Why Lamb Chops Could Be on the Menu in a No-Deal Brexit

(Bloomberg) -- For the sheep on Alan Hutton’s farm outside Basingstoke, the outcome of Brexit will mean life or death.

Hutton, who farms about 1,000 acres (405 hectares) on grassy, rolling hills in southern England, specializes in raising ewes for other farmers to breed. Like many farmers and business owners, he’s grappling with the risk that Britain leaves the European Union without a trade deal, potentially throwing his livelihood into chaos.

Hutton says he’ll send about half his 150-animal flock to the meat market if there’s no agreement. He’s already sold some of his grains crop forward to lock in the price and has stockpiled about a year’s worth of fertilizers and pesticides.

Why Lamb Chops Could Be on the Menu in a No-Deal Brexit

“We’d sell the white-faced ones for meat because there would be no demand for them to be sold as potential mums for next year,” he said in an interview on his farm, pointing to ewes nearby munching on a field of turnips. “The sheep industry will probably contract massively.”

Sheep have been a part of Britain’s blustery landscape since ancient times. The wool industry was prospering by the time the Romans invaded in 55 B.C. and lamb is still a staple of British fare, be it in a traditional Sunday roast or lamb chops served with mint sauce. But, perhaps more than any other type of farming, sheep could be the hardest hit by a no-deal Brexit.

U.K. farmers export about a third of the lamb they produce, and almost all of that heads to the EU, particularly France and Germany. Without a trade deal, those key buyers would quickly turn elsewhere because of tariffs increasing costs as much as 48 percent, according to a study by the Agriculture and Horticulture Development Board.

As a consequence, the U.K. would end up with too much meat, sending prices lower. The AHDB has estimated prices would plunge 30 percent by 2025.

Why Lamb Chops Could Be on the Menu in a No-Deal Brexit

Still, with six weeks before the exit date of March 29, it's anyone's guess what could happen. Some farmers may have difficulty continuing operations without government support, said Dylan Bradley,  a senior analyst at Informa Agribusiness Intelligence in London. The U.K.’s Department for Environment, Food and Rural Affairs is working with sheep farmers to help them adjust and maintain trade continuity, according to a spokesperson.

Over time, farmers might also find new export destinations, such as China where mutton is popular in hot pots, according to Blake Holgate, an animal-protein analyst at Rabobank in New Zealand.

Why Lamb Chops Could Be on the Menu in a No-Deal Brexit

For some British sheep farmers, especially those in the hills of Wales, there are few alternatives. Unlike row-crop growers, which can shift their acreage mix each year, many sheep are raised on poor soil. More than half of U.K. farmland is only suitable for sheep and cattle grazing, according to the National Sheep Association.

For now, most farmers are making any preparations they can and holding tight in hopes that a deal will come through, said Hugh Broom, who raises a couple hundred sheep in Surrey. He’s already stockpiled livestock vaccines that he usually imports from Europe and is considering ways to diversify his business.

“If this deal doesn’t work out, I can see lots of people saying I’ll walk away from farming sheep,” he said.

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