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Food prices would soar after no-deal Brexit, warns major dairy boss

November 13, 2017
Consumer Packaged Goods

One of the UK’s largest dairy producers has warned that a badly handled Brexit could lead to price hikes for food, and scarcity in the shops from April 2019, with dairy and meat products particularly hit.

Gabriel D’Arcy, the chief executive of LacPatrick in Strabane in Northern Ireland, complained that ministers were too focused on financial services and were putting the country’s food security and food standards at risk.

“The impression in the industry is we are not relevant or sufficiently relevant to get a strong hearing in the negotiations. The risk is we are a chip that will be traded. And that might be fine for England and Wales but not here in Northern Ireland,” he said. “Whitehall is fixated with financial services and they are not that bothered about food.”

The farming boss from Northern Ireland is happy for Britain to leave the customs union and single market but not until someone in government “articulates the vision in detail and with examples, and explains, with concrete examples, why it is better than the current regime”, he said.

Leaving the customs union in a hard Brexit scenario could lead to the price of meat doubling and the price of dairy, half of which is imported, rising by up to 50%. A block of cheddar imported from Ireland that costs £1 now will cost £1.41 under World Trade Organisation rules, with Ireland being a major producer of cheddar. This would prompt a vicious economical cycle and a period of “runaway” food price hikes, he warned.

“Tariffs for food are going to be at prohibitive levels so that’s going to drive the price of food up, and then it will probably give rise to another government intervention to dampen down food price inflation, which obviously will be very destabilising and that’s not what the British voted for when they voted for Brexit.

“I don’t believe the government will countenance such food price hikes, because of its impact on inflation, with salaries not rising in line with food prices.”

D’Arcy is the chief executive of a £360m-a-year-business, LacPatrick, the largest producer of powdered milk in the UK, providing infant formula to Africa, Asia and the Middle East.

With production plants on both sides of the border he can segregate his business in a Brexit apartheid, with northern non-EU milk staying north of the border and milk from across the border staying in the Republic of Ireland.

But he worries about the livelihoods of the 1,000 farmers he supports in Northern Ireland as “87% of their income presently comes from the EU”. After the public sector, agriculture is the second biggest sector in the region.

D’Arcy said he feared that there would be an attraction in trying to open up the UK market to US imports to keep prices down if EU tariffs rose. “That would certainly give rise to a massive incentive to open the market to American hormone-impregnated beef and chlorinated chicken and food from the cheapest parts of the world,” he said. “That will be the way to avoid food price inflation but that will be at some cost.”

He said he was particularly alarmed by a warning from Wilbur Ross in London this week when the US commerce secretary indicated the UK would have to adopt US food standards if it was to secure a US trade deal.

D’Arcy warned if the gates were opened to the cheapest suppliers in the world, the country would open the door to disease, fraud along the lines of the horsemeat scandal and threats to the country’s food security.

“We are putting the domestic food industry at risk, we are putting food standards and safety at risk, and putting a massive amount of jobs and the viability of the rural economy at risk,” he said.

D’Arcy said he felt compelled to speak out because he felt so angry at “this the eleventh hour” that there is no government in Northern Ireland to give farming a voice and no one in Westminster with a vision of Brexit.

“No one is banging the desks in Whitehall” to explain the dangers of a hard Brexit, not just to the farmer but to the consumer, he said. “The impression is in the [food] industry we are not relevant or sufficiently relevant to get a strong hearing in the negotiations,” he said.

He is also concerned about his export deals in Africa, Asia and the Middle East as these are all predicated on EU trade deals. No one has a vision, he said, describing “Boris going round like a buffoon talking about trade deals”. The reality is trade deals take years to complete, leaving all exporters’ future after 29 March 2019 in the balance.

He noted that the Japanese prime minister told the prime minister, Theresa May, that his country was focused on concluding a deal with the EU. “I’m wondering what deal will Britain get with Japan than is better than the deal the EU gets with Japan.

“When are these trade deals going to be in place? This is a huge risk, This is the same question that Rolls-Royce will be asking. Rolls-Royce sends engines over to America under an EU-US agreement. This is the same question BAE will be asking, the same question that Japanese car manufacturers in Sunderland will be asking,” he said.

By Lisa O’Carroll

Source: The Guardian

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