AgriCulture Live Podcast Transcript - Episode 23

​

Rebekah 00:01

Right. Welcome to AgriCulture Live. My name is Rebekah Shields. I'm one of the directors at Agricultural Recruitment Specialists. Now don't go anywhere. You don't want to miss this episode. It's a great episode because we're going to be diving deep into the theme of trade deals and the effects on UK agriculture and farming. It's a very newsworthy topic at the moment for the future of our industry. If you have got any questions or comments on what we're discussing, please post them in the chat and we'll come to them as soon as we can. So, John, would you like to introduce yourself?

John 00:38

Yeah, good morning Rebekah. Thanks for asking me to be involved in this session. It's much appreciated and I hope I've got something sensible and useful and interesting to say to all those people who are listening in. I think there's 190 people in total listening in, which is that's a great number. So I'm John Giles.

00:56

I work for a company called Promar International. We're an agri-food consultancy company. We're quite large, we're about 130 people in the UK and in turn we're owned by our parent company, Genus plc, a large livestock genetics company with about 3 000 people dotted all around the world. Um, I've been with the company quite a long time, Rebekah. As you know, I had a bit of a shock on LinkedIn when it said, John, you've been there 30 years, but I joined. I joined the company at exactly the right time, when the Berlin Wall came down and found myself going out to Eastern Europe and other places further and further east Russia at the time, Ukraine and I've been very lucky. I've never really stopped traveling and I've been to about 60 countries around the world working on a whole range of projects in the agri-food sector. And obviously, something that's been keeping people very preoccupied over the last five years, maybe more, is the whole issue of trade deals.

Rebekah 01:56

Yeah, I bet you've got a few stamps in your passport, John!

John 01:59

There's one or two there, Rebekah.

Rebekah 02:01

So, we've had you here before and we know that you're a great, you know key fountain of knowledge and I'm sure a lot of people listening will take some key points away from our chat today. So, we're going to be talking about trade deals and the effects on UK and agriculture and farming. So, could you just firstly give us a bit of a recap of the last five years and what's been going on?

John 02:25

Yeah, well, yeah, we could be here for the rest of the day talking about that, Rebekah, but I'll try and keep it short, I think. I think I'll go back a bit further than five years actually, because, if you think about it, we actually uh, the UK decided to leave the European Union in 2016 uh, so almost 10 years ago now and we're still feeling the after effects of that decision. We finally actually left Europe in 2020 and but we took most of that. It took four years to sort of decide. Having made the decision to leave, it took four years to actually make that happen, and then we spent most of 2020, between January and December, sort of working out further fine detail. So that's been a massive change because, obviously, you know Europe is, first of all, it's our biggest export market for agriculture and food products, but also it's the biggest source of imports for us, and there's been all sorts of trade friction issues related during that period, which particularly have impacted on smaller companies, I think. But we now have signed an agreement on SPS and that is yet to be fully finalized, but that will take away a lot of those trade friction type issues in Europe. We've still got no tariffs, we've still got no quotas, so, and there's still 450 million people in Europe. So I think Europe, if we can sort of bottom out this SPS agreement will still be a very, very important market for the UK and a source of supply, not just in the short term but maybe for the longer term as well.

03:56

But obviously one of the whole points of Brexit was to be able to develop our own trade relationships or trade deals with other people, other countries around the world. So, we started off with the Oceania countries. They're fairly small markets in the overall scheme of things. So New Zealand, the population is about 5 million and Australia is about 25 million. So they're not massive markets 25 million. So they're not massive markets If you know the um. But obviously part of the part of the purpose of a trade deal is it has to work both ways. So there is concern in the UK that we'll get more imports of New Zealand and Australian dairy and meat products in particular. That hasn't really happened yet, but, but obviously the opportunity is there to do it. Um, and then beyond the uh, that hasn't really happened yet, but obviously the opportunity is there to do it. And then beyond the Oceania countries. We've done quite well. We've now got 40 trade agreements in the UK of our own. Some are more significant than others, but amongst the big ones in Asia, the Comprehensive and Progressive Agreement on Trans-Pacific Partnership it's always a bit of a mouthful, but that covers 12 countries across the sort of ASEAN type markets.

05:15

It looks as if we're going to get a trade deal sorted out with India and obviously India 1.4 billion people. People talk about the Brexit dividend and we don't need to be reliant on Europe anymore. I think Europe will still be very important to us, but these are markets India, the Asian markets, the US market. It looks as if we're moving towards a trade deal there. We'll still probably have a 10% tariff on UK products, but we're probably better off in agriculture and food than maybe the steel industry or the car industry. So it's all relative.

