The direct trade impacts of Brexit on Australia’s agricultural sector are likely to be relatively contained, Rabobank says in its June 2016 Agribusiness Monthly report.
The global agribusiness banking specialist says with the United Kingdom and the EU-27 only contributing a relatively small share of Australian food and agricultural (F&A) exports – 1.4 per cent and 4.6 per cent respectively by value – the direct trade implications of the UK’s historic decision to leave the European Union would be limited for the agricultural sector as a whole.
However, the report notes, for some sectors – particularly wine and sheepmeat– the direct export exposure is more significant.
Rabobank senior analyst Marc Soccio says these sectors in particular would be exposed to any sustained negative impact Brexit had on the UK economy and household incomes, as well as price inflation due to adverse currency moves.
“These sectors, in addition to wool and canola, are also the more significant Australian exports to the EU-27,” he said.
Mr Soccio said for Australia’s wine sector, in particular, the UK had long been its largest export market by volume, taking one-third of all wine volume exported by Australia to the world.
For dairy, the reports says, any weakening of the euro resulting from Brexit could also increase the competitiveness of European dairy products in already over-supplied global markets.
For the beef sector, Mr Soccio says, from an Australian export perspective, the EU and UK markets are relatively small in volume terms, but represent a valuable market.
“Apart from the financial and currency impacts of the Brexit decision, which have the ability to impact beef trade, the biggest question for the Australian beef industry will be around what might happen to the quota positions into the EU and UK,” he says.
The report says the implications of Brexit on both market access and UK food prices would need to be watched in the future.