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Brexit: Both challenges and opportunites for the sector

Last week at The London Produce Show the General Election and Brexit were hot topics and even though we don't know what will happen after Brexit it is important that importers and exporters stay well informed about the possibilities of what might happen.

To this end a workshop took place to discuss a few scenarios of what might happen and how best to prepare for every eventuality. A third of UK fruit and vegetables are imported from Europe and the decision to go ahead with Brexit has already made an impression with the currency taking a dip and prices rising.



Nigel Jenney, from the Fresh Produce Consortium, said there were both challenges and opportunities to be had from the situation. He said that Brexit needs to be seamless and above all there has to be clarity. It will be a complex legal process breaking with the EU and the FPC wants ensure beneficial trading relations with the EU and further afield.

He stressed that another major factor is labour, which is essential for the fresh produce sector, as a high percentage of workers in fresh produce and the processing industries are from Eastern Europe. How border controls are organised will also be a big factor.

Whatever happens the UK population will still have to eat and, with the EU as the biggest trading partner, relations will continue, but there will also be big opportunities for non EU countries to extend relations with the UK.

Other benefits could be the reduction of import regulations as at the moment most of the regulations derive from the EU and many of these are not relevant to UK plant health issues, there could also be a reduction in much of the 'red tape' surrounding European legislation.

Nigel encouraged people to lobby their governments wherever they are in the world to allow smooth trade between the UK and other countries.



Richard McIntosh, Assistant Chief Plant Health Officer at DEFRA explained the importance of plant bio-security and how there are good reasons for regulating certain products which come into the UK. At the moment the European Standing Committee controls this and he advised importers to be compliant and to work with the committee and help identify emerging problems.

 

Gary Welsh, Head of Imports and Exports at the Food Standards Agency continued in a similar theme and applauded the part that the fresh produce sector played in keeping food safe and hoped that going forward more information would be shared to mitigate risks before they arrived at the UK borders.



Lambert van Horen from Rabo Research Food and Agribusiness presented three possible post Brexit scenarios, after reminding delegates that although fresh produce was top of our agenda it was not an important part of discussions in Brussels.

The first scenario was that things would just remain how they are at the moment, with the same tariff free trade and possibly some new regulations for increased trade. The second was the protectionist scenario with fewer tariff free quotas. The third was a Great Global Britain with no import tariffs. In most likelihood it would be a combination of all these scenarios.

With 160 nations in the World Trade Organisation the UK will have to renegotiate with each and every one of these countries, so this makes scenario one most likely, at least in the beginning. Van Horen pointed out that Spain and The Netherlands, as the biggest exporters to the UK would be the most affected and, regardless of what happens, the UK will pay more for their imports. He also expects the pound to drop further against both the Euro and Dollar.

The UK labour supply will also be affected and this is a serious issue as 38% of the people working in the processing and preserve sector are European. Apart from immigration issues, these people will be less inclined to work in the UK as the a low pound also means there is less to send home.

He asked, "Will the UK continue to subsidise the farmers?" The answer was "I don't think so" - this in combination with the increased cost of imported essentials, such as fertiliser, would meant the average farmer could be 50% less better off.

He concluded by saying that as a bank they will have to prepare for all of these scenarios.



Brexit may bring with it hard borders between the EU and the UK so what would this mean the for ports? Barbara Buczek, Director of Corporate Development at the Port of Dover explained that with more than 2.6 million trucks passing through the port each year security checks are just not an option as there is simply no room to carry this out. She called for frictionless borders to keep the trade moving and said an IT solution would have to be found. She said that people in general, not just in the trade, don't want to be stuck in queues and referred to chaos during the last French port strikes. She encouraged an industry led solution to be set before the government.



Tim Heddema, Commercial Counsellor at the Dutch Embassy, said Brexit will test even the tightest relations, but that The Netherlands are keen to continue the long shared history of trade with the UK. He pointed out that the EU has never offered tariff free deals to non-EU countries and Brexit could lead to that scenario and that it could take decades to get back to the current state of affairs, but there will be new opportunities along the way.



Hein Deprez, Executive Chairman of Greenyards Foods, took a different angle on Brexit and said that it was a reality and people would have to make it work. He reflected on when he started as a mushroom grower 25 years ago, saying that you need to create awareness for your product using knowledge, innovation and technology and think like a consumer not a producer and adapt to changing markets. He went on to say that UK producers will have to work harder, produce more and do it for less. At the moment the UK only produces 30% of its food, this needs to increase to 50% and it can be done if people become more efficient.

Deprez encouraged people to be realistic not pessimistic and although the politicians are needed in the process for negotiations, people need to stand up and do the hard work themselves - make the impossible, possible.



Lastly delegates heard from Laurence Jones, Commercial Attache for the Jamaican High Commission. At the moment Jamaican produce comes to the UK via The Netherlands but in the future this will have be done with two ships instead of one, but they will adapt to that. He said Brexit had encouraged UK importers to pick up relations with the old Commonwealth counties. He sees Brexit as a huge opportunity for non EU countries and said that they had already started negotiations to increase trade with the UK as soon as Brexit takes place.