Leaked papers confirm food and drink industry fears after Brexit

A leaked government document titled ‘EU Exit Analysis–Cross Whitehall Briefing’ has revealed that the food and drink industry could be hit with considerable cost spikes after Brexit.

The papers, leaked to Sky News, showed that costs could rise by up to 16% due to proposed regulations such as non-tariff barriers. This is accompanied by a potential 17% rise in agriculture costs and a 20% rise for the UK retail sector. Causes of these rises are accredited to extra customs checks, as well as administration and bureaucratic costs.

According to a Food and Drink Federation (FDF) spokesperson, the success of the industry has largely been built on close trading relationships with the EU for the past 40 years.

“FDF has repeatedly stated that the food and drink sector will be one of the industries most affected by Brexit, and the latest leaked assessment papers are acknowledgement from government that they believe this to be the case too. Government has a duty to share this analysis with the sector so businesses can prepare,”​ said the spokesperson.

The FDF is appealing to the government to establish a ‘status quo’ by enacting no changes until March, so that businesses in the UK and EU have stability. The FDF notes four important objectives–a frictionless tariff-free trade, access to the EU workforce, a stable policy regime, and special protective measures for Ireland.

A British Retail Consortium (BRC) spokesperson emphasised the importance of strong customs co-operation between the UK and EU, which will be vital for the frictionless flow of goods.

“With annual customs declarations in the UK estimated to rise from 55 million to 255 million on the expiry of a transitional period, a no-deal Brexit could mean new delays at ports of up to two to three days. For consumers, this would affect availability on shelves, increase food waste and push up prices,” said the BRC.

Impact on the sugar industry

The Environmental, Food and Rural Affairs (EFRA) committee is launching a study into the potential effects of Brexit on the sugar industry in particular, and possible trade options with non-EU nations.

The UK currently has an import demand of around 613,000 tonnes of sugar each year. Of this, 60% is domestically-grown sugar beet, 15% is imported from EU members, and 25% is imported sugar cane from outside the EU.

EU policy supports sugar beet protection in the EU while giving special access to the least developed countries (LDC), plus Africa and the Caribbean and the Pacific region.

Sugar producers in all other nations experience high tariffs on sugar cane imports.

EFRA committee chair Neil Parish said: “As the UK leaves the EU, these regulations will change and the UK may have to look elsewhere for the sugar currently imported from Europe.​ ​It is important that less developed countries retain their ability to sell sugar in the UK after we leave the EU, as this has reciprocal benefits for UK consumers and overseas vendors.​ ​It is vital that domestic growers and importers understand the ramifications for the sugar industry of any potential future trading arrangement.”​ ​

EFRA is opening a dialogue with sugar manufacturers in order to tackle issues including falling demand and a deflation of world sugar prices.