Brexit and the food industry
Unless you've been living under a rock, you'll be well aware of the word Brexit.
It became so widely used after the UK’s European Union (EU) membership referendum that it was added into the Oxford English Dictionary at the end of 2016. The term signifies the UK’s departure from the European Union (like we needed to explain), and with that comes a great number of questions as to how industry, markets and our day-to-day lives will be impacted. In this article we take a closer look at the food industry and speculate what the impact of our EU exit will mean for our grub.
Approximately 2 million vehicles cross into Dover from the continent every year, and it’s estimated that that half of these contain food. If we break that down, that’s 5,500 large trucks every day and on peak days could be as many as 8,000. The first thing that comes to mind is the length of time vehicles may be held due to increased border inspections; today there are no checks when products are in free circulation for sale in the UK, that also applies for every other EU member state. We could predict that the possible implications of these added checks could result in a time delay and a direct impact on shelf life, teamed with an increase to stocks and cost and possible risk of unreliability. These factors all have the potential to disrupt the supply chain which in turn affects the consumer.
“For the authorities, a day’s delay on inbound for the Dover Straits will require 100 kilometres of queuing road space on an average day. And that is just for food.”
For some residents in the UK, the looming fear of a possible lack of food is getting to them. Hundreds of boxed Brexit survival kits have already been sold online, whats a Brexit Box you ask? It’s a box (no kidding) that contains 60 servings of main meals, 48 portions of meats, a water filter, fire starter and energy gel.
Consumers aren’t the only ones stockpiling, many brands, retailers and manufacturers are also planning ahead, Associated British Foods announced that they're buying in ingredients, packaging, and machinery ahead of time to limit the risk of any possible disruption. Pets at Home are getting in on the action too saying, “we may consider buying £8m worth of extra stock, as we approach our financial year end and monitor the Brexit process”. The scare can be attributed to a range of factors, not least of all that recent research for Reuters suggests that three quarters of major British companies are now pessimistic about Brexit. Recently a panel of food retailers and food to go restaurant executives signed a letter to all members of UK Parliament, warning of the consequences of Hard Brexit:
“As prudent businesses we are stockpiling where possible, but all frozen and chilled storage is already being used and there is very little general warehousing space available in the UK. Even if there were more space it is impossible to stockpile fresh produce, such as salad leaves and fresh fruit.”
This all comes out of the negotiations that are currently underway, the vote for a deal or no deal; a ‘Soft Brexit’ or ‘Hard Brexit’ if you will. We have outlined the two broadly below:
The UK would most likely stay either inside the EU’s Single Market by becoming a member of the European Economic Area, such as Norway or in the European Customs Union, or both.
A Hard Brexit plan would probably see the UK give up full access to the Single Market and full access to the European Customs Union along with the EU.
Opting for a Hard Brexit plan would prioritise giving the UK full control over its borders and establish making new trade arrangements as well as applying laws within the UK’s own territory. At first, this would mean Britain would fall back on World Trade Organisation (WTO) rules for trade with the EU. Possible advantages of this would mean Britain could then try and establish itself as a global trading nation. However, coming back to food, this would see products subject to tariffs, as well as what we mentioned previously, an increase of checks on goods coming into the country via ports and airports. Food does have a sell by date and time constraints could cause major problems.
Going for a Soft Brexit would leave Britain’s relationship with the EU very close, and although the UK would no longer be a member of the EU, it would keep its access to the European Single Market. Dependent on negotiations, possible advantages of this is that goods and services with remaining EU countries would be tariff free and quotas or taxes on trade would be eliminated, as they are currently. It’s likely that the UK would also remain in the Customs Union, meaning, frictionless-trade, as we would not be subject to increased ‘red tape’ when it comes to border checks. A Soft Brexit may also mean no change to ‘free movement of people’, which would prevent the Government from introducing stricter border controls on the country.
Both these outlines are just scratching the surface of the pros and cons for each outcome. With a recent IGD survey revealing that although 64% of shoppers are worried about what Brexit might mean for the country, only a minority (31%) state they are currently modifying their spending behaviours in anticipation. So, as we look towards this new horizon for Britain, and know that Brexit will continue to dominate our headlines and our conversations, we can only hope that ultimately, the decisions that are made are in the best interest of the people and our plates.