Post-Brexit problems: UK plagued by “marked declines” in agri-food trade, flags research

18 Sep 2024 --- Brexit has left a pronounced impact on agri-food businesses due to diminished exports (27% drop) and imports (32% drop) since the UK-EU Trade and Cooperation Agreement (TCA) was signed at the end of 2020, finds a study. The biggest slump in export value was found for edible fruit and nuts, peels of citrus fruit or melons (73.5%).

The deal’s adverse impacts have further intensified over time, and the authors are now calling for “policy interventions,” including reconfiguring supply chains, adopting digitalization, negotiating sector-specific deals, engaging with individual EU countries and supporting firms in adapting to new trade barriers.

“The TCA introduced substantial barriers and there are ongoing and marked declines in the value and variety of UK exports and imports. Without urgent policy interventions, the UK’s economic position and place in the global market will continue to weaken,” states Professor Jun Du, lead author of the study from Aston University, UK.

Post-Brexit, the agri-food sector — which exported £25 billion (US$33 billion) worth of food, feed and drink in 2022 (Defra, 2023) — has suffered due to complex rules and requirements and checks on multiple fronts, which makes moving agri-food goods across borders more difficult.

“The introduction of required physical Export Health Certificates and physical inspections by Official Veterinarians, the sourcing of supplier information, documentation production and approval, customs checks, sanitary and phytosanitary (SPS) measures and additional documentation requirements have significantly disrupted this trade,” states the report.

To ease the barriers, the UK government recently advocated for an SPS agreement that would allow retail agri-food goods UK-EU trade by scrapping border checks implemented under the Brexit deal. However, “hard-edged, formal negotiations” are not expected to begin until early next year, as reported by Food Ingredients First previously.Increased border checks have led to delays, causing product spoilage and financial losses for traders.

Meat and fruit trade delays

The research, titled “Unbound: UK Trade post-Brexit,” analyzed monthly imports and exports between the UK and the EU from January 2017 to December 2023.

Increased border checks have led to holdups, resulting in spoilage and financial losses, sparking recent concerns voiced by food groups impacted by “costly” post-Brexit EU seed import delays. 

The cost of compliance has also risen sharply, making it more challenging for smaller firms to sustain exports, according to the British Chambers of Commerce.

Additionally, the British Meat Processors Association (BMPA) reported a 50% drop in exports of some meat products to the EU in the first quarter of 2021 due to increased border checks and delays (BMPA, 2021), states the report. Meat and edible meat offal export trade values dropped by 36.9% while imports fell by 51.9%.

Fresh fruit and vegetables exporters, including Dutch and Spanish vegetable growers, have also experienced delays and jump in prices due to new customs procedures and the need for additional export health certificates. Vegetable products reported the most significant slump, with export variety dropping by 68.5%.

“Freshfel Europe estimates the cost of Brexit is about €500 (US$557) per truck and the total annual increase of charges for EU fresh fruit and vegetable exports to the UK is estimated at €55 million (US$61 million), a cost that will ultimately be borne by UK consumers," underscores the report.

Meanwhile, the UK government recently announced a further delay to post-Brexit border checks on fruit and vegetables imported into Great Britain from the EU. According to a recent Defra statement, the implementation date has been pushed back from January 2025 to July 2, 2025.Cereal imports have declined by 21.6% since the UK’s departure from the EU.

Import contractions

The varieties of UK imports from the EU in most sectors also contracted during the studied period. Agricultural goods imports dropped off by nearly 4.75%, with drastic declines in fish (51.2%) and cereals (21.61%).

Sugars and sugar confectionery imports went down by 40.8% while trade varieties plunged by 10.6%. Cocoa imports dropped by 46.6% in trade value while its imported varieties rose by a meager 1.4%. 

Additionally, coffee, tea and spice imports fell 50.3% in trade values and 7.5% in trade varieties.

Meanwhile, some products contradicted the trend by increasing imported varieties, like live animals that saw a significant increase in variety by 24.7%. 

Need for strategic overhaul

Sectoral differences observed during the study pointed toward “smaller EU economies” being more affected by reduced UK export varieties, while larger ones like Germany and France reported smaller declines. 

Dr. Oleksandr Shepotylo, the report’s co-author, says: “Our findings indicate a decoupling of the UK from key EU final goods markets, accompanied by a shift in UK supply chains toward geographically closer EU trading partners for exports and smaller countries for imports.”

“This shift raises concerns and underscores the urgent need for a strategic reconfiguration of UK supply chains to maintain competitiveness.”

The substantial variations across different goods categories and EU trade partners emphasizes the “uneven effects” of Brexit and the TCA on UK-EU trade dynamics. Understanding the nuances and tailored strategies to address sector-specific challenges within the new regulatory environment could be useful, notes the study.

Balwinder Dhoot, director for Sustainability and Growth at the Food and Drink Federation, agrees that with export volumes down 20% in the first quarter of 2024 and recent import regulations creating administrative barriers, “it’s vital that the government prioritizes easing the bureaucratic burden and cutting unnecessary costs and processes in order to strengthen the relationship with our largest trading partner, the EU.”The authors believe digitalization can speed up customs processes and lower costs. 

Calls for automated and modern customs

The authors urge policymakers to take steps that enhance the UK’s economic position by simplifying and modernizing customs processes through digitalization to reduce delays and lower costs.

“Implementing advanced customs platforms that automate documentation, provide real-time tracking and integrate with EU systems should be a priority in future negotiations.”

The report further points to a potential UK-EU Veterinary Agreement that, if negotiated successfully, can strengthen the agrifood trade dynamics between the two countries.

The authors also deem tax incentives for R&D, grants for innovation projects and the creation of innovation hubs, research institutions and government agencies as a way to support firms in adapting to new trade barriers and enhancing productivity.

Addressing the barriers to UK-EU trade, particularly through increased non-tariff measures through “targeted improvements to the TCA” is crucial to ensuring that UK businesses remain competitive in the European market, asserts Du.

“A structured, multi-faceted approach is necessary.”

By Insha Naureen