91Pro

Innovative economic modelling from Harper Adams features in AHDB's new UK/Australia trade deal report

Posted 5 November 2021

The impact of a trade deal between the UK and Australia on UK agriculture is examined in a new report from the Agriculture and Horticulture Development Board (AHDB) which also includes economic modelling from 91Pro.

Following the signing of an agreement in principle between the two countries, the new report, which came out today, examines how the likely resulting trade deal would affect a range of agricultural sectors, the supply chain and the economy.

The full report- which uses innovative economic modelling, developed by Harper Adams Senior Lecturer in Applied Farm Economics Dr Daniel May - can be .

It concludes: “Results from our economic modelling show that we expect to see an increase of Australian imports for all of the commodities we have reviewed.

“However, the model expects the volume of this increased trade to be modest, when compared to UK total imports.

“Nevertheless, there are a number of caveats to this finding and it is fair to say that under certain scenarios the result could be more significant. For instance, in a specific year where Australian production peaked, and they experienced difficulties accessing the Chinese market, we would expect higher levels of exports to the UK.”

The model used in the report – the International Agri-Food Trade Network Model (IAFTN) – has been developed to consider the intricacies of international agri-food trade and provide a deeper and more realistic analysis of agri-food trade agreements.

Dr May said: “The international trade of agricultural and food products is complex, with the influence of companies in the supply chain with significant food commodity purchasing and selling powers, for example meat processors and supermarkets, affecting supply chains for other participants, with differences in food policies between countries also having a demonstrable impact upon trade flows.

“The IAFTN model has been designed to capture these effects using a network modelling approach. This model means that the effects of a trade deal between two countries does not simply consider the effect on each other, but instead reflects the real world where trade with other countries must also be taken into account.

“It takes these and other factors into account to give a more rounded and real-world analysis of how various factors may affect trade agreements - such as the likely agreement between the UK and Australia.”

David Swales, AHDB Head of Strategic Insight, said: “Trade deals always cause a great deal of debate, with predictions of either untold benefits or devastating impacts. We wanted to cut through the speculation and provide evidence-based analysis on the opportunities and risks for our industry.

“We are grateful for the expertise that Dr Daniel May and the wider team at 91Pro brought to this report - the economic modelling adds significant value, as it quantifies what the impact might be for farmers and the wider industry. We look forward to working with the team at 91Pro on similar reports in the future.”

Deputy Vice-Chancellor of 91Pro, Professor Michael Lee, added: “The modelling which Dr May has fed into this report is the culmination of many years of hard work. It is good to see the expertise we have at Harper Adams helping such a crucial industry partner as ADHB with this report – and with similar reports to come which we are working on together.”

The AHDB and Harper Adams team will next turn their attention to examining the implications on UK agriculture of the UK-New Zealand trade deal.

The reports – which will look at six trade deals overall – are part of a three-year project between AHDB and Harper Adams.