05:52

And again, there's the opportunity for American exporters to um, to trade into the UK and that might be with beef or pork or, uh, soya beans or poultry or fruit, um, so there has to be one of the whole things. You can't have. It can't be just a one-way thing. We have to accept that other countries will look at the UK market as an attractive market and then other trade deals, the gulf region, you know, Saudi Arabia, UAE, these sorts of places, um Japan. We have a sort of rollover agreement from what we had when we were part of the European Union. So there's been a huge amount of change, huge amount of uncertainty at times as to what's going to happen next, basically, but it's been an incredible. Whether we say it's five or 10, it's been an incredible moment in time, I think, for the UK, and that includes farming and food so what is the rest of the world doing and how do we relate in the UK?

06:56

The rest of the? Yeah, so we've been very active. There was concern, um, I think at the time we left Europe that we know we weren't really cut out in the UK to develop trade deals or negotiate trade deals. We didn't have the experience. I think, sort of, slightly tongue-in-cheek, one or two countries around the world said you know, we can provide you with the expertise you're going to need, but we've done quite well. We've negotiated 40 trade deals since we left Europe. But you know, compared to Europe, Europe has 70. So, you know, we've got a bit of.

07:32

If we want to get back to parity with our European counterparts, there's still quite a lot of work to go. Countries like Hong Kong, Singapore, New Zealand, Peru and Chile are all very active in developing free trade deals and they're very good at doing that. Basically, countries involved in trade deals um, I've already mentioned Europe with their 70 agreements around the world, but, but China and the US in particular, they haven't been sort of letting us have a free run at this. They are also, very active in negotiating trade deals around the world. So, it's a busy place.

Rebekah 08:13

It sounds like it! So tell us what is the impact on, say, UK exports on the agri-food products?

John 08:21

UK exports have been doing pretty well over the last couple of years. I say Europe is still important and there's been a decline in trade to Europe and that's largely been down, I think, to the. I think two reasons the sort of trade friction type issues I mentioned earlier on, but but also maybe just some uncertainty amongst European customers as to what the UK is really up to and how important is Europe going to be for us and um, but the. So the growth, uh, we've seen is coming from other parts of the world, often from a relatively low starting point, but places like the Middle East and Southeast Asia and the US. We've done quite well in those markets and the challenge obviously will be to carry on doing well.

09:10

I always think, Rebekah, that having market access is one thing, but you also need to have market knowledge, and so there's countries like Indonesia. Take that, for example. You know, on paper it looks like a fantastic market 275 million people, fast-growing middle class. The economy's growing at five or six percent a year. So we could get access to Indonesia, and hopefully we will at some stage in the future. But then you need to have companies in the UK who sort of wake up on a Monday morning and think we're going to be in Jakarta this week and you need to understand the, the market size, the market trends, that, who the competitors are, how do consumers think and behave, and where does the UK fit in?

09:57

So having negotiating market access is great and the government will say, well, look at all the great things we're doing and isn't that good? And it is. But then you need companies to start on Monday morning and say right, you know, exports are our priority and within that we've identified certain markets and we're going to find out and learn a lot about those markets. Because if you go to somewhere like Indonesia, who do you find there? You find the Australians, the New Zealanders, maybe the Irish, the Germans, the French, the Dutch, the Americans. We're not always the first cab on the rank, and so we've got a bit of bit of making up to do I'd say so.

Rebekah 10:39

So, what would you say if you could say, out of all the, the different markets would be the best for UK agriculture going forward?

John 10:47

In terms of exports?

10:51

Yeah, that's a really good question, but I'm not sure there's a you, you know, sort of being a consultant. You know we sort of try and make things sound a bit more complicated than they are sometimes, Rebekah, but it depends a little bit on the nature of the company, the size of the company, the export experience of the company and also what their aspiration is going forward. But I think you know, look Europe, I think you know, if we can bottom out these SPS agreements, Europe will still remain a very, very important market for us. But look at these markets in India, in the US, in Southeast Asia, in parts of the Middle East. They're all attractive. For some reason Some have to be more attractive for the other and they can't all be the most attractive. So I'm not sure the perfect market for the UK exists, but it will depend on individual circumstances. But I think the good thing I would think is that we've got lots more options these days.

Rebekah 11:48

And do you think that the trade deals that have been done have been in favour of agriculture and farming?

John 12:01

In the UK, yes, have been done, have been in favour of agriculture and farming, um, in the UK. Yes, time will tell. Rebekah, the impact of trade deals sometimes takes a number of years to uh, to actually see the full impact of this. Basically, um, and in some cases you can get into a situation you know, would that have happened anyway without a trade deal? But obviously a trade deal does facilitate additional imports and exports. I think you know people are.

