The UK and EU agreed a last minute Brexit deal on 24th December, which has been widely welcomed by the fresh produce industry. It means goods can still be traded tariff free between the two but the deal is not complete and there are still may hurdles faced by the industry.
“Whilst it is positive that we secured a non-tariff position for many goods of EU origin. I would be extremely concerned about the substantial additional administration and official inspections which the industry will have to complete,” comments Nigel Jenney, CEO of the Fresh Produce Consortium. “The magnitude of those new official requirements when exporting from the EU to the UK will have a material cost on the supply chain and beyond.”
He said he hopes that the industry’s customers fully appreciate the considerable efforts their supply chains are going to support this level of administration. These costs simply cannot be absorbed by the supply chain, they are simply too substantial.
“The UK has the reputation of being a fantastic trading nation and we will look to identifying supply solutions wherever we can throughout the world. We import on average 65% of our fruit and vegetables with Europe providing 50% of that supply, so regardless of the situation the EU will continue to be a key trading partner. It would appear at the moment that unless there is some significant relaxation on the approach adopted by the EU & UK including official fees, charges and inspections the industry can’t avoid nor absorb those costs.”
From a fresh produce point of view, (not plants etc.) the key changes for fresh produce beyond customs will only come into play on 1st April and 1st July.
At the moment EU fruit, vegetables and cut flowers are not required to provide phytosanitary certificates. After 1st April with some notable exceptions virtually all consignments will require a phytosanitary certificate. This will mean a huge amount of additional official inspections in Europe for all those exports and subsequently potential inspections in the UK. From the 1st July the UK will have these new border inspection facilities around the country where a proportion of these consignments will be held for physical inspection.
“The impact to date albeit significant, is only part of it. The full impact is yet to be felt by the industry. One thing the UK government could do, which it has not done yet, is to accept and implement the use of electronic phytosanitary certificates which would ease the administrative burden on the industry by millions of pounds a year. At the moment it doesn’t appear that the UK government has any plans to do that in the foreseeable future.”
Subject to the new rules of origin there are no tariffs between the UK and Europe, if goods originate in a third country then duty is more than likely to be applicable, but its complicated and an often-overlooked situation. If a product is imported into the EU and you then want export it to the UK you either have to use various officially approved systems where the goods are in transit or pay the EU duty on it, perhaps repackage and then pay UK duty and claim back the EU duty (if possible). This again would incur substantial costs and paperwork.
“The once seamless and highly effective supply chain will become embroiled in greater levels of official administration to support the trade in an ongoing basis. The industry is working very hard: firstly, to try to feed the nation through Covid and to try to figure out what the initial implications of Brexit are. While we have known about some aspects as an industry for a while until we have the full picture of the agreement and advice from the UK government it is very difficult for businesses to effectively plan their futures.
“There are still huge issues, as an industry we have done our best to plan at very short notice, some aspects of UK government have been very supportive and very clear with their expectations, others have not. It is becoming very clear now that the UK customs system amendments that should have been made to allow goods to flow into the UK seamlessly on the 1st January have failed to have been made. These issues have not been identified by government officials. They were identified by the FPC and its members who actively tried to ensure the UK government understood and fixed those issues as soon as possible to avoid the huge delays which we are seeing at various locations in the UK.
“In my point of view, whilst this is not easy, it is actually the easy bit. The industry has been let down by the government failing to prepare its own IT systems properly. The frustrating thing is that the UK government has failed to make the necessary changes to their IT systems while being fully aware of this need. This failure has had huge impact on our industry.
“We have hundreds of members who, at short notice have done as much as possible to prepare for new official systems but the goods are being held because the Government’s IT system is unnecessarily requesting it. The official IT systems are requesting something which is contrary to the advice previously given to the industry.
“Whilst the government has had years to plan for this they have given the industry a matter of weeks but the industry has coped better with modest resources against a government which has huge resources to plan and implement these changes.”
For more information:
Fresh Produce Consortium
Tel: +44 (0)1733 237117