The proposed Brexit deal of Prime Minister Theresa May was voted off the table by the British Parliament. One thing has become clear: uncertainty prevails.
"It's complete chaos", director of VGB (Association of Wholesalers in Horticultural Products in the Netherlands), Matthijs Mesken, says. "It would probably be better if the UK delayed Brexit - instead of March 29. Then the uncertainty will not vanish, but they can buy time. Many people have not prepared for it, and more time also offers the possibility to get everyone in, including the ones that are behind now, as well as the smaller companies. Anyhow, no deal isn't good for anyone and will create a really chaotic situation."
The advice for Dutch companies exporting to the UK remains unchanged. Go and talk with your clients; register at customs, Quality Control Bureau (KCB), Netherlands Food and Consumer Product Safety Authority, get familiar with signing up your deliveries digitally, make sure you have the right software and know how to work with it, and keep in mind all possible logistical thresholds.
Talk with your clients
Meskens particularly worries about the first point. The UK government has drawn up requirements that goods need to meet in case of a no-deal Brexit. "Your customers must register, checks can be made, conditions must be met. However, last week I spoke to a British wholesaler who supplies to florists, and when I told them about this they did not seem to have given it any thought, which surprised me."
When there is a no-deal Brexit, those who are not well prepared can disrupt a lot for those who did prepare. "Our ultimate goal is that if you come to the port and have digitally filled in everything correctly, you can enter immediately. This is what we call the Green Lane or the Fast Lane. One can arrange everything ahead already. However, if the ones who aren't prepared cause a traffic jam, everyone will be affected."
Uncertainty in the UK
In the UK, uncer
tainty prevails."The unknown is the big problem, and it affects us all", says Michael Dodd of Sunflora, a British importer of flowers. Even though the final Brexit will not have direct consequences for their company - they mainly import from South America - they notice that the British consumer is more restrained. "January is always a slow month in the flower industry, but we now feel that it is extra slow. People are sitting on their money, waiting to get some more certainty."
The possible decrease in value of the Pound Sterling is Dodd's biggest fear. "When it devaluates, our flowers will become more expensive."
Devaluation of the Pound?
British flower importer Adam Porges of All S
easons Flowers has seen the weakening value of the Pound Sterling as a problem resulting in price increases. The majority of his flowers are imported from South America, and just a small amount from Europe, so exchange rate fluctuations have a big impact on his business. "Since the announcement of the Brexit, we've seen the Pound Sterling decrease in value. It hasn't gone up since then, we cannot forward buy much currency as it remains so weak. Also when the UK exits the EU, the Pound might decrease again."
Regarding the imports from South America, Porges foresees no problems, only when it comes to imports and any potential tariffs from Europe they are in the dark. "We cannot make any plans as long as we do not know what will happen."
Even though the Brexit might have negative consequences for these importers, it can also work in their favor. "When flowers from Europe get more expensive, there will be more demand for our products", says Dodd. Besides, he believes British wholesalers could profit from a Brexit. "Currently, the florists pay 20% VAT on their flowers bought from wholesalers and just 6% over the flowers they import from the Netherlands. When the UK leaves the European Union, the VAT over the Dutch ornamental products will possibly increase and therefore be less attractive for the florists."
"We're still gazing in a crystal ball"
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How are we supposed to know what will happen if they don't know it themselves?" John Meijer with Bom Group summarises the situation. Bom Group supplies high-tech horticulture projects worldwide. "We have quite a few big deals coming up in the UK and created pre- and post-Brexit clauses. That way we're trying to prepare. For now it remains uncertain what the future will bring, especially for the greenhouses we're exporting."
He continues: "If there will be a trade agreement, the UK will be a 'third country' in terms of exporting. We do business with many similar 'third countries' and will just have to see what terms are needed to import all products. Like all greenhouse builders, we import parts like steel and aluminum to the UK, as well as glass from inside and outside Europe. Getting the paperwork done should not be a problem. But of course there's more to it. We are based in the Hook of Holland and can see the ferries departing to England from our office. One wonders what will happen after the 29th. Traffic jams and waiting for hours for custom service, or even having to wait for months to get access to a boat? Those developments will affect us directly and will affect our clients, since they're active in the production and trade of fresh fruit and vegetables. But it's not just us - it's the complete Dutch export industry."
Since Brexit was announced, UK demand for greenhouse projects has risen. "The demand can't be compared to the explosive increase we saw after the Russian boycott, but we do notice how investors and companies see opportunities to increase the local production. Brexit is stimulating that."
Will it also stimulate local competitors in the greenhouse construction market? Probably not, John explains. "The Dutch horticultural suppliers are known worldwide, and our customer relationships have a long history. Since knowledge and technique are inseparable in our industry, a local party can step in, but they cannot offer the same level of knowledge. The expertise from seed to supermarket is unique for the Dutch suppliers and is not to be replaced easily."
All in all, Bom Group will keep following the news but isn't really stressed about the Brexit - even though the UK is in their top 10 of export countries. "It is what you deal with when exporting. There's always something going on somewhere. We've seen it before. Is it difficult? Yes. Will it cost us some? Yes. But in the end, we'll figure it out."
Beneficials & bumblebees
"We've ta
lked the various scenarios through, we've analyzed the risks - but so far we don't know anything yet", Jan Schuttrups, director with Royal Brinkman International, summarises. "In case of a no-deal scenario, we will have to follow the export rules and that's something we can work with. We know how to export, how to deal with the right documentation. Since we operate worldwide and import from various countries including the UK, that's not the challenge."
Customs and phytosanitary services are a bigger challenge. "Traffic at the border or long waiting times might make it more difficult for us to import our products. We will increase local stocks and deliver more from our UK location to cope with this."
A post-Brexit challenge to the company could be the devaluation of the Pound. "In that case all import products will become more expensive. Some horticultural supplies are produced locally, but various grower necessities are imported. If the prices are to rise, they might look into local alternatives."
More serious issues could occur in biological crop protection. Many beneficial insects have to be transported in a conditioned manner and delivered within a certain period of time. Additional checks and long queues can disrupt this. "Some beneficials have to be delivered within a day, where others can remain unattached for a week or so. But in the worst case scenario, growers would have to switch back to chemicals."
Moreover, at the end of March - Brexit time - the strawberries are to be pollinated. "You can pollinate tomato plants by hand, but bumblebees are necessary in the pollination of strawberries. Therefore our biggest worry is capacity problems and long waiting times at customs or phytosanitary services."
And now what?
Right after the results came in, opposition leader Jeremy Corbyn submitted a motion of no-confidence. This will be debated and voted on today. If PM May survives the vote, she’ll have three days to put forward a new Brexit proposal. If the PM loses the confidence of Parliament, the government will collapse and new elections will follow. Regarding Brexit, there are multiple scenarios: a new agreement with the EU, a second referendum, or a delayed Brexit. Officially, the UK leaves the EU on 29 March. That’s 72 days from today.