UK’s non-EU food and drink exports surge following large drop in EU-bound sales

18 Jun 2021 --- Exports of food and drink to non-EU markets topped sales to the EU in the first quarter of 2021, with EU sales falling by 47 percent compared with Q1 2020, as a result of the on-going impacts of COVID-19 and changes in the UK’s trading relationships. 

This is according to new analysis by the UK Food and Drink Federation (FDF), which reveals that sales to non-EU nations accounted for 55 percent of all UK food and drink exports, with exports to the EU having fallen by £2 billion (US$2.8 billion) compared to Q1 2019. 

“The loss of £2 billion [US$2.8 billion] of exports to the EU is a disaster for our industry, and is a very clear indication of the scale of losses that UK manufacturers face in the longer-term due to new trade barriers with the EU,” shares Dominic Goudie, head of international trade at FDF.

“We set out a plan to mitigate these impacts by boosting support for exporters, and this was backed by the Trade and Agriculture Commission. The government must stop prevaricating and get behind these proposals to help exporters that have been shut out of trading with the EU.”

EU-bound exports plummet
Santander UK recently published a report together with the FDF revealing that Britain’s overall exports fell by 9.7 percent in 2020 when compared to 2019, with the total value falling to £21.3 billion (US$29.7 billion). 

This year, exports to nearly all EU member states in particular fell significantly. In Q1 2021, sales to Ireland were down by more than two thirds, while sales to Germany, Spain and Italy declined by more than half since Q1 2020, states the association.

All of the UK’s top ten products exported to the EU fell significantly in value from 2019 to 2021, with whisky dropping 32.3 percent, chocolate 36.9 percent and lamb and mutton 14.3 percent. Dairy products have been the most severely impacted.

Compared to 2020, exports of milk and cream to the EU have fallen by more than 90 percent, and exports of cheese by two thirds in the same time period.

UK’s leading non-EU markets
The UK’s current top three non-EU markets, US (11 percent), China (5 percent) and Singapore (3 percent), now account for 19 percent of the UK’s total exports, a figure of £713 million (US$988.5 million).

The UK’s current top three non-EU markets, US (11 percent), China (5 percent) and Singapore (3 percent), now account for 19 percent of the UK’s total exports.There has also been a return to strong growth in exports to East Asia, where there is high demand for quality UK food and drink. In Q1 2021, exports to China (+28.2 percent), Hong Kong (+3.7 percent), Japan (+6.2 percent) and South Korea (+18.5 percent) were all above the levels seen in Q1 2020, when the COVID-19 pandemic triggered the early closure of hospitality sectors.

The FDF has also previously hailed increasing export sales to China and UAE as a “golden opportunity.” Other significant growth markets of high potential include Canada, Australia and New Zealand.

The UK’s application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the third-largest free-trade bloc in the world by GDP, will also present new opportunities for food and drink exporters if it is approved.

EU imports weighted
UK imports from the EU were also down 10 percent, driven by a number of factors including the continued closure of the UK’s hospitality sector, stockpiling in late 2020, reduced demand for ingredients as a result of the decline in exports to the EU, and import substitution.

This fall is set to increase when full checks are implemented at UK borders in 2022. Of the UK’s top 10 products imported from the EU from 2019 to 2021, vegetables dropped 13.9 percent, wine 20 percent, and fruit 15.7 percent. Products of animal origin were also heavily impacted, with large falls in imports of EU pork, cheese, chicken and beef.

“Whilst some of this large drop can be put down to end of year stockpiling, significant business has been lost as a direct result of the additional bureaucracy, customs delays and costs of trading with the EU,” says John Whitehead, director of the Food & Drink Exporters Association (FDEA).

“Experienced FDEA members are continuing to battle against inconsistent interpretations of regulations across the EU and having to weigh up whether the time and cost involved is sustainable. We fully support the FDF in pressing the government to boost support for exporters.”

Edited by Benjamin Ferrer