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The food and drink sector breathed a collective sigh of relief after an eleventh-hour Brexit deal was agreed between the UK and EU just before Christmas. But now that the transition period has officially ended, all areas of the industry – from retailers to producers and wholesalers to SME brands – are scrambling to figure out what the new measures will mean going forward.
Minette Batters, president of the NFU, said the deal was positive news for British agriculture, though looking into the finer details would be key. “The tariff-free element will be a particular relief for farmers that rely heavily on the EU export market, such as our sheep farmers, as well as farmers across British agriculture that produce the safe, traceable and affordable food that underpins more than £14 billion worth of export sales each year to the EU,” Minette said.
The NFU also welcomed the news that the UK had been granted third country listing status, which Minette said was “absolutely critical” for ensuring the continued exports of animal products such as meat, fish and dairy.
However, she added that new checks, paperwork and requirements on traders would add costs and complexity.
These new trade requirements are placing additional pressure on fine food retailers as well, as Patricia Michelson of La Fromagerie explained: “For a business like ours which sources from very small independent producers, we are finding it difficult to persuade them to continue working with us as they don’t want to be bothered with the new rules and regulations regarding paperwork and registration as a business sending goods outside their country.”
The added costs could lead some small European producers to stop exporting their products to the UK altogether. “Unless we cover all costs of this for them, we will find that some of our lovely produce will not be available,” Patricia said. “This may seem an insignificant loss to some, but for us it is a real shame if we cannot showcase the rich and wonderful products from other countries as well as our own.”
The food industry was already facing disruption to trade before Brexit took effect after France shut its border to hauliers in late December due to the discovery of a fast-spreading strain of Covid in the UK.
The Food and Drink Federation’s chief executive Ian Wright said that the disruption would impact the supply chain into 2021. “Lorries will take time to return to their normal pattern of collection and delivery,” he said. “Though all in the industry are already working hard to mitigate any impact for shoppers they are almost certain to be impacts across the supply chain.”
“Many businesses have lost very valuable - but uninsurable - consignments in these delays through no fault of their own,” Ian added. The FDF, along with 23 other trade groups, wrote to the government to request compensation for companies that were hit by the border closure.
Ian warned that the disruption caused by the border chaos paired with the last-minute nature of the Brexit deal would mean “significant disruption to supply and some prices will rise”. The FDF has estimated that despite the worst-case no-deal scenario being avoided, food importers could face an extra £3bn in costs.
For many speciality food businesses, the hard work of Brexit is just beginning. “The real implementation period for this deal starts now. Businesses must renegotiate commercial deals, rethink supply lines, retrain staff and restructure businesses,” said Shane Brennan, chief executive of the Cold Chain Federation.
“I know that in time our economy will thrive, because our great food, pharma and logistics businesses will make sure it does, but our food chain will be slower, more complex and more expensive for months if not years,” he added. “Brexit is not done, the real work starts now.”