The free trade zone EEA could provide an option to allow the multi-billion-euro food and farm trade between Britain and the EU to continue, Schmidt told Reuters.
"We export a large amount to the United Kingdom and are well positioned there with our products," Schmidt said. "That will naturally have to be newly negotiated."
He added: "It cannot be excluded that in some sectors there could be tariff and non-tariff trade barriers (after Brexit). It will also not be the case that the internal market will be transferred 100 percent to a non-member country."
"But the concept European Economic Area offers itself, for example," Schmidt said.
The EEA enables countries including Norway to have free trade with the European Union.
Germany sold 4.54 billion euros ($5.06 billion) of agricultural products to Britain in 2015 including meat and grain, while German factories also supply much of Britain's coffee and cocoa. British whisky, cheddar and stilton cheese are prominent on German supermarket shelves.
But Germany's trade with Britain is still a relatively small part of Germany's total 2015 agricultural exports of 68.5 billion euros, he said.
"We should use Brexit as an occasion to review whether all regulations are really necessary in Europe's complex agricultural structure," Schmidt said.
Meanwhile, a new EU aid package for dairy farmers likely to be announced on July 18 is expected to include EU-wide measures to restrain milk production, Schmidt said.
"There is too much supply on the milk market," Schmidt said. "We need volume discipline in milk production. EU aid will be coupled to a reduction of milk volumes. But there will be no new quota."
European dairy farmers have suffered a collapse in milk prices as output rose after the end of restrictive EU production quotas last year, while a Russian embargo on EU food imports and weak Chinese dairy imports created a supply surplus.
The EU's agriculture commissioner said on Thursday that a new package of financial support for European dairy farmers was being prepared but also ruled out a return to restrictive production quotas.
"It is of central importance that the EU takes action jointly," Schmidt said. "Different reactions from individual EU countries would distort the competitive situation."
"The EU will lay down a framework which will then be completed nationally."
($1 = 0.8968 euros)
(Reporting by Michael Hogan and Hans-Edzard Busemann; Editing by Dale Hudson)
By Michael Hogan and Hans-Edzard Busemann
