Brexit: UK industry celebrates record £22bn exports, urges “farm to fork” focused deal

13 Feb 2018 --- While the UK food industry celebrates record exports of more than £22 billion (US$30.5bn) in 2017 as overseas sales of UK food and drink continued to soar last year, the food supply sector is also increasingly calling for a solid Brexit deal that will help boost exports, homegrown production and explicitly get behind the business of food production in Britain. As the UK government releases the latest record statistics championing the highest exports of homegrown products, the UK Food and Drink Federation, as well as it’s Irish equivalent are both campaigning for a Brexit deal that will enhance food and farming sectors within the UK and not cause problems for the industry.

UK food and drink businesses are now selling their products to 217 markets – with sales of milk & cream increasing by 61 percent, salmon by 23 percent and pork by 14 percent.

An increasing thirst for British tipples has also seen bottles of UK beer appearing on shelves as far as Japan and New Zealand, while gin continues to go through a “ginaissance” with international sales of UK brands reaching over £500 million (US$693 million).

From January to December 2017, Britain also sent £85 million (US$117 million) worth of cheese to France, £21 million (US$29 million) of chocolate to Belgium and even £2 million (US$2.7 million) of tea to China.

This, according to the UK government, demonstrates “a clear desire for British taste, quality and high standards around the world.”

At the same time, the UK FDF is renewing its calls for frictionless trade with the EU post-Brexit and for the government to secure the benefits of existing EU preferential trade arrangements, at least until the government can replace them with acceptable alternative arrangements. 

The Federation – which is among 36 signatories of a statement issued by National Farmers’ Union on Brexit priorities for the “farm to fork” supply chain – also calls to ensure ongoing access to an adequate supply of permanent and seasonal labor, and secure the benefits of existing EU preferential trade arrangements. 

The signatories also want to see a promotion of food production through agricultural policy alongside its existing high environmental, health and animal welfare standards, and to ensure businesses operate under an efficient and proportionate regulatory system that is centered on scientific evaluation and that incentivizes innovation and competitiveness.

A statement says: “We acknowledge our role in making Brexit a success – in improving productivity, competitiveness and driving growth in the economy, in creating jobs, and in achieving a more sustainable food supply system that minimizes the impact our businesses have on the environment. But a Brexit that fails to champion UK food producers and the businesses that rely on them will be bad for the country’s landscape, the economy and critically our society.”

Meanwhile, the UK government says the latest food export figures demonstrate a growing hunger for UK produce and reveal the “huge opportunities for producers and manufacturers as the UK prepares to leave the European Union.”

The US remains the largest market outside of the EU – worth £2.3 billion (US$3.1bn) last year and rising 3 percent from the previous year.

Secretary of State for the Department of Environment, Food and Rural Affairs, Michael Gove said: “Contrary to the constant negativity of the doom-mongers, the British economy is going from strength to strength showing that a Green Brexit can deliver for the whole country.”

And FDF Director General Ian Wright CBE said: “UK food and drink is known across the globe for its provenance and quality. We are a proud home to many of the world’s most beloved brands.”

“We must now build upon this platform in order to take advantage of new opportunities and the growing global appetite for great British and Northern Irish manufacturing as we leave the EU.”

Major UK exports include:
-    Whisky (£4.5 billion)
-    Salmon (£720 million)
-    Chocolate (£680 million)
-    Cheese (£623 million)
-    Beer (£603 million)
-    Shellfish (£600 million)

Top 5 countries we export to:
-    Irish Republic (£3.7 billion)
-    France (£2.3 billion)
-    US (£2.3 billion)
-    Netherlands (£1.5 billion)
-    Germany (£1.4 billion)

Brexit: Free access to high-value UK market “critical”, says new FDI report
The news comes as new report warns that new barriers to trade in the wake of Brexit could damage Ireland’s food industry because almost two-thirds of exports from the country’s prepared consumer foods industry go to the UK. 

The report from the Ibec group representing the food industry, Food Drink Ireland (FDI), details how a Brexit deal is “vital” to protecting all-island supply chains and follows the latest round of Brexit talks in December 2017.

“Ireland’s food sector is facing an unprecedented challenge following the UK vote to leave the EU in June 2016. Since the outcome of the referendum, agri-food has seen exports to the UK drop in 2016 by €570 million (US$698 million) at the cost of 5,700 jobs,” says the report “Brexit: the challenge for Prepared Consumer Foods” which was recently launched by FDI. 

In terms of access to the UK market, the report adds: “The retention of free access to, and maintenance of, the value of the UK market, is of critical importance. The economic interests of both the EU and the UK would be best served by the UK remaining in a Customs Union with the EU. This will require a comprehensive Free Trade Agreement (FTA) between the EU and UK.”

Commitments made in December 2017, now need to be put into a binding legal contract and there can be no back-sliding on clearly agreed commitments, it says. FDI is becoming increasingly concerned at the direction of the UK political debate and in particular the priorities of prepared consumer food companies in the next phase of negotiations. 

It claims that because Britain has ruled out a future EU-UK Customs Union, the likelihood of a divisive, damaging divorce has increased and believes the decision should be revisited. 

FDI Director of Prepared Consumer Foods Kevin McPartlan said that if the UK insists on leaving a customs union with the EU, it will result in a significant disruption to trade. 

“While the December deal should protect all-island supply chains, new barriers to east-west trade with Britain would be a major blow to the food industry,” he said. 

“Prepared consumer food (PCF) companies are particularly exposed. The gross output of the Irish PCF sector is €4.5 billion (US$5.5 bn) and €2.5 billion (US$3 bn) of that is exported. Sixty-five percent of all PCF exports are to the UK.”

PCF firms surveyed 
A new survey of PCF companies highlighted several key issues of concern including the difficulty in sustaining existing low margin business in the UK market; the negative impact of a further weakening of sterling and possible tariffs; supply chain cost increases as a result of a UK exit from the Customs Union and uncertainty leading to deferral of investment in innovation and plant and equipment.

The report identifies four key priorities for the sector as negotiations progress to phase two which include:
- Free and unfettered access to the UK market for Irish business.
- An agreement that takes account of the special case of the all-island economy.
- Transitional agreements of sufficient length for businesses to plan and prepare for any new free trade agreement.
- Any arrangements to deal with the NI/ROI border should ensure strict adherence to EU regulations and EU customs duties for all products, in particular from third countries.

“Prepared consumer food companies are the life-blood of the Irish economy. They directly employ over 20,000 people and support the employment of many thousands more across the entire country, in SMEs as well as major multinationals,” added McPartlan.

“These companies depend on cross-border supply chains and infrastructure, are prone to currency variation, rely on access to the UK market and need common regulatory regimes more than any other sector of the economy.”

“It is vital that a future EU-UK deal delivers free and unfettered access to the UK market, an agreement that takes account of the reality of our all-island economy, a transition period of sufficient duration to allow businesses to prepare for the new environment and border arrangements which ensure strict adherence to EU regulations and customs.”

Meanwhile, the UK Food and Drinks Federation has been lobbying government for some time on Brexit, calling for clarity on future trade deals and assurances that the many sub-sectors that make up Britain’s £112 billion (US$154 billion) “farm to fork” food chain that employs almost four million people will not be negatively affected post-Brexit.

By Gaynor Selby