The UK Food and Drink Federation (FDF) revealed this week that food and drink exports from Britain to the EU have collapsed in January compared with January last year.
There are mitigating factors when making the comparison.
COVID-19 has dramatically changed the route to market for food, switching from a mix of in home and out of home to almost exclusively in home because of lockdowns across Europe.
Similarly, with the uncertainty of no trade agreement between the EU and UK until Christmas Eve, huge quantities of food and drink were stockpiled.
Exports outside the EU were down 11% at £568.5m
Even allowing for these factors, the collapse is spectacular. Exports of food and drink to the EU were worth £256.4m in January 2021, just a quarter of the £1bn exported in January 2020. Exports outside the EU were down 11% at £568.5m. All sectors have collapsed but particularly notable is that salmon exports are almost wiped out at just £0.5m compared with £27.7m in January last year, beef exports at £3.4m in January 2021 were less than one-tenth of the £39.9m in January 2020 while pigmeat exports were down 87% from £27m to £3.5m.
Northern Ireland escapes
The FDF acknowledges the impact of COVID-19 and stockpiling as contributing factors but says much of this is likely due to non-tariff barriers and collapse of groupage deliveries from Britain to the EU effectively shutting out smaller businesses with part loads.
Businesses in Northern Ireland have avoided this collapse and continued trade with the EU uninterrupted under the terms of the Protocol.
This has caused difficulties in the movement of animal and plant products from Britain to Northern Ireland but it has meant business as usual for meat, dairy and fish exports from NI to the EU.
Warning to Ireland
The experience of British exporters in January gives an insight of what might have been experienced by Irish exporters of meat and dairy to Britain in April if the UK hadn’t decided to put the implementation date for introducing border controls back from 1 April until 1 October.
This problem of course hasn’t been solved, just deferred
Had this not happened, there would have been panic this week with the release of the UK figures coinciding with the last opportunity for Irish exports to enter the UK without the full sanitary and phytosanitary (SPS) controls that British exporters face when selling to the EU.
This problem of course hasn’t been solved, just deferred. At some point, the UK Government will introduce full border controls and Irish exporters will be confronted with having to have veterinary certification in place and be prepared for the disruption of physical checks.
Solution requires political will
Relations between the UK and EU have been poor since the Trade and Cooperation Agreement finalised on Christmas Eve.
Special veterinary agreements are a feature of trade agreements
The UK has acted unilaterally in extending the grace period for imposing full border controls between Britain and NI while the EU have initiated legal proceedings against the UK.
After tariffs, SPS controls are the biggest barrier to trade in goods of animal and plant origin between countries.
Special veterinary agreements are a feature of trade agreements and the EU has different types in place with countries like Canada, New Zealand, Switzerland and Norway.
There is no such agreement with the UK beyond the special provision for NI in the protocol. Given the experience of British exporters and the anticipated nightmare for Irish exports after 1 October, getting a veterinary agreement in place should be a matter of the greatest urgency.
Types of agreement
Levels of SPS controls vary depending on the closeness of alignment between the EU and exporting country. Certification isn’t a major issue for distant countries like New Zealand or Canada exporting bulk containers between ports, but physical inspections cause delays. New Zealand has a 1% inspection rate and Canada has 10%.
When countries are geographically close to the EU like Switzerland, Norway and Britain, trade will be greater in volume and exporters vary in size between industrial shipments of full containers to small parcels from speciality shops to individual consumers.
If the UK and EU could agree such an arrangement, it would at a stroke solve the problems British food and drink exporters experienced in January
Norway and Switzerland believe that it is worth having full veterinary alignment with the EU to enable trade flow uninterrupted by the need for any veterinary certificates and inspections, just as it is between EU member states.
If the UK and EU could agree such an arrangement, it would at a stroke solve the problems British food and drink exporters experienced in January.
It would also at a stroke resolve virtually all the issues with the NI Protocol and mean that Irish exporters would never find out just how disruptive the implementation of full SPS controls would have been.