The extra-mature organic cheddar that Wyke Farms Ltd. is putting down to age in its storehouse will be ready to eat in the post-Brexit world. The question is, who will buy it?
The cheese is made with organic milk from cows that graze on the lush hills of Somerset, free of genetically-modified food and routine treatments with antibiotics. It’s unclear whether these organic standards will still be recognized by the European Union and even the U.S. once Britain leaves the trade bloc.
“Will we be able to sell that in the U.S. as organic?” said Nicholas Saphir, chairman of the Organic Milk Suppliers Cooperative, which provides milk to Wyke Farms. “That is the big question.”
Come March 2019, when Britain is set to exit the EU, certificates confirming the organic status of U.K. products—from cheese to biscuits to breakfast cereals—may no longer be valid in the bloc. As a knock-on effect, Britain will also be excluded from equivalency arrangements the EU has with countries like the U.S., a $43 billion market for organic goods.
The risks go well beyond the fate of organic farmers. As Britain’s future relationship with Europe remains clouded, manufacturers are fretting over the prospect of border delays, increased paperwork and higher costs, not to mention the threat of tariffs. Trade with 70 nations risks falling off a cliff edge if the government doesn’t act quickly to roll over EU trade deals, the U.K. Parliament’s International Trade Committee warned this week.
“There is very little time left,” said Jacqueline Mailly, a senior EU regulatory affairs adviser at Hogan Lovells International LLP. “It’s a very insecure and uncertain period of time for the food industry, as for many other industries.”
Negotiations on the future trade partnership are set to begin by the end of the month. The EU, which published its own draft negotiating position Wednesday, rejected the U.K.’s bid to keep access to bits of the single market -- particularly for its banks -- and said the bloc didn’t share Theresa May’s goal of making a success of Brexit.
But as politicians squabble, it’s decision time for many enterprises.
“Many farmers are now making business decisions for the next five or even 10 years without knowing what trading environment they will be operating in,” Minette Batters, the newly-elected president of the National Farmers Union, said in a statement last week.
The EU issued a notice to food manufacturers last month, warning them of the legal repercussions of the U.K.’s withdrawal from the bloc, including its vast food law. Besides organic certification, the rules cover everything from genetically-modified foods to infant formula to honey. British exports to the EU may face labeling changes, and firms may be obliged to present the origins of their produce, said Katia Merten-Lentz, a partner at Keller and Heckman LLP in Brussels. Imports into the EU may also be subject to customs checks to prove that hygiene requirements have been satisfied.
A transition agreement would help buy time and ensure the continuity of the business before the U.K. gets its own accords, according to Saphir, who’s spent decades in the food trade. The cooperative of more than 200 farmers he chairs has a joint venture with Wyke Farms to make extra mature Kingdom Cheddar brand cheese for the U.S., the world’s biggest organic food market. An agreement on a transition period could be reached this month.
“There is a really big issue about what happens in March next year, not just for our organic cheese, but generally for anything that is certified, if there is no transition deal,” said Saphir. “Whether you talk about cheese, whether you talk about beer or cars, the complexity of unwinding all of this is real.”
Britain’s Soil Association, which certifies organic food and drink, is working with the government to secure a replacement for the current agreement with the EU and hopes to achieve it before Brexit. It’s also supporting the authorities in seeking separate standard-recognition arrangements with non-EU countries.
Back at Wyke Farms, Managing Director Richard Clothier, whose family has been making cheese for generations, stood among thousands of blocks of cheddar aging in wooden boxes.
“There are going to be anomalies thrown up by Brexit,” said Clothier, who sells most of his cheese in the U.K., but exports to places including France, the U.S. and Scandinavia. “We’ve benefited from the free movement of goods across Europe.”
©2018 Bloomberg L.P.