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Since Brexit took effect on 1st January, the food and drink industry has been subject to new rules, and the red tape has been damaging for both importers and exporters, even putting some business at risk.
Small retail and hospitality businesses have struggled to source products from the EU, while producers have run into significant delays with exports.
“The food industry’s troubles from the fallout of the Brexit deal could be the most visible signs of the complications caused by leaving the EU’s single market and customs union,” says Mark Lynch, partner at corporate finance house Oghma Partners.
“While it could be perceived that it will be the consumers of continental Europe that will lose the opportunity to munch into UK products, the most visible signs of the impact are on the fast-emptying supermarket shelves of Northern Ireland,” he adds.
Britain’s biggest supermarkets have said an “urgent intervention” is needed to prevent disruption to food supplies in Northern Ireland. It comes even as the three-month grace period is reducing the requirements supermarkets need to comply with. The CEOs of Tesco, Sainsbury’s, Asda, Iceland, Co-Op and Marks & Spencer wrote to cabinet office minister Michael Gove to say that if further requirements are brought in in April, the system will be “unworkable”.
The government has set up a new dedicated team to work with the food industry on how to streamline the movement of goods.
However, it’s not only large supermarkets facing issues in Northern Ireland. Diane Dodds, economy minister in Northern Ireland, wrote to Michael Gove to call for urgent action to be taken to ensure retailers based in Britain continue to deliver to Northern Ireland. “Over the last number of weeks we have seen numerous GB-based retailers withdraw from offering deliveries to Northern Ireland due to the lack of guidance,” she wrote.
“On regulatory issues we have seen retailers of plants, food and drink ceasing to offer products for delivery in Northern Ireland due to increased costs.”
Mark at Oghma Partners called the problems in Northern Ireland the “canary in the coal mine for supply challenges into the greater EU single market”.
“The principal problem appears to be around export health certificates that need to be signed by a vet for each batch of product shipped and where the products are derived from animals,” he said. “Without a work-around solution – an acceptance that farming practices in the UK and EU are equivalent and that rules will not diverge with the EU – it seems that some food export markets will be lost forever.”
Fresh fish and seafood exports have been hit particularly hard by delays and added paperwork from the new rules. This week, fishing businesses held demonstrations in central London as delays make it increasingly difficult to deliver produce to Europe before it goes off.
James Withers, CEO of Scotland Food & Drink, said many Scottish fishing exporters “fear for their survival”. In response, Boris Johnson has created a £23m fund to compensate businesses for delays that were not their fault.
While James says that compensation is “critical” he added that this will only buy a little time for food producers. “We desperately need to press pause on the new bureaucratic checks on exports. We need time to get systems properly built as they keep falling down – as happened again over the weekend.” Scotland Food & Drink has called for immediate discussion with the European Commission to pause checks on exports.
Exporters are not the only group facing new trade challenges since Brexit rules have come into force. Jose Ribeiro, owner of We Love Pizza in Leamington Spa, says Britain’s departure from the EU has made the import of products from Sardinia more cumbersome, expensive and slower.
“Since Brexit, each individual item has to be coded and logged in transportation documents to be checked at the border before entering the UK, complicating the process to the point where it may no longer make sense,” Jose explains. As a small business, the challenge is multiplied. “I need three to four hams a week, 10 bags of flour, 50 tins of tomatoes. I can’t buy a whole pallet, so the amount of paperwork is a nightmare.”
While sourcing products from the UK would make Jose’s job easier, he says that the business’ reason for importing goods from Italy is the authenticity which can’t be replicated. “It is about identity, and it will be hard to maintain that,” he says. “Already this week my delivery is late and we are struggling to find similar quality on the local market of Buffalo Mozzarella, Parma Ham or Italian Fennel Sausage.”
As with the Scottish fishers, Jose blames the extra admin and paperwork: “It’s something we as small restaurant operators aren’t geared for.”
Independent retailers face the same challenges as Jose. London-based La Fromagerie sources cheese from small producers in Europe, but owner Patricia Michaelson recently told Speciality Food that the paperwork has threatened their ability to import cheese, as European producers don’t want to be bothered with the red tape.
While Brexit may cause British-made products to be more appealing to UK retailers, for those sourcing unique goods from the continent, or for producers seeking to reach bigger markets with exports, new trade solutions will be critical.