Europe III: April F-EU-Ls

[Brad]

[MENTION=42]MartyG[/MENTION] we can't even produce all the eggs we need in this country. We have to import from The Netherlands. Dunno where you got your data from but it appears to be completely wrong because we have to import an extra 2 billion eggs per year just to satisfy our demand.

Or have I not understood how all the figures work perhaps?

[MartyG]

I think you have not understood completely.

You're right that we do import eggs (as linked to UK Egg Industry Data in my above post)

The numbers are:

UK Production
10,782 million eggs

Imports
1,995 million eggs

Exports
147 million eggs

Total UK Consumption
12,930 million eggs (+3%)

UK self-sufficiency
86%

But we also export 147 million of them, and I was talking about the tariffs and quotas on the exports (i.e., the ones that the country you're exporting to has to pay). As I understand it, we could decide as a country not to apply tariffs on the eggs we import, but under WTO rules, we'd have to apply the same tariffs and quotas to all third countries, unless we have specific FTAs with them.

I don't know what the exact reasons for exporting that many eggs are despite us not producing enough for our own consumption (maybe it's a logistics issue), but we will have tariffs applied to those exports to the EU once they're over the quota limits. It's these EU tariffs and quotas that Trump is constantly complaining about as being uncompetitive for the US farmers.

[Neon Ignition]

It does seem bizarre to export eggs and not use them ourselves so much, presumably due to the exchange rates etc but if that changes then no longer exporting and instead producing them for internal distribution would start making more sense. If anything they'd need to increase production which could be good news for those animal lovers out there unhappy at how many unneeded chicks get shortened life expectancies at farms

[Brad]

Yeah, I'm not saying leaving the EU is gonna be great, just that I think eggs are a total non-issue. I'm willing to lower my egg intake until UK farmers ramp up.

[endo]

It's not that we're going to run out of eggs, more that egg producers are now going to make less money because the eggs they export to the EU are going to have tariffs slapped on them (and presumably domestic distribution isn't as profitable).

[Asura]

It's not that we're going to run out of eggs, more that egg producers are now going to make less money because the eggs they export to the EU are going to have tariffs slapped on them (and presumably domestic distribution isn't as profitable).

Eeeeh, it's not such a clear picture.

It might be that domestic producers export because they can market their eggs as "high quality", whereas the bargain-bin eggs you get at Tescos, in clear packaging, born from mutant birds that never seen daylight, are imported.

Domestic producers might find it easier to compete in a post-Brexit scenario because the price of imports will go up.

However this also means eggs will become more expensive in the supermarkets.

This may be completely wrong; what I'm saying is that from the information above, it's no less likely. We'd need more data to be sure.

[Brad]

Things will change, yes. The cheap eggs that we imported from Holland might stop and instead the farmers that used to export some of their eggs ( a very low percentage) will instead sell them domestically. Maybe. It's not like our egg industry will collapse though; it'll just have to adjust a bit I expect. Same for everything we import and export. Always winners and losers in these things.

[Neon Ignition]

For once, it may be for the best for the UK to put all its eggs in one basket

[Brad]

Nice one!

[MartyG]

Quite - as the cost of the eggs will be higher for the importer, they're going to be looking elsewhere (i.e., within the EU where the tariffs don't apply) for their supplier. The UK producer loses out because the cost of their product is now much higher for the buyer and it becomes uncompetitve compared to the EU marketplace.

Tariffs on exported goods aren't something the exporter pays, it's essentially a domestic tax on the country importing them.

The cost of eggs imported into the UK doesn't necessarily go up - that depends on what tariffs the UK decides it wants to apply, but under WTO rules, it has to apply them equally to everyone.

[Brad]

Yeah, so we'll sell less abroad. But there'll be a larger demand for eggs due to that same tax situation applying to eggs the UK imports. Swings and roundabouts.

[MartyG]

It might be that domestic producers export because they can market their eggs as "high quality", whereas the bargain-bin eggs you get at Tescos, in clear packaging, born from mutant birds that never seen daylight, are imported.

The EU marketplace has rules on the quality of food produce (that's one of the points of a common market - a common standard for everyone). So one of the "advantages" put forward is that we can set our own rules, that is, lower the quality of our internal regulation.

You won't be able to export them to the EU of course, because they won't be of standard.

[Neon Ignition]

https://www.theguardian.com/politics/2018/sep/12/day-to-day-effects-of-no-deal-brexit-stressed-in-new-impact-papers

The government sets out a couple more No Deal expectations, because you know, it won't come to that...

https://www.theguardian.com/politics/blog/live/2018/sep/13/brexit-no-deal-planning-papes-dominic-raab-takes-swipe-at-john-lewis-saying-firms-should-not-blame-brexit-for-their-own-failings-politics-live

Raab says rebel Tories should go pro-Chequers or it'll result in No Deal, kind of missing the point there Raab...

https://www.theguardian.com/business/live/2018/sep/13/bank-of-england-ecb-turkey-interest-rate-decisions-john-lewis-profits-tumble-business-live

Credit agency Moody's issues a warning saying No Deal could significantly harm the credit rating of the UK.

https://www.theguardian.com/business/2018/sep/13/john-lewis-profits-dive-99-percent

John Lewis blames a 99% fall in profits on rival discounts and Brexit, Raab has called it a lazy excuse. On this one I'd say he's right, John Lewis' bubble has been waiting to burst for a good while now, their popularity mostly down to their gimmicky and no longer as popular Christmas ads.

[Asura]

The EU marketplace has rules on the quality of food produce (that's one of the points of a common market - a common standard for everyone). So one of the "advantages" put forward is that we can set our own rules, that is, lower the quality of our internal regulation.

Yeah, this is a big worry for me. I kinda feel all the business-people who are excited about Brexit are those who are constrained by the EU's regulations... But if we look at those regulations, we'd see that we'd actually like them.

Like they want to sell cheaper produce, because the EU won't let them sell-substandard crap.
They want to treat their employees worse, but can't due to EU laws.
etc.

[MartyG]

Yeah, so we'll sell less abroad. But there'll be a larger demand for eggs due to that same tax situation applying to eggs the UK imports. Swings and roundabouts.

No - the same tariff doesn't apply to our imports, the UK can set its own tariffs when it leaves the EU. The tariff on the exports is set by the EU to all third countries (i.e., those not in the EU or with FTAs with the EU). That's the part that's going to make our exports uncompetitive.

We won't have to apply a 30 Euro per 100KG tariff on imports from third countries over quota unless we want to because we'll no longer be in the EU.

Tariffs are a way of controlling the domestic market - high tariffs on imported goods discourage imports and boost domestic markets - at least, that's the idea, it doesn't always work out like that as Trump is currently discovering (the US is currently using a BS technicality to only apply its tariffs to certain countries which is why China is taking them to the WTO in dispute).

The UK could choose to put a heavy tariff on eggs exported to the UK to try and boost the internal market (and apply that tariff to every country exporting to us), but that assumes that the UK has capacity to do so and given that we have to import 1,995 million eggs that seems unlikely - and I'd suggest near impossible the day after we crash out without a deal; a near 20% increase in production is a big ask of our current laying hens.