While European Union leaders wrestle with what their economic future will be after Britain’s exit, Alaska’s fisheries economists are keeping a close watch, and trying to calculate how the political upheaval will impact seafood prices.
“It’s speculative, but anything that devalues currency relative to the value of the dollar is not going to be good for the export business,” said Tyson Fick, communications director for the Alaska Seafood Marketing Institute, in an interview on June 27.
ASMI noted in its draft copy that the UK is a major market for Alaska seafood –Alaska salmon in particular, but also pollock and cod. Last year the UK imported over $90 million worth of Alaska seafood. Canned salmon makes up about 70 percent of Alaska exports to the UK, which is the largest export market for canned Alaska salmon.
For the short term, the economics and volatility of the market as a result of Brexit are uncertain, and the impacts could include disruption of long-standing business arrangements, the ASMI report said.
The report also notes that about 38 percent of food eaten in the UK is imported, and for the short term the economic consequences of Brexit will impact consumer prosperity, confidence and demand.
Mid-term, it will take two years or more to separate the UK from the EU, and the impact on food policy, tariffs, and trade negotiations are unknown, and for the long term, dissension within the UK is likely, the report said.
The most immediate impact of Britain’s exit from the EU will be its impact on currency markets, ASMI’s report said.
The vote to exit the EU has caused some of the largest currency movements in decades. Unpredictable markets lead investors to the relative safety of US government bonds, which causes the value of the dollar, which was already strong before the vote, to rise.
Following the vote, the euro and the pound were down significantly against the US dollar. A strong US dollar presents a challenge for exporters, as it makes US products relatively more expensive overseas.
Roe, surimi, sockeye salmon, cod and more in Japan; salmon, pollock and cod in the EU; and salmon, canned salmon, pollock and cod in the UK, are all major markets for Alaska seafood. Prices and overall exports have already been hurt by the strength of the US dollar, ASMI noted.
What happens next is still to be determined, but the good news, said Fick, “is that we have been a trading partner with the UK and EU for a long time, and we don’t expect that to change.”