12:23

There's no doubt people are concerned about the Oceania countries and also maybe the US, which has a huge agricultural sector. It's highly competitive. They're pretty good at exports in the US. The USDA has an export fund. Mr Trump might have something to say about that in the future, but historically they've had a fund called the market access program, which is about 200 million dollars a year to help people in the US export. So it's well funded.

12:51

I suppose the concern in about US is around things like beef and soya beans and poultry, and we've heard lots of. But they can produce these products very competitively. But not all American beef is hormone-treated, not all American soya beans are GM-modified. Not all US poultry uh washed in chlorine, um, and so on and so forth and so for. Therefore, market access is one thing, but again it's how American companies view the UK market. They've been busy developing exports in other parts of the world. They might look at the UK. A lot will depend on what the customer decides. So it may be that technically we're allowed to import American beef. But if supermarkets and food service companies say no, we don't want to do that, and if their consumers say we're not very keen on that idea, American companies might find it hard work, and we do know that they find the way that the British import and retail food service sectors operate is it's quite challenging and where do you think our biggest strengths lie in terms of dealing with the rest of the world?

14:08

I think our biggest strengths are in the, you know, are the quality of our products. Basically, there's no, I don't think there's any need around the world for any more low quality products. The markets we've been talking about, whether they're India or the US or the gulf region, um, and even within Europe and certainly in Asia, they want, they want the best of the British products that we have. So our inherent high product quality and reputation and, to some extent, image We've got a great image to play on, basically, and so I think those are the things that we need to build on. The slight concern is you know how export orientated are we in the UK and have our companies really got the bit between the teeth on exports? Some have, but many haven't, and that's because they're so fully occupied supplying in the domestic market.

Rebekah 14:56

So what do you think, then, as an industry, that we need to do in order to really maximize all of the opportunities?

John 15:12

I think we need to concentrate on our high inherent quality. We probably need a clear strategy about where we want to go. We've got all these markets opening up around the world, including on our doorstep, Europe, but we talk about at Promo. We've done lots of work on helping people prioritize markets, so we talk about markets that are either maintain markets or build markets, or invest markets, or markets that might remain sort of slightly opportunistic in their nature. So, we need to be able to work out which part of the world fits here, these four, uh four categories and then act accordingly.

Rebekah 15:51

Basically is there, you know, a way of getting like the industry together to you know look at targeting some of these countries?

John 16:04

Effectively there's lots of people who can help. There's, uh, organizations like the AHDB do some great work in international markets. You've got things, organizations like the Food and Drink Exporters Association. Um, it gets a bit complicated because you've got people in Scotland and you know, with our devolved government structure here, Scotland, Wales and Northern Ireland sometimes have other priorities and there's always a bit of a debate about do you promote as Britain, you know, under the Union Jack, basically or do you promote as Irish, Scottish or Welsh, you know under the union jack, basically, or do you promote as Irish, Scottish or Welsh? So, but that's not impossible, uh, to sort that one out and get the best of both worlds, maybe. But I think we, we need a, we need a sort of clear export strategy as you go to lots of other countries around the world and they, they have, they know where they want to go.

16:49

I sometimes think in the UK, in among, in, amongst all this change that's been going on over the last five years and all the excitement of these new trade deals, we haven't clearly worked out of these four market types build, maintain, invest, opportune, where, where certain countries fit in. And so there's no shortage of people or organizations who can help DEFRA themselves, as I said, the AHDB food and drink exporters association, and so on and so forth, and individual trade associations, but we all need to come together under one banner really so come on.

17:27

We look strongest when we act in a united fashion rather than everybody going off doing their own thing.

Rebekah 17:44

Okay, and so where does all of this lead in terms of the trade deals? You know, what are the overall effects? Give us a good rundown John.

John 17:48

I think the overall effect is that we there's an opportunity for us to be much more export orientated. But, as I said, in the case of all these trade deals it's a two-way thing, so we need to be prepared for other people. The UK is an attractive market for many people around the world. You know 65 million people. The routes to market are pretty clear. You know, we are maybe not quite as wealthy as we were five years ago, Rebekah, but the UK is still a wealthy market. It's still seen to be able to.

