It's Not All Sour: What Brexit Means for the Bread & Butter of UK Food Industry

In its paper 'Brexit: food prices and availability' published on May 10, the EU Energy and Environment Sub-Committee reported on the potential impacts of Brexit on the price and availability of food for UK consumers.        

Among the concerns voiced by the UK government committee was the unease that even in the 'best case' divorce scenario — with no tariffs and few customs barriers — international rules would oblige the UK to conduct more customs and borders checks than is currently the case.

Form an Orderly Queue

If no agreement is reached between London and Brussels and Britain quits the EU customs union with no alternative arrangement in place, there will be an increase in tariffs affecting prices.

READ MORE: 'Eating All 3 Cakes': UK's EU Customs Union Mess and Why Turkey Setup is a No Go

The committee referred to statements by Andrew Opie, Director of Food and Sustainability at the British Retail Consortium (BRC), who said the BRC had calculated the likely increase in retail price attributable solely to tariffs was 5-29% for beef, 6-32% for cheddar cheese, 9-18% for tomatoes and 5-10% for broccoli.

"The reason for the range is we do not know how domestic producers would react to price increases… would they raise their prices or would they put more of their own product on the UK market if they face tariffs to export to the EU," the BRC said.

Absence of some form of a frictionless trade setup between UK and EU could lead to queues of food-delivering lorries, ships and planes on Britain's borders. This has caused concerns about the time that additional checks on food imports would take, according to the published government paper.

"Currently due to frictionless borders, even the most perishable products such as soft fruit can be transported from Spain but still have 5 days shelf life in store or fresh beef can be transported from Ireland, minced and still have up to 10 days shelf life. Delays due to border controls will reduce the life of products in the home, driving up food waste or, in the worst cases meaning it is unproductive to put it into store. We know where SPS [Sanitary and Phytosanitary] checks are applied to products from outside the EU such as processed meat coming into the UK that additional checks can take up to 2 days which is not feasible for a fresh supply chain," the BRC has been quoted in the report.

Self-Sufficiency

The EU is the leading foreign supplier of food consumed in the UK (30%), while Africa supplies 5 %, and Asia, North and South America all provided a 4% share. Based on the farm-gate value of unprocessed food in 2016, the UK supplied just under half (49%) of the food consumed in the UK.

UK self-sufficiency has been declining for the past 30 years and the new trade rules imposed by Brexit could stimulate the UK to produce more of its own food, the report says. With limited competition from imports "domestic production in the food processing industry will expand under all Brexit scenarios, with this growth in domestic production ranging from 0.9 per cent under the soft EEA membership Brexit to 9.2 per cent under the pessimistic no deals Brexit," as suggested by the UK Trade Policy Observatory.

The organization, however, warned the growth in domestic production will come at the expense of higher domestic prices for consumers.

Leaving the EU would give Britain the opportunity to improve support it gives to its farmers, making farming more productive, improving the quality of the food and enhancing natural environment, according to a recent statement by the UK Environment Secretary Michael Gove.

Outside the EU Box

With the exit from the European bloc looming and the officially announced plan to leave the customs union, Britain is largely on the lookout for non-EU trade partners in all sectors, as well as food.

Every non-EU trade deal is hailed as a success. Export market in Saudi Arabia for British lamb has been reopened, as per the deal — worth an estimated £25 million over the next five years — secured by the UK government in February 2018. UK lamb will also be back on dinner plates across Kuwait, following the 2017 deal worth up to £15 million.

The UK exported £625 million worth of food and drink to the Gulf region in 2016, including £80 million of cereal and £22 million of cheese.

The chairman of the EU Energy and Environment Sub-Committee Lord Teverson stressed that Britain needs a comprehensive food policy to tackle a series of complex issues faced by the UK food industry and urged the "government to produce one with some urgency."

Earlier this week, the UK Prime Minister Theresa May said that the UK would leave the EU customs union in 2020, when the Brexit transition period ends, pointing out that work on customs arrangements with the EU currently remains a priority.