Government urged by UK food and drink sector to ‘get a wiggle on’ over Brexit

The food and drink sector continues to have serious concerns about life after Brexit, and much of the blame for this is being laid at the feet of the UK government for its failure to show clarity and properly engage with the industry about the potential problems it faces.

This was vividly brought to life last Monday (16 April), at a forum organised by the Food Manufacture team during the Foodex show held at Birmingham’s National Exhibition Centre. The forum, titled ‘Go for growth in 2018’, was hosted by BBC business broadcaster Steph McGovern and featured the great and the good of the UK food and drink sector on its panel.

Brexit wasn’t the only issue raised. The rising costs for companies in doing business and problems with attracting labour from the EU, were existential difficulties raised by Nigel Jenney, chief executive of the Fresh Produce Consortium. The tightness of margins was also raised by Chris Sturman, chief executive of the Food Storage & Distribution Federation (FDSF).

Soft drinks levy
Despite the recent introduction of the soft drinks levy – or sugar tax, as it is more commonly known – it is not the only issue facing soft drinks manufactures, British Soft Drinks Association director general Gavin Partington told the audience. However, on a more positive note, Partington remarked: “It does provide an opportunity for some of our members.” He had in mind reformulation and export opportunities, particularly in the field of new “high end juice” varieties.

The Food and Drink Federation’s (FDF’s) director general Ian Wright, while expressing some optimism about the opportunities for new innovative UK food and drink brands, couldn’t get away from the continuing uncertainty surrounding Brexit.

“The challenges for manufacturers are, obviously, Brexit … clearly the whole focus on diet and nutrition is a big issue and it plays out in number of different ways – lots of opportunities for people but also some difficulties for established brands’ reformulation, particularly in areas like bakery and confectionery, where it is very difficult to reformulate without making the product less palatable.”

Wright went on to raise the emerging challenge of plastic packaging of food and drink. He also cited commercial difficulties, such as “the continued concentration of buying power in the hands of the retailers”. And he raised the uncertainty surrounding the recent Tesco-Booker merger, as well as the implications for hard discounters Aldi and Lidl, which source a lot of the products from Germany, should barriers at borders result post-Brexit. “That may create opportunities for British manufacturers in a perverse sort of way,” Wright conceded.

Mike Berthet, market development manager for the EU with the Global Aquaculture Alliance (GAA), highlighted the huge opportunities and challenges facing the fish and seafood sectors – not least in ethical sourcing and food safety. “What that is leading to is disrupters coming into the market,” said Berthet, who cited developments in China as an example of this.

Norway-based Marine Harvest, one of the largest salmon producers in the world, has just announced that it is to open 2,000 restaurants in China, Berthet reported. Meanwhile, he note that Chinese company Alibaba was sometimes responsible for driving up the price of salmon – a staple product in China for foodservice caters  – as a result of the power of its purchasing activities.

However, without doubt, it is Brexit that poses the biggest threat to the UK food and drink sector, the panel recognised.

Brexit poses the biggest threat
Sturman reported on discussions the FDSF was having with government departments such as the Department for Environment, Food and Rural Affairs, Department for Transport “and now very much more with Her Majesty’s Revenue and Customs” about minimising the impact of borders post-Brexit creating delays for trucks on either side of the Channel.

“The big issue, of course, is that we would love somebody to make a decision: we would love the politicians to actually stop beating around the bush and say this is what we are going to find in the final structure, and then we can move forward,” said Sturman.

It was a view supported by Wright, who announced that while the industry was prepared for what might happen post-Brexit, the UK government wasn’t. “That’s why the transition phase has become so completely vital,” he added. “Because it has become clear that in 11 months’ time we will be out, but we will have this 11 months’ extra time when we will be in for all practical purposes, but not for political decisions.”

Wright said most of the negotiations on any final arrangements, including a trade deal and customs arrangements with the EU, and the regulatory framework under which the UK would operate, would take place during the transition period.

“So businesses are going to have to operate a little bit in the dark,” said Wright. “We do know where we are with labour; we know that everyone who is here ­– and this is important to all of our industries as a third of our workers are Europeans – can stay … And everyone who arrives during the transition can stay.” However, he urged government to “get a wiggle on and get that sorted”, since EU works were uncertain about how the new registration scheme would operate for them.

‘No clue what’s going to happen’
“So, the labour force thing looks – at least in the short term – OK. But on customs, on tariffs, on rules of origin and, crucially, on which regulator we are under, we have no clue what’s going to happen,” he added. “And neither does the government right now. They don’t know whether there is going to be one regulator for the whole of the UK or four. Until those sorts of things are decided, it is very difficult for business to move forward.”

Jenney added: “The current uncertainty for the labour force is significant; people are choosing not to return [to the UK to harvest fresh produce] and in much lower numbers. We need to provide clarity to our workforces, to encourage them to return and feel welcome in our communities.”

He said that the UK was only one-third self-sufficient in fresh produce and without greater certainty about workers to harvest those crops, that figure could well decline further as farmers decided against planting more fruit and vegetables.

The same problems face the logistics and distribution sectors, which employ large numbers of EU workers and was currently 50,000 drivers short, Sturman reported.

Meanwhile, Partington raised the threat of ingredients used in soft drinks, such as fruit juice, that come from around the world and could suffer were large tariffs be imposed as  result of Brexit.

So, will the government “get a wiggle on” as Wright urges? Experience to date would suggest not.