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Agritechnica 2019: Hoping for the best and preparing for the worst in agriculture

DuckerFrontier, January 13, 2020

DuckerFrontier’s Europe, Middle East & Africa Heavy Equipment and Agriculture team attended the Agritechnica Trade Show in November 2019 – an unmissable event attended by major market players to showcase new products and innovation as well as interact with customers traveling from across Europe.

Agritechnica is also an occasion for experts in the sector to discuss developing trends on the macro-economic side such as Brexit. Stay tuned for Part 2 of this series for insights into the impact on the agriculture-specific side like labor shortage and regulatory changes as drivers of technological development, as well as actions for multinational executives.

With little surprise, many industry concerns are driven by Brexit uncertainty, particularly considering the downside risks in the medium-long term and their impact on the heavy machinery and agriculture sectors.

At the Brexit conference, Stephen Howarth, Farm Equipment Council Secretary, discussed the impact of the diverging regulatory changes on the trade of machinery. He explicated that both a No-Deal and a New-Deal Brexit would not have direct consequences on machinery tariffs. However, we would see a large impact on trade of used machines as they will need to comply with EU regulations at the time of import. According to Howarth, this could make exporting machines in the short-term impossible.

Farmers have been paying the consequences of Brexit uncertainty with an increase of 5% on machinery prices since 2016. A No-Deal Brexit will continue to erode their margins, rendering it impossible to sell old machinery abroad and affecting the purchase of new equipment.

Nick von Westenholz, Director of EU Exit and International Trade at NFU, elaborates on the consequences of a no-deal on farmers, pointing out the dramatic impact on the labor market and export from UK:

  • Famers are facing increasing challenges in covering demand for labor; 56% did not secure seasonal workers in 2015 and these numbers remain stable until 2019.
  • Another negative impact would be on export of agriculture production, in particular sheep meat, 40% of which goes to the EU.
  • A lot of preoccupation also on the changes of regulation and the structure of the subsidies, which risk to hit a sector that is already shrinking. Von Westenholz argued that the shift from CAP (common agriculture policy) to ELM (environment land management) would negatively impact farming activity, since it would reduce the support for food production and consequently decrease the cultivated land, 75% of UK soil.

DuckerFrontier’s Europe team is at the forefront of key global trends impacting the region. Our goal is to work with clients to deliver tailored growth solutions to support your critical business decisions and growth strategies. How can we help you deliver better outcomes for your business? Contact us here to connect with a team member to get started.

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