18:24

We've done work with people all around the world and they say you know, if we can supply a UK retailer in particular, or the UK food service sector, that's almost like a badge of honour and it means that we can go to people in other parts of the world and say look, if we're good enough for the UK retail system, we'll be good enough for you. So we have to expect that other countries will find the UK market attractive, so it will make a more competitive situation and as we open up into new markets we will come into. You know, we will come up against the best of the best, uh, be it people from New Zealand, Australia or America or Ireland, or France or Holland, we will be. Uk companies will be more exposed to, you know, the real sort of, at times white hot heat of international competition.

Rebekah 19:10

So we will need to up our game and how do we do that?

19:15

Well, there's all sort of that again that we could be here for the rest of the day talking about that one Rebekah. But I mean there's, there's a number of number of things. What one thing we've got in the UK as well, we've got very good um environmental and sustainability credentials and that is increasingly important around the rest of the world.

19:30

So, it's not only people who've got good products and good service and good prices. Those are almost taken for granted, but these days people want to know what are your environmental or sustainability credentials? And that's where the UK. I think it's always dangerous to say we're the best, but we're certainly not the worst at that and we've got a strong track record in there. But yeah, we will be up against the best of the best.

Rebekah 19:57

And are we too late with some of them? You know where Australia got in, or New Zealand?

John 20:05

Yeah, that's a very good question. I don't think you're ever too late. Uh, look, being the prime mover. Advantage is sometimes people use the phrase that can be, that can be. Uh, that can be a dangerous situation because you make all the mistakes before everybody else and then people watch you and copy you and learn from you.

20:21

But yeah, so again, if we looked at southeast Asia countries, Australia and New Zealand they've been operating in those markets for probably 20, maybe 30 years. So, do they have an advantage over us? Yes, they've sometimes got their own companies on the ground in those. You know, when we were in Indonesia, we were looking at the dairy sector and you know Fonterra from New Zealand have got three factories there. You know, almost 1,000 people employed, so they are firmly ensconced on the ground.

20:55

But at the same time, you know, most people around the world want options, yeah, want options the ground. But at the same time, you know, most people around the world want options, yeah, want options, and I think with um not least. And so why can't the UK be an option? And if we, I don't, I don't think the UK is ever going to be a mass market supplier in these export markets. I think we're going to be relatively niche, but we're going to trade on our high quality, good environmental sustainability, credentials and so on and so forth. So, I don't think we're sort of looking to. We haven't got enough, we're not big enough to sort of take over the world in the way that maybe the US and China and one or two other countries are. So I think we'll be a bit of a niche player in some of these markets. But, um, niche players can be very profitable if, um, if you get it right, I, but so I don't think it's ever too late. People always want options for other suppliers and people always want new suppliers.

Rebekah 21:43

So, if you're a company in the UK, you've only been trading in the UK. What would you say to them? If they want to, you know, start to venture into the rest of the world, where would you tell them to start? What would they do?

John 22:02

Historically, people in the UK have started in markets that are quite close to home and that's not uncommon around the world. So, you know, if you look in Europe, for example, which is our closest and still our biggest market, people often start in countries like Holland or Sweden or Ireland in particular, before branching out to go into markets. I sometimes get that it's India and China, and these Asian markets can all sound incredibly attractive, incredibly exciting, and they are, but they're usually better suited to companies and organizations who've earned their spurs in other markets around the world. First, to go into China as your first export market or India as your first export market, that's like going from the cub scouts to the paratroop regiment, really, Rebekah and so probably start local, but I think the main thing look, we're a bit biased at pro markets.

23:00

It's what we do here is you need to understand the markets. So before doing anything, you need to sort of probably do your do your homework on. You know, is it? Is it the middle east, is it Saudi Arabia or the gulf? Is it? Is it Ireland, is it Holland? Is it, uh, markets further afield? But you need to do your homework and find out. What about? Find out as much as you can about the market. You need to become an expert on these markets, and to be an expert on all these markets is quite challenging. So, you need a sort of quite a high degree of focus and there's all sorts of ways you can do that. There's lots of information that can be gathered um about these, but you need to understand the market. And I think when companies go to these markets, the people they're going to be talking to they expect you to already know something about their market or maybe, in some cases, quite a bit about your market. So being well informed, I think, is really important.

Rebekah 23:54

And understanding the culture as well and traditions and how business is done.

John 23:59

Yeah, yeah, all those things. So you've got the sort of big macroeconomic indicators how many people, how wealthy are they, economic growth and all these sorts of things. But, yeah, understanding the structure of the market, consumer behaviour, competitor behaviour and all these things, you know, yeah, you need to build up a. It's a bit like doing a jigsaw in some cases, Rebekah, but you need to sort of complete the jigsaw and then and then make your move on the basis of knowledge and some strength, rather than hoping it, hoping sort of, in some ways, almost hoping for the best. They're bound to like our products, aren't they? They might do, they might not.

