Britons could face shortages of salad and fruit and a jump in the price of cheese and meat if the Brexit transition ends without an EU trade deal — a result that the UK Food and Drink Federation described as “deeply damaging for both businesses and consumers”.
As London and Brussels on Friday warned that “no deal” was the most likely outcome of negotiations, food and farming groups in the UK said the combination of border congestion and tariffs would create huge hurdles for the sector.
Tesco chairman John Allan has predicted overall food price rises of 3 to 5 per cent along with shortages of fresh food for up to two months if there is no trade deal in place on January 1 — although the government has rejected this claim. A study by the London School of Economics found the price of speciality cheeses could rise as much as 55 per cent, while the cost of other EU meat and dairy products would rise by more than a fifth.
British consumers may also face less choice. The Wine and Spirit Trade Association, which represents the industry, said many small European winemakers were likely to give up exporting to the UK in the face of extra red tape.
Quitting the EU means the UK faces a range of extra checks when exporting to the continent, even with a deal. While Britain will phase in some requirements over six months, the EU will not, meaning exports to the bloc must complete customs declarations and will incur physical checks.
Without a trade deal the effects at the border are expected to be much more severe.
The new regulatory requirements are likely to cause serious congestion at ports, including Dover and Felixstowe, delaying imports and exports, while new tariffs imposed in the event of no deal will all but halt exports of some products — such as lamb — and imports of others.
“The ongoing uncertainty surrounding the new checks and red tape that will apply from January 1 will create disruption in the supply of many goods,” said Andrew Opie, director of food and sustainability at trade association the British Retail Consortium.
Richard Burnett, director of the Road Haulage Association, which represents the freight industry, said once checks kick in, congestion would affect transport in both directions. “The issue is that the trucks — 85 per cent of which are EU trucks — flow in a constant loop back and forth over the Channel, so controls at EU ports risk creating a ‘blowback’ into the UK system,” he said.
Deal or no deal, foods face extra checks that could delay trade even further. For example, animal products need export health certificates signed by a veterinarian. Trade groups say there are not enough customs agents or vets to complete all the checks.
Perishable goods are also at risk from congestion delays. The UK depends on overseas farmers for fruit and many vegetables; in January, 85 per cent of tomatoes; 90 per cent of lettuces; and 70 per cent of soft fruits come from Europe.
Jack Fleming, founder of Chill-Chain, a digital platform for cold chain logistics, said: “There will be an increase in wastage. Things like salad . . . only have a shelf life of about five to six days after it is packed. If you have two days in transit and two days standing in queues, you only have two days left for the supermarket to sell it and the customer to eat it.”
If congestion builds, some companies may simply stop sending products. Mr Burnett said there were signs that EU distributors, hauliers and logistics companies were preparing to cut deliveries to the UK to avoid perishable products getting stuck, leaving them financially liable.
The new checks and congestion will also incur costs. Even if the UK and EU reach a trade agreement, the London School of Economics estimates the price of unbranded EU products would rise 4.7 per cent in the UK, and branded and speciality products by 9.9 per cent. Without a deal, they would rise 12.5 per cent and 26.5 per cent respectively.
Without a deal, steep costs will be added by tariffs levied on imports and exports, with 60 per cent of UK agrifood going to the EU. This levies an average tariff of 48 per cent on sheep meat, for example. Britain exports about a third of its lamb to the bloc and farming groups believe the levy would destroy that market, potentially causing a price collapse and domestic surplus of up to 2m lamb carcasses.
The UK government says it would support sheep farmers in this scenario, potentially through a payment to farmers based on the number of ewes they own.
But Charles Trotman, senior economist at the Country Land and Business Association, said even if the government bought up surplus lamb as well it would not prevent an “economically significant reconstruction of the sheep meat sector . . . In Wales, that will have a significant cultural and political impact”.
Supermarkets have warned that a ‘no deal’ Brexit may mean food price increases and food shortages © Andy Rain/EPA
The UK this year set out its so-called global tariff on imports, which it said it would apply to imports from countries without a trade deal from January 1. This would add steep extra costs: 48 per cent on beef mince and 16 per cent on cucumber, for example.
Experts argue that the effects would be so severe that the government is unlikely to fully implement these tariffs, but may use mechanisms such as tariff rate quotas to exempt some goods.
Dmitry Grozoubinski, founder of consultancy ExplainTrade, said: “Without a deal, the balance skews wildly toward protection, with many of those EU-sourced goods facing high tariffs without domestic alternatives or tariff-free foreign substitutes readily available.” These include products such as pork and champagne.
The A16 highway in France shows trucks heading to the Channel Tunnel stuck in a traffic jam: if congestion builds, some companies may simply stop sending products © Philippe Huguen/AFP
“As no-deal looms, the UK has to rapidly reconsider its tariffs or risk price hikes and shortages,” he added.
Developments after January 1 depend in part on how quickly companies and the government master the new regulatory requirements. But they also depend on unpredictable human and political factors.
The government’s “reasonable worst-case scenario” notes “there is a risk that panic buying will cause or exacerbate food supply disruption.”
Source: Economy - ft.com
