What does Brexit actually mean for our eating patterns and habits? In all honesty, no one knows the extent of the changes we are facing, but what we do know is that whether we leave with a deal or not, food will get more expensive and there will be supply chain disruption.
Earlier this month, a letter from the British Retail Consortium, signed by the heads of the large supermarkets, highlighted to the public (and hopefully the politicians) that retail just isn’t prepared for Brexit, and can’t be in the current circumstances given the ambiguity of our situation. Companies are spending vast sums of money trying to put plans in place to deal with the potential disruption and to minimise the impacts on business continuity that Brexit of any kind will create, but without an actual plan from the government, no concrete plans can be made.
However, we don’t know if we will leave the EU on the 29th March through a “no deal” Brexit or begin a transition to leave with Theresa May’s current deal, whether the date will be delayed, or if we will even leave the EU at all. The messy nature of the current situation adds to concerns that Brexit just hasn’t been thought through from a practical perspective. What we do know is that if we leave then we will see the food industry under many new kinds of pressure, and the consumer will be subject to several changes in the supermarkets that they shop in, restaurants that they eat in, and deliveries that they receive.
Wages and staffing
35% of staff used in manufacturing and retail are from the EU. If we leave the EU, the ability for these people to stay in the UK is threatened. Whilst it is welcome that the government chose to remove the £65 settled status fee, the reality remains that many EU employees will leave the UK. Staff turnover is a huge cost to businesses already, and Brexit will just increase its impact on the bottom line. Shortages of staff will disrupt the supply chain further and add to the teething problems that we will face, regardless of the way that we leave the EU.
Supply chains will be disrupted. If we enter into a free trade agreement with the EU, we will still be subject to non-tariff barriers. These could be checks at borders into and out of the UK; further proof of health and safety and quality of goods; proof of origin of goods; more animal passports; and many other potential checks and requirements for UK goods leaving the country and goods from the EU or coming into the UK through the EU.
To put the potential disruption into perspective, Imperial College London calculated that a two-minute delay to all lorries into or out of Dover for a day would lead to a 47km traffic jam over the border. A 47km traffic jam doesn’t just disappear – deliveries would be delayed, there is the risk that flight paths change, and restrictions may well be placed on volumes of freight across from the EU. The possibility that cross-channel ferry availability may decrease by 87% has been raised by Parliament, and this will be catastrophic for imports and exports. The government knows that there will be disruption, too. There are plans to turn a 20km section of the M20 into a giant lorry park for lorries waiting for the required checks to leave the UK.
One way to mitigate the disruption to supply chains is for the UK to remain in a customs union with the EU, or one of their existing customs unions which include countries such at Turkey. However, as this prevents us from freely negotiating with other countries, the Conservatives do not want this. Labour do want to remain in a customs union. However, this would still come with associated issues as we would no longer be a member of the single market (no free movement of people) and the customs union may not encompass all aspects of trade.
The disruption may be short term if we leave with a deal and are able to prepare until December 2020 to put new measures and processes in place. If we leave immediately, no preparation will be possible, and no one can estimate the level of disruption that a no deal Brexit will create.
Food prices will increase under the proposed deal, and in the event of a no deal Brexit, food price rises will be significant.
If we manage to negotiate a free trade agreement, then we will at least be able to avoid tariffs on EU goods. However, the financial impact of non-tariff barriers for retailers and suppliers is hefty. The cost of checking one container coming into the UK is up to £700, and the impounding cost per day is £80. The cost of obtaining the required veterinary records for a shipment of Danish pork into a non-EU country varies between £150 and £800 per shipment (depends on amount/breed/grade). A one-day delay of a lorry costs the business using the lorry upwards of £600. These are costs that haven’t existed on 1/3 of our imported food before.
If we don’t manage to negotiate a free trade agreement, then we will be immediately subject to World Trade Organisation tariffs. This means that we will have to accept the current WTO tariffs for all countries with whom we haven’t signed any form of trade agreement. So far, we have signed, or are in the process of signing, a trade agreement with 6 of the 71 countries that we trade with through the EU. The others of those 71 are not due to be signed before the 29th March, if ever. WTO tariffs are an average of 22% and vary by product and grade.
The argument has been made that we could just lower our tariff to 0% to get everyone trading with us, but that would be a disaster for British farmers, and we cannot selectively offer the 0% to different countries – the tariff we choose to offer goes for all countries but they do not have to offer the same rates back to us.
Adding all of these extra costs onto food, not all of which will necessarily be passed onto the consumer, will mean that food will become more expensive. Some food will become prohibitively expensive (the lowest estimate from the government is a 3.8% increase and the greatest is 22% from the BRC (not to be confused with the average WTO tariff of 22%), particularly food which we can’t produce in the UK, such as many fruit and vegetables. The British Medical Journal estimated that between 2021 and 2030 the reduced fruit and vegetable consumption as a result of price increases will lead to 12,500 more cardiovascular related deaths than we are currently anticipated to have during that period in the UK.
Food quality and safety
If we don’t enter into a customs union arrangement then we are free to trade with any other countries in any way that we like. Currently, the kind of food we consume is regulated by EU law which bans the use of certain pesticides, chemicals in the supply chain, and ensures a minimum level of treatment of animals. If we leave the EU, the UK could decide not to maintain these standards, either to bring down the spiralling cost of food, or as an incentive for countries such as the USA to trade with us.
More GM foods will enter into our diets, as well as chemicals and pesticides. Practices such as the chlorine washing of chicken, hormonal medicating of pigs, using 10x the amount of pesticides that we allow now, and different additives which have been linked to detrimental health effects are currently banned in the UK, but not in the USA. It is up to the UK government to protect the public from potentially damaging food, but with fewer trade partners and increasing costs, they might be tempted to sacrifice quality and safety to survive. Beef in the USA is an average of £12 a kilo, whereas in the UK it is £25 a kilo. This is due to the different animal welfare standards, chemical treatment, and medication that cows are subject to. Sometimes, cheaper doesn’t mean better value.
What does all of this actually mean?
So fundamentally, there is going to be more cost in the supply chain for the supplier through to the consumer, how this is distributed is yet to be seen, but margins in food businesses are so thin that they won’t be able to avoid passing cost to the consumer.
In the short to medium term there will be disruption to deliveries. This will lead to emptier shelves, some products being unavailable, and use by dates of products being shorter by the time that they reach the supermarkets and restaurants as the delays will have eaten into their shelf lives. Range is likely to decrease as scale will have to be leveraged to minimise costs, and it is likely that we will have to consume more British products, so we will eat more seasonally.
We may well end up with more food from other non-EU countries. Hopefully this will continue to adhere to the high standards that we currently have, but if it doesn’t then animal welfare, chemicals, additives, pesticides, and sufficient labelling will be very strong concerns.
Retailers and restaurants have already struggled with the impacts of living wage and inflation post- Brexit vote (which is only just starting to ease) and with Brexit the indirect costs of employee turnover will impact the productivity of a business.
Brexit is bad for the food industry, there’s no escaping that. The only way that we could see a landscape after 2020 that looks even vaguely similar to where we are now is if we remain in a customs union as well as negotiating a free trade deal. This seems unlikely as the EU won’t want to agree to that and the Brexiteers won’t push for it as it limits us as much as being in the EU from a trade perspective. Also, a free trade agreement and the customs union would end up with us sacrificing more than we do in the EU at the moment, so it begs the question “why leave?”
Should we be stockpiling food and panicking? There will still be food on the shelves, but the range won’t be the same, so if a specific brand of Italian Olive Oil really matters to you, you probably should buy it in!
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