A relative of mine has spent the past weeks munching his way through the contents of an over-filled freezer, stocked to survive the Great Food Famine that would surely follow the end of the Brexit Withdrawal Agreement interim period on December 31st. While also coping with the fact that Kent has so far not become the biggest lorry park in Europe and the UK’s speedboat vaccine programme left the EU tanker wallowing in its wake. But he may take comfort from the problems faced by many British agricultural exporters, snared in a web of European red tape.
Businesses in this sector are grappling with complex, costly, and often opaque bureaucratic rules: rules that mean food products exported to the EU can face punishing charges.
The EU’s regulatory framework affecting their products seems to have been designed by French farmers for third world countries with cheap labour and dodgy food safety standards.
The Provisional Trade Federation, a large trade association dealing with food commodities including dairy, says that while big businesses generally have the resources to find ways of coping with EU regulations (hence none of those empty supermarket shelves we were warned about), small exporters can face difficulties.
Brexiteers who thought that we could leave the EU after 40 years of economic integration without disruption were unrealistic. Remainers who predicted economic catastrophe were guilty of wishful thinking. A recent webinar hosted by the Agricultural and Horticultural Development Board (AHDB) had the title EU Exit. Short-term impacts and long-term opportunities? The answer to both questions from experts across the industry was ‘yes.
First the impacts. For the director of a medium-sized UK diary marketing and sales company these have been particularly damaging. His company is keeping its head down in the still-divisive post Brexit debates, so he must remain anonymous.
He voted Brexit but is now angry and disappointed. Mention the government’s dismissive ‘teething problems’ response to complaints and you can practically hear him grind his teeth. He says the Tories failed the agricultural sector when they negotiated the final deal.
As far as dairy exporters are concerned, he says: “We don’t have a free trade deal. We have preferential status. We only have limited access, depending on what you produce and how you produce it”. EU customers, he argues, don’t trust our food safety standards, since in the future they will not necessarily be aligned with the EU.
His biggest headache when exporting to the EU has been the ‘rules of origin’ regulations. These specify the exact proportion of any product that must be produced and sourced in the UK to benefit from our tariff-free trade deal. Like most EU regulations, it’s complicated. Bear with me.
If a UK firm buys a ton of cheese from the US and then cuts it up, packages and sells it to the EU, it must pay a tariff under the rules of origin. Fair enough, says the director. This adheres to the spirit of protecting the EU single market. But, he asks: “How can it be wrecking the single market if the UK does the same process with cheese originating from the EU? Why is cheese imported from the EU, cut up and wrapped in UK and exported back to the EU, treated the same as if the cheese originally came from outside the EU?”
The reason lies in another part of the rules of origin regulations: the process by which the cheese is cut and wrapped could be deemed ‘insufficient’.
Deciding whether a process is seen as ‘sufficient’ or ‘insufficient’ is not simple. The Department of Environment, Food and Rural Affairs (Defra) has produced a guide, with primary school-type line drawings of pigs and cows, to provide some examples of processes that are insufficient or sufficient. Unfortunately, this document doesn’t provide an answer to the director’s particular question.
The Provision Trade Federation provided an answer, though not one of much comfort. After meeting with a European trade body, they reported that to achieve certainty on what was insufficient or sufficient, processes needed to be approved on a case-by-case basis. It wasn’t simply a matter of whether you used sophisticated machinery. For instance, a tanker of Spanish wine, bottled in the UK using specialised machinery, and then sold back to Spain, would probably not be counted as a ‘sufficient’ process.
A ruling on this would come from the customs authorities of the importing country. It could take months and, if the decision was non, nein, or no in any other language, the tariff for this particular company could be as much as £7m.
Rules of origin are a problem for many UK exporters. They are though, just one of a number of tripwires. A dairy exporter says sending a lorry across the channel with a mixed load of pallets from small companies is “like playing Russian roulette”. Should there be a mistake in the paperwork for one pallet, then the whole consignment could be held up for a week. In one case, a lorry with its entire load had to return to London.
Health certificates for animal products must be written in the language of each country they pass through. And at a recent webinar, hosted by the Agricultural and Horticulture Development Board (AHDB), Mike Gooding, Director of Farmers First, said “The rules and regulations continue to change”. This was a major problem. They had settled down a little bit over the last few weeks. This wasn’t because the regulations had become clearer but because “we’ve got better at dealing with the system as it is”.
When Dutch customs officials seized British hauliers’ ham sandwiches it was more than petty bureaucracy: it was a warning. Mr Gooding said the rules were open to interpretation and could depend on a customs officer’s mood. “Every time we have a ding-dong in the press with our politicians expressing their view on Europe you find a UK truck gets delayed a little bit longer”.
Nicola Thomas, Director of the UK Food and Drink Exporters Association, agreed that exporting to the EU was “a bit hit and miss. You can send three identical consignments and two get through, one doesn’t”.
