House Lords EU Committee on Brexit: deal or no deal . . . the agri-food sector

The latest of the House of Lords EU Committee’s excellent reports is Brexit: deal or no deal.

One of the case studies,  the agri-food sector, is copied below. A warning: The prospect of no deal with regard to our food supply and the agri-food sector, is scary:

“The British Food Importers & Distributors Association said that no deal would lead to a lack of availability of key food products on supermarket shelves. Falling back on WTO rules could also lead to food prices rising by over 20%.33

The Wine and Spirit Trade Association said that no deal would lead to job losses, investment cuts, a decline in sales and potential business relocation. Under WTO schedules, customs tariffs would be imposed on wine, probably raising the price for consumers. Non-tariff barriers would present challenges regarding access to stock, transit availability, bonded warehouse space, packaging, machinery, access to labour and securing supply of future wine vintages.34

The Fresh Produce Consortium noted that the Port of Dover handled 600 lorries per day transporting fresh produce.35 In 2016, the UK imported 3 million tonnes of fresh produce from other EU Member States. Many suppliers dealing solely in EU imports have no experience of meeting customs requirements, and registration as an Authorised Economic Operator36 would not be feasible for most small importers.37

The British Retail Consortium warned that the average tariff on food products imported from the EU would be 22%, with tariffs on Irish cheddar of 44% and on beef of 40%. Its research pointed to potential rises in the price of cheese in the order of 6–32%, on tomatoes of 9–18%, and on beef of 5–29%. Non-tariff barriers would be burdensome in relation to customs checks, and health or veterinary checks stemming from sanitary and phytosanitary requirements.38

NFU England & Wales argued that a default to WTO terms would have a particularly devastating impact on the British sheep sector, which exports more than 30% of its total production each year (of which 96% goes to the EU). Other net exporting sectors such as the wheat and barley sectors would also be harmed by the imposition of duties. Overall, 71.4% of the UK’s food and non-alcoholic exports go to the EU. They also noted that the UK was a net importer of food, and that Brexit could present opportunities to increase the domestic consumption of home-grown food. However, the fact that not all imported products can be grown in the UK meant that an increase in consumer prices was likely.39

Dairy UK said that there would be an increase in UK wholesale and retail prices for dairy, severe erosion of the UK’s position in export markets, a growth in the sales of dairy substitute products, and particular disruption to the dairy industry in Northern Ireland (see Box 7). WTO tariffs for dairy products were prohibitively high, and would make EU imports much more expensive. Meanwhile UK dairy exports to the EU would become uncompetitive, as they would need to surmount the EU tariff wall.

Dairy UK cited a forecast by the Centre for Economics and Business Research suggesting an increase in wholesale cheddar prices of 51% and a 20% increase in the retail price of cheese. It was unclear how no deal would affect the supply of EU labour in the UK. On average, non UK-born staff account for 11% of the processing workforce.40

Although no evidence from the fisheries sector was submitted to this inquiry, we note that some within that sector have advocated a ‘no deal’ outcome. Fishing for Leave, for instance, have argued that a clean break from the EU, with no continuation of the Common Fisheries Policy, is needed to ensure the future prosperity of the UK fishing industry.41

1. I’ve left the footnotes in the text, as they link to the relevant page in the Committee Report.
2. The image above is of the House of Lords Woolsack from the UK Parliament flickr feed.

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