Jelisa Hanley analyses the potential effect of post Brexit trading deals on the UK food industry.
With an urgency to secure international trading deals with countries outside of the EU, the future of a post-Brexit Britain as a trading nation is now under the magnifying glass of the media. Much debate was sparked after Brexit’s impact on trade deals prompted an early call to action from Prime Minister Theresa May, despite EU leaders’ demands that Article 50 of the Lisbon treaty must be triggered before negotiations even start.
The announcement of the new US president Donald Trump sparked recent interest in the media about how the UK would now work with the US as an independent nation. One huge benefit of the UK’s exit from EU membership is the chance to negotiate its own bi-lateral trade deal with the US. Their American meat and dairy market is the largest in the world, and by giving them access to the UK’s advanced grocery market, this could be a beneficial start in negotiations for both countries.
The changes after the vote to leave came almost immediately, with a decline of the pound in June 2016. In response, Britain saw a major decrease in international imports, as expenses on imports increased. The food supply chains in Europe have been hit with an 18 per cent devaluation following the fall of the sterling, leading manufacturers to spend more on ingredients and leaving independent businesses at the mercy of their supermarket buyers.
Don Trevor, owner of the Village Bakery, Chorlton said, “I’ve seen a major increase in costs in ingredients. We used to bake homemade bread, and my wife Pat would bake cupcakes, but with all the rest of our ingredients we had to buy, we had to temporarily remove these options from our menu. We had to also raise our prices, because we had to start buying poultry from the supermarket.”
Don used to buy his meat from the butchers, before he found out the poultry wasn’t from the UK. He believes that these meats should be labelled to keep consumers in the know. The Guardian reported in 2015 that, even though the UK has ‘high standards in animal welfare’, there are not yet any restrictions on importing meat from countries who do not uphold the same standards.
Tim Farron, leader of the Liberal Democrats, warned UK farmers in January that they could face losing tariff-free access to the EU market whilst also being undercut by cheap US imports, if Theresa May’s favoured ‘hard Brexit’ and free-trade deal with Donald Trump gets the go-ahead. The National Farmers’ Union’s (NFU) director of EU exit Nick van Westenholz also suggested to the Financial Times that the increased costs UK farmers face due to the ‘ruthless pursuit of trade liberalisation’ put the much-valued high standards of UK produce ‘at peril’. In the past the Agricultural Protection Act has stalled big EU and US trading deals but, through Brexit, the British farmers become vulnerable to losing out in what seems to be very long road ahead.
The Guardian reported in 2015, the National Farmers Union said that some overseas farmers have been required by UK retailers to meet higher standards than their national minimum. With more than half of UK retailers now sourcing their food from abroad, scientists believe the increasing reliance on foreign food may have an impact on the UK becoming more self-sufficient.
Despite this, pubs, canteens bars and restaurants, which now account for half of the money spent in the UK, don’t always seem to be particularly concerned about the quality of imported foods used in their establishments.
Roy Nipsum, Manager of the Lloyds Pub, Manchester, said: “We source our meat from local UK farms. It is an extra expense we feel is worth it for quality purposes. However, I know many of my friends who own pubs who have their meat imported from overseas because it is cheaper, but you can taste and see the difference in the quality.”
A NEW START?
However, there is an upside to the trade deficit, as UK food and drink exports grew by nearly ten percent in 2016, with sales to the US going up 12 percent. For the first time in history, UK food and goods hit the £20bn mark, according to government figures.
China is also becoming one of the US fastest growing markets, with an export value of pork up £43m which is a 70 percent jump from 2015. Exports in food and drink grew 11.5 percent in 2016, according to the Food and Drink Federation (FDF), and they are showing no signs of slowing down.
When government Environment Secretary Andrea Leadsom addressed the National Farmers’ Union’s annual conference on February 21, she said: “As we prepare to leave the EU, there has never been a better time to become more outward looking – developing new trading relationships and establishing our place as a truly Global Britain.”
The figures show that the key to a healthy UK economy lies within exports, and with only one in five UK companies exporting, the government has turned its attention to educating companies on how to tap into these international markets.
This is no doubt a good time to export, as the weakening of the sterling has helped boost UK trade competitiveness. This is why we are seeing such a major rise in exports at the start of 2017, but it is now up to companies to negotiate new sales agreements with overseas buyers which could give the UK the upper hand after Brexit.
Britain has always wanted the free movement of partnering with faster growing and emerging nations. China and India for example are a huge subject in trade at the moment. These emerging nations, however, want free movement of people as a condition for trade deals, as well as wanting a more liberal approach to Britain’s visa policy, which will involve a changed attitude to allow foreign workers into the UK.
These agreements may take years to secure and finalise. Britain’s firms have helped India’s economy by outsourcing call centres , services and IT hubs. However, opening their country to free trade may have more to do with people than with manufacturing. Britain has shied away from this form of free trade before and, in leaving the EU, they have proven that they are confident on their own.
Whether it is the food industry or the free trade of people, Britain is at one of its most vulnerable stages. They need the help of international free trade without the risk of negotiating away their own freedom.
It now goes without saying that this two year exit will be a very long process.