Brexit is here! Uncertainties remain
Brexit is almost here but the uncertainties related to food trade, especially meat, and the evolution of local businesses still hangs over the whole sector. Food sufficiency may be more of a wishful thinking and any scenario including a severe disruption in trade between the two parts is likely to have a certain impact for the small and medium enterprises, regardless of the sector that they are coming from: food-service, producers, retailers.
Despite the fact that the UK is taking pride in being one of the important players in the European meat industry, it is also heavily dependent on certain types of foods imported from the EU member states.
Special needs
Regarding the volume of animal protein production, Great Britain may look good but, in reality, domestic consumption is mostly based on products that are imported at a large rate. The consumer’s preferences for certain products originated elsewhere can be observed on hypermarkets shelves, on the street-food chain of distribution, in big cities restaurants or on online channels of sales.
The British dietary style is a mix of some old popular recipes, fusion cuisine, innovative foods and international cuisine and it is translated into high volumes of food imports. Despite being one of the greatest poultry producers in Europe, Great Britain maintains the role of a major importer of poultry products from other EU countries (the Netherlands, Poland, Germany,
Ireland etc) but also from Brazil, Chile, Argentina or Thailand, as revealed in an analysis released by International Meat Trade Association.
“The vast majority of poultry meat imported into the UK, be it raw, salted or cooked, is either whole chicken, breast or made of chicken breast”, the analysis mentions.
In 2015, the volume of frozen/chilled poultry imports from the EU countries was of 386,000 tonnes, while non-EU imports reach 23,000. Also, salted poultry imports in that year accounted for 112,000 tonnes, while processed poultry imports were at 504,000 tonnes, with EU imports accounting for
330,000 tonnes of it.
Just by using this example and the preference of British consumers for the chicken breast, the domestic production should more than double its volume (1,1 additional birds; +124%) to secure the demand for chicken breast and also to find markets for the distribution of 75% of the remaining carcasses.
Poultry is just a singular example, while the situation is also present in beef, sheep or pork sectors of the industry, with burgers served on the streets of London or Liverpool coming from Ireland, or other meat cooked in restaurants or at home originating from different countries across the globe.
Fishy situation
A similar situation is present in the UK fish&seafood market, domestic consumption being based mainly on imported fis&seafood products while the catch is usually exported.
„Mackerel, langoustine, and scallops are the top three species caught in British waters by British vessels, but they don’t have a market in the UK. These species are exported, predominantly to the EU. On the other hand, cod, haddock, pollock, as well as shrimp and prawns are the species favoured most by British consumers – yet they are largely imported,” explained Beyhan de Jong, Associate Analyst - Animal Protein, Rabobank.
Top three suppliers for the British seafood market are the EU (30%), non-EU Western European countries (Norway, Faroe Islands, Iceland totalling 20% of the imports), and Asia and Oceania (25%). Even the salmon produced in the UK doesn’t have more than 33% share on the domestic market (50,000 tonnes).
Without a Free Trade Agreement between the UK and the EU, tariffs imposed by the World Trade Organization from 2021 could run from 2% to 20% impairing the fisheries sector in Great Britain by reducing the demand for British fish&seafood on the European single market. On the other hand, EU producers can find other markets to export their items.
A six-months resilience test
For now, all the signals indicate that the two parts engaged in „the divorce” are heading for a no-deal Brexit, a situation that will block the agricultural products from the UK to reach the EU single market between April and October next year.
At the same time, the British government announced that food security issues request that food imports from the bloc will be allowed to enter the country creating a downward pressure on prices and hurting the domestic producers.
Practically, in that scenario, that period will be a real resilience test for any enterprise in the Kingdom, the survival of the fittest being the only rule taking in consideration. Of high vulnerability are the farms in Wales and Scotland, very much dependable on the export of lamb to the EU market but also other businesses in the meat industry.
For now, the National Sheep Association (NSA), the British Poultry Council (BPC) and the National Farmers Union (NFU) warned that the country is not prepared to take such a serious hit as a hard-Brexit, with the latest raising the problem of UK’s food insufficiency.
According to official data, Great Britain’s rate of self-sufficiency in food has dropped from 74% in 1987 to 60% last year.
„Home-grown food production must have the unwavering support of Government if we are to achieve this post-Brexit”, says NFU President Minette Batters, who also warns that the country can survive on its own food for only 7 months and one week.
A similar vision is shared by Phil Stocker, NSA Chief Executive. “It would be highly damaging to the UK sheep sector if we ease the flow of imports, something the Government has suggested it would do to keep our manufacturing going, at the same time as the EU delays the approval of products destined for its side of the Channel. If we lose access for UK sheepmeat, even for a few months, and still allow imported lamb to come in, then our markets will quickly become flooded and prices will plummet, with farmers feeling the brunt of it”, he said. In his opinion, opening new markets on short notice for UK sheep and lamb is ”unrealistic”.
Consequences on both sides
No-deal Brexit will have consequences on both sides, as a former EU Commissioner for Agriculture, Rural Development and Fisheries observed in a comment for BBC. Welsh farmers are to suffer the most in the UK, predicts Franz Fischler, mentioning that 30% of the Welsh lamb and 13% of the beef are exported in the EU market. The only solution, in his opinion, is the public support for the local products.
At the same time, with the leave of Great Britain, a gap is created in the EU budget for Agriculture and that is to be felt by all 27 Member States. Reform of farm subsidies within the EU is to be expected, with direct payments to farmers likely to be cut, as the bloc is approaching a new policy of rewarding farmers for delivering public goods, such as environmental projects. A recent financial support for the Welsh farmers came from the EU (€ 3.5 million) to prepare the food, farming and fisheries industries for Brexit, including with branding.
In search of new FTA’s
New Free Trade Agreements will be necessary for the British meat, poultry and seafood sectors as the departure from the
EU will change the rules of the game. For the livestock sector, the economic sustainability requires the maintenance of its access to other EU markets, where its key customers lie, to be a priority, mentions the IMTA analysis. On the other hand, imports are fueling sectors such as retail, foodservice and manufacturing by supplementing those parts of the carcase in deficit. “A substantial part of those supplies come from other countries in the EU, but imports from non-EU countries are critical, particularly for our foodservice and tourist industries. One of the greatest challenges will be to ensure
these supplies are not disrupted. Unlike many other foods the EU schedule of duties for meat have been set so high that the only way to import has been via a plethora of concessionary import quotas, thus simply adopting EU tariffs will not be a solution. Uncertainty at the moment faces this sector as the WTO rules covering the exiting of a country from a trading bloc are unclear,” it is mentioned in the IMTA document.
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