When a deal was struck on 24th December, this was a sigh of relief for many – going into 2021 with a EU-UK deal in place meant no food shortages among other things. However, a few months into 2021 we can see that may not have been the case.
What a No-Deal Brexit Could Have Meant for Food Supplies
A no-deal Brexit was always a concern for the grocery industry – but even more so following the mass stockpiling that took place in light of the Coronavirus pandemic. This prompted many to fear the empty shelves we saw across the world in March and April occurring again in light of Brexit.
In 2019, the EU supplied 26% of food consumed in the UK. With a total of 45% of all food consumed in the UK coming from elsewhere. This is what prompted fears that the UK could see food shortages should a trade deal not be reached. It wasn’t only food coming into the UK – the total food exports from the UK totalled £23.6 billion in 2019 so there were fears of knock-on effects worldwide.
The UK government reassured the population that should a no-deal Brexit happen, food supplies should not be interrupted – instead they would seek to get food from further afield should EU supply chains be interrupted. This would result in price increases, so stockpiling was still on some people’s minds.
Food Supplies in 2021
Entering 2021, a trade deal with Europe reassured people that food supplies would remain stable. However, that was unfortunately not the case. In January 2021, the Financial Times reported that EU supply chains were disrupted due to Brexit. This disruption was largely due to tariffs on goods not of UK origin. This is where one of the key concerns regarding food supplies post-Brexit arises.
FDF CEO Ian Write CBE stated that UK businesses were promised a year to adjust to the new trade rules, however a deal so late in 2020 meant businesses were only given four working days to prepare.
Red-Tape and Tariffs
Whilst the trade deal meant that food supplies should continue – the food and drink industry has been subject to new legislation on imports and exports, and it has been damaging for both. On one hand some smaller retail and hospitality businesses in the UK have struggled to source products from the EU and on the other, producers are facing significant export delays.
These are the complications associated with leaving the customs union – and the most apparent impact were the fast-emptying supermarket shelves in Northern Ireland. British supermarkets demanded immediate action be taken to prevent the disruption seen to supermarkets in Northern Ireland. Supermarkets do have a grace period in which the requirements are reduces but the CEO’s of major supermarket chains such as Tesco have raised concerns to the government than after this period ends, requirements are unmanageable.
Businesses are struggling to get their hands on key ingredients from the EU and blame the same added paperwork and new rules for their struggles. Restaurants and businesses in the UK that source European produce from Spain and Italy are facing delays and price increases. The fine food industry is one which is struggling to get the goods they need – with their suppliers reluctant to spend extra time on new paperwork.
Additionally, issues are arising over fresh fish and seafood exports. This industry has been hit particularly hard by added paperwork and delays due to new rules coming into play. The issues here are a direct result of new ‘health certificates’ needed for the export of foods derived from animals.
James Withers, CEO of Scotland Food & Drink said anger was growing “amongst Scotland’s seafood exporters… as the door to their most important market has been slammed shut.” Fortunately, since a funding package has been announced to support seafood businesses threatened by the EU exit but there is still a lot to be done in terms of adjusting to the new rules and regulations.
Whilst UK retailers looking to stock more locally produced goods won’t have to worry about new import and export rules, those who exclusively stock produce from across the globe have new regulations to overcome.
Concerns Over Food Origin
Whilst on the surface the trade deal is hailed as being ‘zero-tariff’ that is far from the case – and that is where new rules on food origin come into play. Businesses must be able to prove that they qualify for ‘tariff free access’ by meeting ‘rules of origin’ on each of their products.
What this means is that to qualify for tariff-free exports, goods must originate from the UK and not elsewhere. This raises concerns for businesses whose supply chains spawn across the globe. This not only means that businesses could face increased tariffs on goods, but that they may need to look at adjusting their supply chains.
Whilst the trade deal has no doubt reduced the level of disruption we could have seen to the food and drinks industry – it has not stopped it. We will never know what could have been, but in current circumstances there is still a great deal of disruption being cause by new tariffs, regulations and rules on imports and exports.
As businesses begin to adjust to changing rules and tariffs, they will likely begin to adjust their supply chains accordingly. Supply chain diversification is one way to minimise disruption and ensure that you have a back-up solution. It helps to ensure that should you struggle with imports through one channel, you may have an alternative solution elsewhere.
It is important to note that the full impact on the industry is yet to be seen – currently we are in the grace period, which looks like it is going to be extended, and have already seen disruptions to trade. Whilst importers and exporters get used to the new rules and regulations, adjust their supply chains and come up with back up plans – we have still yet to see what the final impact will be.
At Trident we have a global network of warehouses and fulfilment centres as well as a dedicated customs team ready to advise you on all the required documentation when shipping into the EU. With over 30 years’ experience in logistics and freight we are well-versed in the world of global supply chains and the food and drinks industry.