FDF reports trade spike for East Asia but braces for Ukraine related backlash

21 Mar 2022 --- UK foreign trade has shown strong performance despite a drop in trade with the EU and food and drink manufacturers will continue to scout for opportunities abroad, according to new research by the Food and Drink Federation (FDF).

F&B markets in Asia, North America and Africa show encouraging signs of recovery, following significant COVID-19 related impacts. The sector is beginning to take advantage of export opportunities in Central and South America with sales up 62%, totaling £533 million (US$702 million), the FDF reports. 

The federation expects an improvement in exports to Europe in 2022 as global hospitality industries recover and businesses are better able to trade with EU markets.

“The war in Ukraine is likely, however, to negatively impact our businesses’ trading ambitions, at least in the near term, with supply chains and trade routes disrupted,” says Karen Betts, chief executive, FDF.

“That underscores the need for business and government to work closely together, ensuring that companies can develop new markets and seize new opportunities in a difficult economic environment, to underpin their resilience,” she says.

Trade strategies take effect
As the UK’s new trade strategy takes effect, improved market access globally will further increase exports, allowing the FDF to take advantage of the demand for regional products.

Sales to non-EU countries grew by over 8% compared to 2020. This was driven by a strong recovery in exports of whisky (+18.7%) and salmon (+20.6%), and with breakfast cereals and soft drinks back above pre-pandemic levels.Exports to East Asia have recovered faster than in most other regions.

Exports to East Asia are recovering faster than in most other regions, with exports to China of food and drink worth over £800 million (US$1053 million). The boom has been facilitated by a new UK-Japan trade agreement entered into in 2021.

“These figures are encouraging, with rises in exports across the Americas and in Asia. Less good was our export performance in established markets in Europe and Australasia,” Betts explains. 

“But we have a good base to build on, and the FDF is committed to working closely with the government and devolved administrations to ensure that their weight is fully behind further building exports in British food and drink,” she says.

Israel is an important trade partner for UK F&B companies, with the potential to expand trade through the renegotiation of the existing preferential trade agreement. Growth in exports (+26%) and imports (+22%) with the country since 2020 has been observed.

Outlook for foreign exports
The FDF anticipates further new opportunities for UK exporters from overseas markets in the coming years. A key priority for the F&B sector is improving the implementation of the UK-EU trade agreement.

Sales to the EU fell by 12% compared to 2020 at £12 billion (US$16 billion), with much of the drop in the first quarter of 2021 when many UK businesses paused movements and supplied customers with stockpiled goods. The FDF’s research shows there were significant improvements toward the middle and end of the year.

One unknown is the impact of the war in Ukraine. Already we are seeing the conflict push up energy prices and impact on supplies of certain key ingredients, including vegetable oils, cereals and white fish, all of which are vital for many of our importers.

“Finding customers in new markets is particularly challenging at a time when supply chain issues, shipping costs and inflation are impacting pricing, and our members continue to report major issues with bureaucracy as they strive to retain sales and win new business,” elaborates John Whitehead OBE, director, Food & Drink Exporters Association (FDEA).   

“With travel now opening up, our team is rebuilding its program of UK groups at international trade shows to connect UK exporters with potential partners across the US, Europe, Japan and ASEAN countries all of which have great potential. We urge the government to increase its support for trade shows, a vital tool in accelerating international growth,” says Whitehead.

By Inga de Jong

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