at least two years from when we formally give notice to quit so rules and regulations stay the same for at least that period.
“Clearly what happens to currency and the stock market in the next few months will have implications for business and, I suspect, cause trade to slow whilst people wait to see what happens.”
“[The list of unanswered questions] starts with what policy will the UK establish for beet farmers growers?
“What trade agreements will be in place within the EU and with all other countries?
“This rings true for suppliers of cane sugar for refining, as well as white sugar under the current agreements with the European Union.
“White sugar imports in the UK from the EU are on average at around 200-250,000 tonnes [a year], with exports of UK sugar into EU at around 60,000-70,000 tonnes.”
Richard Feltes, RJ O’Brien, Chicago
“Risk off is the theme as margin calls and heightened volatility force capital to the sidelines.
“Key take home points are that 1) worse for banks, 2) will take days for financial markets to sort out, 3) likely negative for energy and 4) fear that global growth will be undermined.”
“We expect weakness in many emerging market currencies.
“Weakness in these currencies can stimulate dollar-denominated agriculture exports in order to maximise local revenue. This acts to elevate global inventories and can depress prices.”
Thomas Kujawa, co-head of softs department, Sucden Financial
“The headlines are obviously taken with the economic shock following the Brexit vote to leave the European Union and this has resulted in some record-breaking market performance in currency, stock and commodities charts.
“The ‘established order’ has now experienced its first, and probably not the last, earthquake with cracks/questions now emerging under Western Europe which have strengthened the dollar and put a question mark over growth rates, and so demand.”
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