The UK food and drink industry is about £2 billion worse off than it was before Brexit, new figures have shown. The reports come from the Food & Drink Federation, who have analysed the trade of food and drink between the UK and EU in the first 6 months of 2021. This, of course, coincides with the beginning of the post-Brexit era, since the majority of the Brexit changes came into force on the 1st January 2021. This is obviously worrying news for the food industry as a whole. The UK government are claiming that this is just a temporary drop, but some experts are not so sure.
What Has Been Hit Hardest?
The reports have shown that the worst hit area has been meat and dairy. This is likely due to the strict and often confusing rules surrounding the exportation of products of an animal origin into the EU. Beef in particular has seen exports drop by almost 25%. Other products such as chocolate and cream have also seen a significant drop off.
Aside from the products themselves, it seems that SMEs and family-run business have been hit the hardest. It seems reasonable to assume that this is because these businesses are finding it harder than their bigger counterparts to deal with the new paperwork and customs controls.
It is this paperwork that has caused the most issues since Brexit. The new obligations to document products for trading standards before entering the EU has led to huge delays at customs and ports. It is thought that the food industry is being hit particularly hard due to stringent nature of the health checks. Food exporters now have to provide correct paperwork that confirm products meet physical sanitary and phytosanitary standards, something that was not required before Brexit.
Is Brexit Definitely To Blame?
There are some that believe that the report has been too harsh on Brexit and has not placed enough significance on the affects of the pandemic on trade. It is undeniable that the coronavirus outbreak has caused massive disruption to supply chains and will have undoubtedly changed consumer habits. While this is true, it is clear that Brexit is the main contributing factor to the issues facing the UK food industry.
As mentioned earlier, Beef exports have dropped by about a quarter. This is in comparison to the same period in 2020. However, they have dropped by almost 40% compared to the same period in 2019. So whilst trade was clearly disrupted by the outbreak in early 2020, it seems that more severe drop we are seeing this year points more towards Brexit as the cause for the trade disruption.
What Can Exporters Do?
Many exporters have complained about the detrimental affect the Brexit red tape is having on their operations. This has led many UK businesses to move a portion, if not all, of their operations to the EU in order to continue trading freely within the EU. This means the loss of trade and jobs for the UK, which was supposedly the exact opposite of what those who voted Brexit wanted.
Whilst this may be an option for bigger companies, for smaller companies this is unlikely to be an option. For smaller businesses, the best options seems to be to re-evaluate their supply chains and make sure they are as compliant as possible. There is advice out there about dealing with customs after Brexit (like in our article here) and there is always the option of appointing a customs agent. Whilst this would come at an expense, it would likely be cost-effective in the long run.
How Can J&P Help Exporters Post-Brexit?
If you are a business who participates in cross border e-commerce, or exporting of any kind, we would be more than happy to help you register for UK VAT, the UK VAT deferral scheme, gain an EU and UK EORI number, file your UK and EU VAT returns, and help you comply with VAT in case your account faces any issues. At J&P, helping your business is our passion, and we understand that companies across the UK are at risk now more than ever. We are here to support you through Brexit, so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to enquiries@jpaccountant.com.
