The Wider Effect of Brexit – Changes in the Price of Fuel, Feed, Fertiliser, and Access to Workers

Austin SmithersThe tremors following the EU referendum have reached far and wide and for some businesses, the recent fall in the Pound against currencies like the US Dollar and Euro, has ended up costing them more. There’s been great concern over the number of workers to fill positions post-Brexit. 100,000 EU citizens living in Britain headed elsewhere in the three months following the EU referendum and there’s been a 14% decline in new worker registrations from Hungary, a 16% fall from Poland, and a 20% drop in workers form Slovakia.

But it’s not just workers that are a problem—a soft Pound exchange rate has meant that feed, fuel and fertiliser have all become more expensive for UK businesses.

Chairman of the Agricultural Industries Confederation (AIC) fertiliser sector, Howard Clark, commented: “Already we have seen a devalued Pound lead to raw material costs increasing by some 15%, which is bad news for the whole food chain.”

The UK has around 200,000 businesses involved in importing, storing and distributing animal feed and this industry is worth an estimated £4.4 billion. Higher feed import costs could impact a substantial amount of these businesses and their economic contribution. Fertiliser and feed price increases have been joined with more expensive fuel costs accredited to a bullish US Dollar and a much weaker Pound. Sterling fell by around 20% against the US Dollar post-Brexit and that fall has converted into higher oil and fuel prices for agricultural machinery.  

As negotiations regarding a trade deal begin, businesses will need to consider the prospect of tariffs and trade barriers, as well as the threat of losing access to the Single Market and more border and customs controls. These factors may cause fuel, feed and fertiliser imports and exports to become even more costly.

To combat business losses due to soft exchange rates, companies are now looking at forward buying their currency requirements in order to gain a stable exchange rate, in a  volatile market. Contact an industry expert like Global Reach Partners to learn more about the tools available to ensure your business maximises its international money transfers and protects itself against market risk.

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