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Unknown unknowns

On Tuesday this week, the great and the good of the UK livestock industries spent the morning in the Edwardian splendour of 'One Great George Street' under the watchful eye of Big Ben.

In recent years, this has been the magnificent venue for the annual AHDB Outlook Conference which seeks to plot the various scenarios for the meat and dairy industries in the year ahead.

It was little surprise that this year’s event kicked off with an examination of the impact of a Brexit vote in the forthcoming EU referendum. Professor Alan Matthews of Trinity College Dublin presented a thorough review of all the potential scenarios for UK agriculture – mainly a mix of neutral and potentially negative outcomes, if Britain votes to leave the EU. As we’ll need to renegotiate our trading arrangements with our former EU colleagues and other global trading partners, several years of uncertainty can be safely predicted, particularly in the early months following the vote, which now looks set for mid-2016.

With a renewed focus on exports, Andrew McLay from PROMAR International then reviewed a wide range of factors which will have a bearing on the competitive position of the UK livestock industry in the years ahead. It’s not just the easily measured ‘cost of production’ in the UK livestock industry, compared to that of our main international competitors. It is a host of other less certain factors, such as the fall-out from a proliferation of Free Trade Agreements, for example the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), and freight and transport costs which can vary significantly according to the direction of the trade flow. And, lest we forget, there’s fluctuating exchange rates which can be regularly relied upon to upset the balance of diligently prepared forecasts and carefully laid plans.

Looking specifically at the UK pig sector, AHDB’s Stephen Howarth concluded that 2016 will be another difficult year for both British and EU pig producers, but with the possibility of prices improving in the later months of the year, particularly if we see a significant reduction in the EU pig herd. He also stressed that a number of ‘wild cards’ may come into play which could change things either way, including currency, outbreaks of animal disease, developments in the Chinese economy and the possible reopening of the Russian
market to EU exports.

And, of course, there’s feed costs, which account for up to 70% of the cost of a finished pig.
AHDB’s, Brenda Mullan, presented a bearish outlook for the prices of feed grains and oilseeds, which may be further exacerbated by declines in pig and poultry production both in the EU and further afield. On the other hand, however, the weather may have a final say on matters.

Most delegates will have left a very informative morning with the words of former US Defence Secretary, Donald Rumsfeld ringing in their ears:

“There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know.”

We heard plenty about the first two. Perhaps the ‘unknown unknowns’ don’t bear thinking about, but we can at least hope for a couple of pleasant surprises being in store for 2016.

Thursday 11th February