Brexit change the market demand for the Brits and for the other europeans.Domestic and EU demand for commodities and for food is relatively static and if the British arable industry is to grow then it will have to look to the rest of the world
Over the last few years a decline in consumption in grain-based products by Brits has outweighed a rise in the UK population .In the year to March the UK milled 6.461 milion tonnes of wheat (85% of which has home-grown).That compares with an average of 6.393 mt , in the seven seasons since 2009/2010.Barley usage in the 12 months to March was 1.804 mt , compared to 1.788 mt over the last seven seasons .
There has been an increase in oat use , with 12-month use to March at 521,800 t, up 9% on the seven -season average and up 51 % on the volume 10 years ago .It is similar picture of static demand across much of the rest of the EU ,where there is little or no population growth .
Growth in the UK cereal industry is dependent on increasing exports outside the EU.The UK has made some progress in increasing the volume of non-EU exports , but it will need to do more .
The challeges faced by the UK and other EU growers in capturing new world markets were explored in a report by Rabobank earlier this year .The report argued the EU needed to reposition itself in the world market , identifying a number of challenges in achieving that goal :
- the emerge of large exporters and importers including Brazil and China.
- a fragmented EU farming structure with an industry made up of a large number of small farmers with high costs of production where strict legislation can restrict competitiveness.
- the EU is a price taker in most international markets and cannot adopt rapidily to make most of the opportunities .
- a need by producers and food companies to become more flexible to respond to changing consumer demands inside and ouside the EU.
- a reliance on imported inputs such as phosphates and natural gas , along with a reliance on unstable markets such as the Middle East and North Africa .
- internal turbulence including Brexit ,financial crisis , Russian import bans and the refugee crisis.
The UK will not be immune from these challenges when it leaves the EU and it would probably be wise for the Government and the industry to tackle them as part of its post-Brexit strategy .
But there are some ways in which the UK is already ahead of its EU neighbours.Perhaps the most significant is farm size .After the Czech Republic the UK has the largest farms in the EU at an average 92 hectares compared to 33 ha for the whole of the EU at 22 % of the total compared to just 3% for the whole of the EU .
These figures include all farms ,so the average size of arable farms is likely to be much bigger than the universal figure.The UK has also some of the highest cereal yields in the world , with only a handful of countries near it including Ireland ,Denmark ,Germany and New Zeeland.
The size and yields of British farms mean its farmers are more likely to be able to compete on a world stage whele scale allows greater output , more scope for efficiencies and greater returns for investment .The average UK farm is a little larger than the average South American farm , although still half the size of the average North American farm and less than a fifth of the size of the average Russian and Oceanian farm .
Further consolidation after Brexit could mean UK farms get larger .