UK food industry not ready for Brexit

18 Jul 2017

A new report published by SPRU, the Science Policy Research Unit at the University of Sussex, shows that the UK is not prepared for the impact Brexit will have on the food system.

According to the briefing paper, written by leading food and agricultural policy analysts Professor Erik Millstone (University of Sussex), Professor Tim Lang (City, University of London) and Professor Terry Marsden (Cardiff University), severe risks to consumer interests, public health, businesses and workers in the food sector - the "food system" - are likely unless issues are addressed.

If the UK opts for a ‘hard Brexit’, the retail industry could see price rises of up to 22 per cent in imported goods. And with no Government vision for UK food or agriculture, prices, quality, supply and the environment will all be adversely affected even with a ‘soft’ Brexit.

Professor Millstone says: “In the EU, UK consumers and public health have benefited from EU-wide safety standards, without which there will be a risk of the UK having less safe and nutritious products.”

Professor Lang adds: “UK food security and sustainability are now at stake. A food system which has an estimated three to five days of stocks cannot just walk away from the EU, which provides us with 31 per cent of our food. Anyone who thinks that this will be simple is ill-informed.”

  • The report, which analyses industry and government data, policies and literature on a wide range of issues including production, farming, employment, quality, safety standards and the environment, draws on more than 200 sources, including many interviews with senior figures across the food chain. It highlights 16 key issues that must be addressed by the Government in its negotiations with the EU including:
  • An urgent need for a clear integrated plan for UK food – the UK government currently has no UK food policy
  • Clarification on food crossing borders, particularly from the Republic of Ireland to Northern Ireland
  • New legislation to replace 4,000 pieces of EU law relating to food
  • Scientific and regulatory infrastructure, replacing at least 30 EU-based bodies
  • Farm viability and subsidies to replace the EU’s Common Agricultural Policy (CAP)
  • Fishing policies that are more than rejecting the 1964 pre-EU London Convention
  • Food labour – 35 per cent of food manufacturing labour is from the EU; more in parts of catering and horticulture
  • Some idea of from where UK food will come – as only around 54-61 per cent is currently UK-sourced
  • Tariffs – retail industry says tariffs could raise imported food prices by 22 per cent post-Brexit
  • Prices, which are already rising and likely to rise more, will become more volatile, especially harming poor consumers
  • Quality standards throughout supply chains, which are currently set by the EU, may well decline, and may do so abruptly.

Professor Lang explains that consumers in the UK spend £201 billion each year on food, with the whole food chain contributing about £110 billion gross value added (GVA).

“The Government has provided next to no details on agriculture and fisheries, and there has been total silence on the rest of the food chain where most employment, value adding and consumer choice are made," he adds. "With the Brexit deadline in 20 months, this is a serious policy failure on an unprecedented scale."

At this time of economic uncertainly, it is essential that business owners of UK small and medium sized enterprises (SMEs) maintain effective management of their company’s working capital. This will not only help to ensure you have the cashflow needed to survive and thrive, it will also expose any pressure points within the cash cycles, helping to boost efficiency and even save costs – all vital elements to survive and thrive in challenging times.

Contact our specialist advisers to the food industry for guidance and strategic advice to help in formulating plans for your business in order to strengthen its prospects of success, achieve growth and maximise wealth.

Our partner business, BM Structured Finance, is also available to help with sourcing and restructuring debt finance for SME businesses.

For further information, contact Steve Govey or your usual Beavis Morgan Partner.