Yahoo Finance How a no-deal Brexit will impact the UK's food industry
Bare store shelves after Brexit? Higher food prices? Stockpiling?
Food industry veterans say these doomsday scenarios could become reality if the UK government is unable to reach a comprehensive trade deal with the European Union before the Brexit deadline in late March.
Expect “serious disruption to food supplies” along with higher prices and “chaos at the ports” for transporting food, according to Ian Wright, the CEO of the UK’s Food and Drink Federation.
“While the UK may not run out of food and drink it will certainly be scarcer and more expensive,” he said.
About 30% of the food consumed in the UK comes from the EU, according to UK government data. Another 11% comes from other countries that have trade deals with the EU. A no-deal scenario will make it more difficult and costly to import all these items as the UK would be ousted from the EU single market and its numerous trade deals.
“Disrupting these established [EU-UK] trading arrangements would have a much more significant impact on consumers in terms of access to the food they enjoy than can be demonstrated by statistics alone,” FoodDrinkEurope warned in a written statement this year.
Here are some of the key concerns for the food industry as the UK looks increasingly likely to exit the EU without a Brexit deal:
1. Replacement is not an option
A recent House of Lords report laid out the problem in stark terms: “EU food imports cannot easily be replaced by either producing more in the UK or importing more from non-EU countries. UK self-sufficiency has been declining for the past 30 years.”
The report added that there is “no evidence that non-EU imports could increase significantly” to replace any lost trade with the EU.
Close proximity between the EU and UK is a big factor that has promoted food trade and makes it difficult for Britain to find other suppliers, said Kiti Soininen, director of food and drink research at Mintel, a London-based market research company.
“The geographical fact is that Europe is closest to the UK when it comes to shipping fresh food over,” she said. “If you’re having to ship [food] from further afield, then you’re looking at [issues with] the freshness of the food … it might have a shorter shelf life, it might have a higher carbon footprint.”
2. ‘Chaos at the ports’
Britain relies on an integrated system and harmonised rules that allow food items to move between EU countries with minimal checks and zero tariffs.
In the event of a no-deal Brexit, trucks, ships and planes carrying food items are set to face new red tape, tariffs, costs and serious delays. They may even be turned away at the border.
Additionally, the UK government warned it would no longer be allowed to use an EU system called TRACES to track its imports. Instead, it’s planning a new replacement system that should be available in January. The government warned the new system would require more border checks but it was training border agents to “reduce the chance of delays.”
The UK Food and Drink Federation said: “[Items] heading to the continent will require physical and documentation inspections as they enter the EU and within hours this will result in turmoil at [the French port city of] Calais, which does not have a border inspection post. A transport backlog will mean our essential imports from the EU will be similarly disrupted.”
3. Tariffs
UK food could be hit by new tariffs as they enter the EU if there’s a no-deal Brexit.
A House of Lords report from mid-2018 found that average tariffs on UK food items would be around 22%, hurting businesses relying on exports.
British producers ship £13bn ($17bn) worth of food to the EU each year, according to the farming industry group, NFU.
These tariffs “would make many [British] products uncompetitive”, warned Wright from the UK’s Food and Drink Federation.
“If EU consumers are unable to access UK food and drink, the chances are they will switch to other sources of supply and those export markets will be lost forever,” he said.
4. Product labelling problems
The UK government outlined on Monday that UK producers would have to change their labelling and packaging because it wouldn’t be accurate to say their products come from the EU after Brexit.
The Food and Drink Federation warned this change would be “costly” for manufacturers, leading to the possibility that these costs would be passed to consumers.
5. Worker shortages
UK farmers and producers, which supply 50% of Britain’s food, are known to rely on EU workers to help in the fields. But more than half of British growers are already having trouble hiring the seasonal workers they need, according to a House of Lords report.
“If, already, the UK farm sector is struggling to find seasonal labour … it is likely to get worse post-Brexit,” warned Professor Tim Benton, a food security expert from the University of Leeds. “Some UK production is likely to move offshore, but the costs of doing so will reflect in prices.”
