IMPLICATIONS OF BREXIT FOR ORNAMENTAL HORTICULTURE

IMPLICATIONS OF BREXIT FOR ORNAMENTAL HORTICULTURE

Following the vote by UK citizens to leave the EU we are now in a period of uncertainty before the full implications are understood. It remains in the interest of both the UK and other EU countries to retain good trading relationships and eventually a trade agreement of some kind will be reached. What cannot be known at this stage is what will and won’t be included in these negotiations and the impact that this will have on the trade in horticulture.

In the short term the main impact will be from the change in the exchange rate between the pound and the euro. The pound has weakened following the Brexit vote. If this continues, then over a period of time the UK may seek to reduce its import of plants and flowers from the EU and increase home production. But, in reality the UK has lost much of its production base for cut flowers and other aspects like energy and labour costs still make an increase in glasshouse production of ornamentals in the UK unlikely. Growers of outdoor container plants may lose some export trade to the UK. However, exchange rates always do fluctuate and it may be that this is just a short-term shock. Growers and importers/exporters cannot make strategic decisions based on what we know so far.

The UK is a net importer of flowers, bulbs, trees and ornamental plants by a significant margin so, in theory, this should mean that the EU will argue to maintain the current situation for trading in these products. However, the reality is that it is unlikely that this small subset of UK/EU trade will be given special treatment so the outcome will depend on an overall trade deal.

The content of any overall trade deal will depend on the degree of flexibility shown by both sides on the other aspects that are of such critical concern to the UK. These relate to the free-movement of citizens and EU regulation. Undoubtedly the main reason why the UK voted to leave the EU was because of the perception that free-movement has taken immigration to unacceptably high levels and that this will get more severe in the future, further threatening employment and living standard prospects for UK citizens. The final trade agreement achieved will depend on whether a compromise can be reached on this issue. It is unlikely that an arrangement, such as that with Norway, which gives free trade access but also ties them in to free-movement and EU regulations, would be acceptable to the UK. The Swiss model is also not very smooth for the EU so it seems that a new relationship model will be required with the UK.

Despite the way the vote went, the reality for UK horticulture is that access to labour from outside the UK has become critical for business success. Many horticultural producers in the UK rely heavily on a workforce sourced from other countries like Poland, Bulgaria, Romania, etc. These workers are willing to work hard for wages and conditions that are not tolerated by many UK citizens. Any reduction in access to this labour supply will certainly increase labour costs for UK growers and reduce productivity.

One more positive opportunity for UK horticulture exists if the UK government chooses to retract some of the legislative burden introduced as a result of EU rules. Some of the environmentally-based legislation from the EU has reduced UK horticultural productivity, arguably without a corresponding environmental benefit. Examples include controls on pesticides and the recent ban on neonicotinoid pesticides that, according to the UK government, is not based on sound science. The process of harmonisation for pesticides across the EU has also led to the loss of many pesticides which, outside of the EU, the UK may have decided to keep. Also, the rules affecting the use of pesticides on ornamental crops may be different. The UK could also chose to take a more targeted approach to regulating Invasive Non Native Species so avoiding the problem of plants that are problems in other countries, for climatic reasons, being unnecessarily banned or controlled in the UK. However, although the UK government will be reviewing the EU rules it wants to keep and lose there has been no indication that these regulations, introduced for environmental protection, will be withdrawn. The reality is that environmental NGOs will lobby hard against any such changes and the responsible UK government department – Defra – is simply not resourced to manage such a change in a short period of time. The EU could demand that environmental protection rules are part of any trade deal so we really do not know yet which way this will go.

One area where the UK may want to develop tighter legislation relates to plant health. The outbreak of Chalara fraxinea (Ash dieback) in 2012 frustrated UK government who were prevented from introducing ‘Australian-style’ biosecurity controls due to EU rules. The protection of native trees is a major concern in the UK and tighter import controls for plants would undoubtedly follow another pest or disease outbreak that threatened the environment. This would have major implications for EU countries exporting to the UK but in turn may strengthen the UK’s own production base. Again, whether or not the UK could take action like this depends on the trade deal it strikes.

There are also implications for scientific research with the potential exclusion of the UK from accessing EU research funds. But that also depends on how a future UK government chooses to allocate its new budget after it ceases to contribute financially to the EU.

There will be an impact on the registration of Plant Variety Rights (PVR). These rights are enforced in the UK mainly through the European system. Without this then many varieties could be unprotected in the UK unless the UK system was used separately with its associated additional costs.

Without a trade deal the UK will find itself subject to tariffs, although for ornamental horticulture where UK exports are so low, this with have minimal effect on UK producers. Likewise it could impose tariffs on imports. Being outside the EU also gives the UK the opportunity to establish new deals with non-EU countries including other major flower exporting countries.

So there are many possible outcomes but what actually happens will depend on the nature of the trade deal that is done, EU flexibility on free-movement and the ability of the UK government to understand and manage the relatively minor interests of UK growers during negotiations that must be compressed to within a pressured two year period.

There will be many business sectors raising their concerns during this negotiation period. To ensure the best outcome for horticultural producers, both in the UK and the rest of the EU, it is important that the industry lobbies hard, both to national governments and in Brussels, to ensure that the interests of this sector are fully taken into consideration.