UK manufacturers report export success, call for more post-Brexit support

31 Aug 2018 --- The Food and Drink Federation (FDF) is calling on the government to provide greater support for UK food and drink manufacturers to compete with European rivals. The calls come following the latest export statistics which show that in the first half of 2018, UK exports of all food and drink hit £10.68 billion (US$13.9), up 5.1 percent on the same period in 2017. This was led by growth to the European Union’s 27 member states with exports to EU countries (+7.3 percent) growing at a faster rate than those to non-EU countries (+1.6 percent).

However, UK export growth to Japan and the US is being outpaced by both Spain and Ireland and more support is needed, says the FDF. 

Despite the good news that UK food and drink exports are growing, the FDF is using highlighting the need for more support as the clock counts down to Brexit next March. This closely follows an FDF Brexit report in July which the industry says needs help to “turbocharge” the sector’s exports and restore productivity levels to avoid falling behind once Britain has left the EU.

The industry-wide report highlights the key growth opportunities for the food and drink industry, the UK's largest manufacturing sector which contributes £28.2bn (US$37bn) to the economy annually, employs 400,000 people and is a key part of the nation's £110 billion (US$144bn) farm-to-fork food chain.

From 2010 to 2015, the UK’s food and drink productivity levels dropped to just 3 percent and Britain is now falling behind its European counterparts having previously shown growth of 8.5 percent prior to 2010.

“This analysis of UK food and drink exports in the first half of this year reveals several great success stories and a number of areas with room for growth. Food and drink sales are flying the flag for the UK around the world,” says Ian Wright CBE, Chief Executive, Food and Drink Federation.

“However, some of our competitors are outshining us. It's clear that focusing export support on specific product sectors can transform performance. With great uncertainty still hanging over our future trading relationship with our largest food and drink market – the EU – now is the time for the Government to back UK food & drink exports with the kind of turbocharged support that FDF has proposed.”

The call to action also follows the recent publication of the Government's Export Strategy and the publication of FDF analysis comparing UK food and drink sales to China, the US, and Japan, with exports to those countries by other European nations.

From 2015-2017, the growth of the UK's food and drink exports to Japan (+10.4 percent) lagged behind nations including Ireland (+153.3 percent), Spain (+31.3 percent), Germany (+28.3 percent) and Denmark (+13.7 percent).

In comparison, UK sales to China, where certain sectors benefit from in-market specialist support, have grown by 94.7 percent, experiencing far more significant growth than Spain (+42.5 percent), Ireland (+40.2 percent), Denmark (24.5 percent) and Germany (+12.3 percent).

Fastest export growth in Singapore and Australia
Singapore and Australia were the fastest growing markets for UK food and drink exports, within the top 20 markets, with growth of 22.5 percent and 19.3 percent respectively. The top five UK products sold to Singapore were whiskey, wine, gin, chocolate and sweet biscuits. For Australia, exports of gin were up 115 percent and soft drinks were up 99 percent, while outside of the top 10 products, pasta sales rose 257 percent.

Significantly, food and drink exports to China, Australia, and Singapore all grew in excess of 40 percent between H1 2016 and H1 2018 (46.5 percent, 48.7 percent, and 42.1 percent respectively). Of these, China and Australia are on the list of UK Government priority exports markets as set out in Defra's International Action Plan, with campaign activities running between 2016 and 2020.

Strong exports growth continues
As in Q1 2018, total exports to EU markets grew faster than those to non-EU markets, up 7.3 percent compared to 1.6 percent. The top five export markets made up over half (52 percent) of overall food and drink exports, with exports to Ireland alone making up 18.4 percent.

The fastest growing UK products by value within the top 10 were breakfast cereals, gin and beef. Exports of branded goods over the six months rose by 4.6 percent to £2.8bn (US$3.6 bn). Over the past ten years, from H1 2008 to H1 2018, total food and drink exports have grown by 75 percent, with an average annual growth rate of 5.2 percent. Over the same period, exports to non-EU countries grew faster (109.3 percent) than to EU countries (59.3 percent).

“We are greatly encouraged by such a positive performance for food and drink exports both in the EU27 and wider global markets. The figures confirm the need for Government to ensure that the success of our exporters is not damaged by a failure to maintain the current ease of trade with our key markets in Europe after the end of March 2019,” says Elsa Fairbanks, Director, Food & Drink Exports Association (FDEA).

“The recent performance is a testament to our industry's commitment to maintain and grow business in core EU markets while at the same time, investing resources in building longer-term opportunities worldwide. We should not underestimate the risks that are being faced. We fully endorse the FDF's proposal for a Sector Deal for the industry and look forward to a positive decision on this.”

Earlier this week, FoodIngredientsFirst published an in-depth report “The Brexit cliff-edge: 'No-deal' worries grow, but what does it mean for food?” examining how the UK government has published the initial list of no-deal technical notices which detail what industry should do in the worst case scenario when Britain exits the EU.

Designed to allay the substantial concerns about prices rises, food shortages, EU workers, trade barriers, border chaos and much more, the first batch of notices set out advice for people and businesses should the UK crash out of the EU without a deal. But the list doesn’t seem to have quashed the concerns of industry as government officials expected, but has rather fanned the flames even more as the Brexit deadline looms.

You can read more on this here.