Rebekah 24:37

Absolutely. Thanks, John. John - so where do you think, or what do you think, is the biggest issue going forward in agriculture? Aside from this, what do you think is going to be the next big thing that everyone's going to be talking about?

John 24:51

Well, I think there's a number of things. One thing that could change everything over the next few months is the whole situation regarding Trump tariffs. So not only will there be tariffs on the UK products, but there could be. You know, as we know, Mr Trump seems to be able to sort of change his mind quite regularly about what he might want from these arrangements.

25:14

But yeah, and the relationship between the US and China is particularly important. You know they're both major powerhouses in world agriculture and food, so what they do ricochets, what they do and what they don't do ricochets around the rest of the world. But there's, so you know, so many things going on at the moment, Rebekah. So, you might start at the top and say things like climate change will still continue.

25:40

You know, regardless of any trade deal uh, trade deals or not having trade deals, or having 10 or no percent or whatever you know, the impact of climate change around in the UK and around the world will carry on. That's not going to stop for anything. Um, and I think also the use of agri-tech, um, tech, agri-tech products, services, solutions that's got the ability to change, change agriculture and food around, not just in the UK but around the world um, and then you can bring it back down to much more local things in the UK, so things like inheritance tax and these sorts of things which don't make life easy for farmers at all.

Rebekah 26:22

Absolutely not. So, what a great discussion,John. Thank you for that. You've definitely highlighted some key things to consider there, and it was great to have you know your insights today. Have you got anything you'd like to add, John?

John 26:38

I think, yeah, yeah, I'll try and keep this brief, Rebekah, but, well, first of all, thank you for inviting me to do it and I hope people have enjoyed or found what I've had to say interesting. Um, if anybody, it doesn't have to stop here at 10.30 on a Thursday morning, Rebekah. If anybody wants to get a hold of me, they can do that through you, presumably, or you'll find me on LinkedIn or through the Promar website. So we're always happy to carry on the conversation. Half an hour is not that long to cover, you know what is a huge, huge subject. But I'd say, yeah, there's been a very big change over the last. Is it 10 years? Is it five years? Um, somewhere in between, maybe, but there's, you know, lots of change going on that causes some uncertainty. But, uncertainty for some companies can actually produce opportunity.

27:35

So, I think we have to remain positive about what's going on, but also accept that not everything will always. You know, it can't all be in the favour of the UK. We're going to have to accept that. You know, the whole point of trade deals is that they're meant to be a two-way benefit. So, if we do a trade deal with the US, there has to be some benefit to the US industry, as well, and agricultural food is often a major part of these conversations. Beyond financial services, cars, steel, and what have you? There needs to be a some investment in understanding market structures, policy issues, the direction of travel and all these sorts of things and you know, that's where Promar helps clients. And also, you need good. You know, beyond anything else, Rebekah, you need good people to do all this, and presumably that's where you come in, Rebekah.

Rebekah 28:36

Absolutely. We can find them. We can find them, that's not a problem.

John 28:39

Your trade is finding good people to help. You know for your clients.

Rebekah 28:43

Absolutely.

John 28:44

So yeah, huge change, some uncertainty. Uncertainty can bring opportunities and again, you've only got to look at the scale of some of these markets. You're getting a free trade deal with Lichtenstein it doesn't really count, really, you know um. But getting a trade deal with some of these mega markets you know the, the uh, the ones in Asia, India, the US, and sorting out the relationship with Europe. Europe’s still got 450 million people there and they are relatively wealthy. So there are some big gains, big wins to be had.

Rebekah 29:22

Absolutely so. Would you like to say goodbye John?

John 29:27

I could go on the rest of the morning if you wanted me to, Rebekah, but I will say goodbye. I know people are busy. I'd just like to say thank you for people joining us this morning. Thank you, Rebekah for setting all this up, and if anybody wants to carry on talking to myself or my colleagues at Promar about these sorts of issues, then, feel free to do so. We all, you know we like, we enjoy the conversation.

Rebekah 29:49

Absolutely. So thank you everyone for joining us today. Thanks, John, keep following us. We've got some great new topics coming up. If you've got a topic in agriculture that you would like to talk about, please contact me at agricultural recruitment specialist, which is www.agriRS.com and if you would like to hear more on new issues and topics within the agricultural and farming industry, you can follow us on various channels, including Spotify, YouTube, apple podcasts - just look up agriculture live. So that's all from us today. Thanks for joining and goodbye.