Food prices and customs disruption at stake in Brexit deal - report

A report found if there is no trade agreement between the UK and EU, the average tariff on food imports is likely to increase 22% and prices would rise for consumers.

The UK government could cut tariffs on all food imports but this would risk undermining UK producers who could not compete on price. It would remain a World Trade Organisation member.

The report said the government must balance​​ the need for easy access to EU food imports with that of maintaining standards through adequate checks on imports.

Tariffs and potential price increases​

Lord Teverson, chairman of the sub-committee, said: “[The government has] said they want to maintain high food standards but also that they would be willing to have minimal customs checks to avoid disruption at borders.​

“They have said they want UK food and farming to be exemplars of high-quality production but also that they will seek trade deals that secure lower prices for consumers.”​

Data from the UK Trade Policy Observatory (UKTPO) showed the average tariff for whole milk is 70% but 36% for low-fat milk while beef is subject to a 56% average tariff but for poultry it is 14%.

Modelling by the UKTPO found that if the government negotiated a free trade deal with the EU to keep tariffs at zero and minimise non-tariff barriers, the cost of border inspections and some low-level non-tariff barriers would see food prices rise by 3.8%.

The government is seeking a free trade agreement (FTA) with the EU, which could result in continuation of the no-tariff status quo after the transitional period (31 December 2020).

Preparation time and reassuring consumers​

Lord Teverson called on government to set out what checks they will do on imports so industry and customs authorities have time to prepare and consumers will be reassured about standards. ​

“And we would urge the government to consider the impact that Brexit may have on food inequality in the UK: will we have a situation where high quality, local produce is available for those who can afford it, with cheaper food imported for those on lower incomes?”​

A total of 30% of food eaten in the UK comes from the EU and another 11% from non-EU countries under 40 trade deals covering 56 countries negotiated by the EU.

Andrew Opie, director of food and sustainability at the British Retail Consortium, said for consumers, new tariffs will mean higher prices. ​

“It’s been positive that both sides of the negotiations have accepted the importance of a zero-tariff deal and a standstill transition period – priorities for the retail industry,” ​he said. ​

“Retailers urgently need the government to focus in on developing workable plans for customs that allow goods to continue to move uninterrupted across EU-UK borders after the transition period ends.”​

Increased customs and border checks​

The committee said in the ‘best case scenario’, with no tariffs and few customs barriers, international rules would oblige the UK to do more customs and borders checks than it does now.

If an agreement is not reached by the time the UK leaves the EU the additional customs workload could ‘choke’ the UK’s ports and airports and disrupt food deliveries as the UK does not have the staff, IT systems or physical infrastructure to meet increased demand.

With 40% of vegetables and 37% of fruit sold in the UK from the EU, these foods may be particularly affected.

The committee found EU food imports could not easily be replaced by producing more in the UK or importing more from non-EU countries.

It added UK self-sufficiency has been declining for 30 years and there are some foods that cannot be grown in the country due to landscape and climate.

FDF chief executive Ian Wright said the food and drink manufacturing sector has prospered from frictionless access to European markets for imports and exports.

“As the report confirms, any increased friction at borders will prove costly for the entire supply chain and cause short-term disruption for businesses, consumers and shoppers. The committee is right to highlight the urgency of securing continued market access for UK food and drink firms to those countries with which the EU has a free trade agreement, home to one in 10 of our exports. ​

“Time is running short and government must offer clarity and realism to businesses on future customs arrangements and the Irish border.”​

Gov response to EFRA report​

Meanwhile, the government has responded​​ to a report by the EFRA Select Committee in February on Brexit: Trade in Food.

It said statistics show the EU is more dependent on the UK market for exports than the UK is on the EU market for agricultural produce.

“The statistics show that EU sectors that currently export significant volumes to the UK market (and are currently particularly reliant on the UK market) include French dairy, Irish beef, Dutch fresh cut flowers and Danish bacon for example. Conversely, the UK sheep meat sector is very dependent on access to the EU market (in terms of exports). ​

“The government has committed to maintain financial support for agriculture as the same level until at least 2022.”​

The government said sectors such as beef, pork, dairy, fruit and vegetables could, in the medium term, increase production and processing of agricultural products to displace EU imports.

It also reiterated there is no intention to lower standards in pursuit of a trade deal.