So far, so bad. Yet British businesses, including small suppliers, are adapting and some are even thriving. Recently the Grocer magazine carried a report you’re unlikely to see on Channel 4 News. It began:
‘Dewlay Cheesemakers is mopping up business in Northern Ireland and the EU as post-Brexit red tape and costs force other companies to exit the regions. The Lancashire supplier, whose customers include Waitrose, Aldi and Sainsbury’s, said sales to Northern Ireland had more than doubled in the first two months of 2021 compared with the same period last year, while sales to Europe were up around 30%’.
The company claimed its success was because it was large enough to avoid the problems of pallets from various suppliers in one load, and small enough to be agile in adjusting to EU regulations.
The Grocer also reported how Wyke Farms had set up a facility to help the export of products from other suppliers, with staff filling out export documents, invoicing, collecting money and sorting out Vat.
Ms Thomas said that members of her association had done very well in getting to grips with the new regulations and anxiety levels had gone down. In the main, problems were “short term headaches rather than long term barriers”. And for some of the bigger brands with big distributors “business is booming”.
All the speakers in the ADHB webinar were optimistic about the future, pointing to the growth of the middle classes in Asia and the power of the Made in Britain brand.
In the short-term, trade weather with the EU is likely to remain unsettled. Recently a row erupted over the Brussels’ ban on UK imports of live mussels, oysters, clams and cockles unless they had been treated in purification plants first. An ‘unlikely ally’ popped up in the shape of French MEP Pierre Karleskind, who pointed out that: “The UK waters didn’t become dirty on December 31 at midnight, so this (ban) doesn’t make any sense”.
He could have added that on that day UK food didn’t suddenly become unsafe, British food standards didn’t drop, regulations governing UK food products remained the same as EU ones.
The biggest challenge now faced by retailers sending (one could almost say exporting) goods to Northern Ireland, a subject beyond the scope of this article. Can the UK’s Lord Frost, recycled from the Withdrawal Agreement negotiations, sort out the Irish Protocol and find ways of simplifying or limiting EU agri-food regulations across the board?
The signs aren’t promising. In a recent article for the Spectator Professor John Keiger wrote that at a meeting with Michel Barnier French senators ‘were worried about the impact Brexit border checks were having on French exporting companies and how overzealous controls on UK shell-fish exports might provoke retaliation when Britain ends its grace period’.
He added that ‘in Jekyll and Hyde mode’ both Barnier and the Senate were insistent that the terms of the agreements on trade must be applied ‘fastidiously’. Will Lord Frost be meeting Dr Jekyll in his negotiations, or will it be Mr Hyde?
The UK didn’t get much Jekyll for the agri-food industry in its trade negotiations. Britain has, sensibly, decided to delay the instruction of a full customs border with the EU until next year. This will leave European exporters more time to prepare and for the UK to put in place its customs infrastructure. The EU hasn’t reciprocated.
Nor could the UK and the EU agree ways to reduce the burden of sanitary and phytosanitary (SPS) checks for food of animal or plant origin crossing borders. Even though it’s reported the EU eased its inspection requirements with other countries such as New Zealand, where only 1% of goods are checked upon arrival into Europe.
Such reluctance to free-up trade adds weight to Caroline Bell’s recent article for Briefings for Brexit (Is the unratified TCA the EU’s new weapon in the Brexit war against Britain?) charging the EU with ‘bureaucratic officiousness and malevolent obstructionism’.
Yet in the time of Covid, with European economies racking up massive debts, it makes sense for the EU to find its inner Jekyll. After all, in 2020 we exported £12.5 billion of agri-food products to the EU. This compares with £35.9 billion of agri-food imports from the EU. These figures do not include fish or live animals.
The trade deficit and British exporters losing EU customers, make a strong case for a government-led Buy British Food campaign. It shouldn’t be a difficult sell. You can’t miss the Union Jack labels on the shelves of major retailers, and even German supermarkets in Britain are keen to demonstrate how much of their food is UK sourced.
Leaving the EU after 40 years of integrating supply chains and common regulations was always going to be disruptive. As Phil Bicknell, chairing the webinar for AHDB pointed out, it had been as easy supplying customers in Berlin or Barcelona as it had been in Birmingham. Yet after just a few weeks from the end of the Withdrawal Agreement, it’s clear that, while some businesses have lost European customers, the UK agri-food industry is not facing a crisis.
Companies are adapting. Businesses that already export to countries outside the EU are used to dealing with multiple regulations. Nicola Thomas said the UK was in the forefront of trends in retail and manufacturing. Brand Britain was powerful, recognised for quality, heritage, innovation, and security. Consumers wanted to buy from safe, trustworthy, and socially responsible companies.
The EU was open for business. “We’ve seen retailers and distributors looking for new providers from the UK”. There were “a lot of reasons to be optimistic and lots of opportunities going into the second quarter of 2021”.
Brian Morris is a media consultant
