UK food trade body warns “not for EU” labeling plans pose “considerable threat” to supply chains

11 Mar 2024 --- The Food and Drink Federation (FDF) has found that the UK’s largest manufacturing sector had a total export value of just under £25 billion (US$32 billion), falling 2% when compared year on year.

In its end-of-year Trade Snapshot report, which covers the period of January — December 2023, FDF shows the sector felt the successive shocks of high inflation, Brexit and the war in Ukraine, which has impacted the decline of most products — only pork and cheese saw growth in both value and volume.

Ireland became the first-ever export market to reach £4 billion (US$5.1 billion), increasing by 6.4% demonstrating how important Ireland is for trade. Imports have also increased by £200 million (US$256.7 million), thanks to a large increase in cheese, savory snacks and chocolate.

Considerable threat?
The introduction of mandatory GB-wide “not for EU” labeling poses a considerable threat to GB and Irish supply chains — and will almost certainly result in growth being reversed in its largest export market, says the FDF.

The membership organization estimates the implementation costs for the industry to be £150 million (US$192.5 million) to £200 million (US$256.7 million) and says, “this unnecessary labeling change not only threatens our exports but will be seen as a barrier for imports potentially leading to important overseas suppliers pulling out of the UK market.”

Balwinder Dhoot, director of Industrial Growth and Sustainability at the FDF, comments: “Selling our products overseas helps our businesses and the wider economy. In a challenging trading environment, it was good to see the value of exports to the EU increase slightly and those to Ireland, our largest single export market hit £4 billion (US$51. billion).”

But government proposals to introduce “Not for EU” labels across the whole of GB will undermine trade with these markets, remarks Dhoot. “It’s baffling why the government would want to implement something so damaging that will reduce investment and push up prices for shoppers, while delivering a real blow to our exports just at the time when our businesses need more support,” he adds.

“There are better solutions, including digital ones, which businesses support. We’re urging the government to remain open to these rather than imposing their own, rather analog, and backward-looking proposals.”

Non-EU exports fall
The report also shows that non-EU exports have fallen by 6% to £10.4 billion (US$13.3 billion).

More free trade agreements (FTAs) would help boost world exports and the FDF urges the government to take a balanced and careful approach with new FTAs such as India.

To ensure continuity, it would like to see negotiations resumed with Canada to extend important EU cumulation provisions, as recently achieved with South Korea and Mexico.

Fruit potential
Imports of food and drink increased by 5.1%, driven largely by an 8.6% rise in EU markets. Fruit remains the largest import, with Spain, South Africa and Peru making up over 35% of all imports.

An ongoing review into the risk categorization of fruit and vegetables included in the Border Target Operating Model, as well as tariff reviews with Egypt, Morocco, and South Africa, will encourage non-EU imports and could allow the UK to diversify supply chains.

However, the FDF says it “must be careful not to put up unnecessary barriers with our most important trading partner, the EU.”

The report also focuses on trade with Australia, showing that exports are yet to reach their full potential. However, the FDF expects exports to grow in 2024.

Switzerland is also highlighted with modest UK exports; reducing high tariffs through an updated FTA could help boost exports. With a new UK trade policy, FTAs away from the EU will be new territory for many businesses and the government must ensure there is easy online guidance so businesses can take advantage of these new opportunities.

Last week, Food Ingredients First reported that the UK F&B industry predicted a “positive year” for investment following “turbulent times,” highlighting that British F&B manufacturers are “cautiously optimistic” about the future.

Edited by Elizabeth Green

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