The impact of Brexit on the processed food and drink sector

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Series Details (2017-19) HC381
Publication Date 22/04/2018
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Further information

+ Northern Ireland border

The report also highlighted frictions at the border between Ireland and the UK as being of particular concern given that the food and drink sector was highly integrated across the two countries. The report called for a credible solution to avoiding a hard border to be found as soon as possible.

+ EU regulatory regime – food standards and consumer choice

The EU regulatory regime in food and drink was highly integrated, and the UK was a full member of the European Food Safety Authority (EFSA). The report noted that EU food regulation was viewed by the majority of stakeholders as positive for the food and drink sector, through geographical indicators, high food standards, harmonised food labelling, and that it already allowed divergence.

The report found a unanimous view in rejecting any 'race to the bottom' as UK consumers would not tolerate any lowering of standards. Most stakeholders supported the UK continuing its membership of EFSA after Brexit.

The Committee agreed with the sector that the UK should stay as close as possible to EU regulations after the EU and that key EU regulations must be preserved to maintain the competitiveness of flagship UK products and allow UK customers confidence in what they buy (e.g. Cheddar Cheese).

The Committee also expressed concern at the impact on the 96% of food and drink SMEs for whom having to deal with another set of regulations would be burdensome and costly. The report recommended that the Government sought to secure mutual recognition of standards as soon as possible to provide these businesses with the necessary certainty.

+ Non-tariff barriers

The processed food and drink industry relied on just-in-time delivery of products with short shelf lives and was heavily integrated with supply chains spread across the UK and the EU for sourcing raw materials, processing goods and selling them.

Having heard evidence from a range of witnesses including representatives from companies such as Diageo and Ferrero UK, the Committee’s report found that non-tariff barriers, in the form of border delays and increased bureaucracy, would have an adverse impact on UK competitiveness. For instance, Diageo told the Committee that a 15-minute wait for each truck at the border between Ireland and the UK would cost £1.3 million per year to Diageo alone - potentially more for suppliers.

+ Food and drink sector critical reliance on migrant labour

Access to EU nationals was crucial to the hospitality and to the processed food and drink sectors, both relying heavily on EU labour at both unskilled and highly-skilled levels for meeting their existing skills gaps. According to the Migration Advisory Committee, 24.3% of the sector's workforce was made up of EEA migrants in 2016.

The food and drink sector directly employed 400,000 people throughout the country, a third of whom were EU nationals. In the short term, the report called for the Government to ensure that on leaving the EU, the food and drink sector can continue to have immediate access to the skills it needs. In the longer term, there was a strong need to work with the sector to meet its skills gap and ensure the sector was an attractive destination to UK nationals for a career.

+ Trade opportunities post-Brexit

The UK food and drink sector could stand to benefit from substantial growth opportunities beyond the European Union in the coming years. However, the sector does not see this as achievable without replicating all existing EU trade deals with third countries and negotiating preferential agreements with other countries that include mutual recognition.

The Government's priority in terms of opportunities for trade beyond the EU after Brexit should be to secure the roll-over of existing and forthcoming trade agreements. The report also found that the opportunities were both relatively slight and distinctly uncertain, when set against the benefits to the consumer of free access to the current range of products facilitated by conformity with agreed standards.

Further information

Several organisations sent written submissions to the Committee during its inquiry. You can access their submissions via this link.The United Kingdom: House of Commons: Business, Energy and Industrial Strategy Committee published a report The impact of Brexit on the processed food and drink sector on the 22 April 2018.

The Committee suggested that the UK Government was almost out of time to negotiate an orderly trade system after the Brexit transition, risking a significant impact on consumers, businesses and workers in the processed food and drink sector.

The Committee said that a no-deal would be disastrous for UK exports and must be avoided at all costs.

The Committee found that a future move by the UK to lower or remove tariffs could have extremely damaging consequences for British farming with only the prospect of very limited benefit to consumers in terms of lower prices. The Committee’s report also examined the impact of non-tariff barriers, regulatory alignment, transitional arrangements, trade opportunities, and the food and drink sector’s critical reliance on migrant workers.

Source Link
Related Links
Food and Drink Federation (FDF): Exiting the EU
University of Sussex: Science Policy Research Unit (SPRU), 2017: A Food Brexit: time to get real. A Brexit Briefing
The Guardian, 24.08.17: Food and drink industry says EU staff exodus will damage economy
BBC News, 24.08.17: Food industry warns of Brexit workforce shortage
Provision Trade Federation (PTF): About Trade: Brexit
Association of Licensed Multiple Retailers (ALMR): Brexit
BBC News, 22.04.18: No-deal Brexit 'disastrous' for food firms
United Kingdom: House of Commons: Environment, Food and Rural Affairs Committee: Third Report (2017-19) HC348: Brexit: Trade in Food
ESO: In Focus: Brexit - The United Kingdom and the European Union
United Kingdom: Parliament: House of Commons: Parliamentary Business: Committees: News, 22.04.18: Brexit: free trade agreement with EU crucial for UK food and drink industry
British Retail Consortium: News, 05.07.18: There will be food supply issues in the event of a cliff edge Brexit

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