The latest report from the House of Lords EU committee is of interest to all involved in Ireland’s Agri-food industry, including the logistics companies that make it tick.
Called ‘Brexit: Food Prices and Availability’, it looks at some fundamental questions – in particular, what are British people going to eat after they leave the EU, and how much is it going to cost them?
From an Irish point of view, the Lords first conclusion is stark - "It is inconceivable that Brexit will have no impact on EU food imports to the UK". Some excerpts from the report give a flavour of the grappling ongoing within the higher echelons of British government.
Checks
Witnesses were concerned about the time that additional checks on foodimports would take. The British Retail Consortium, for example, told us:
“Currently due to frictionless borders, even the most perishable products such as soft fruit can be transported from Spain but still have 5 days shelf life in store or fresh beef can be transported from Ireland, minced and still have up to 10 days shelf life. Delays due to border controls will reduce the life of products in the home, driving up food waste or, in the worst cases meaning it is unproductive to put it into store. We know where SPS [Sanitary and Phytosanitary] checks are applied to products from outside the EU such as processed meat coming into the UK that additional checks can take up to 2 days which is not feasible for a fresh supply chain”.
As well as causing delays and shortening the shelf-life of products, nontariff barriers are an additional cost for businesses. The KPMG report, for example, calculated that “one day of delay for a lorry will easily cost a business €600 to € 1,000”. It also stated that delays would mean that “businesses will have to make more frequent use of ‘last minute’ carriers charging premium rates”, and that this could add 20–25% to transport costs.
Professor Tim Benton gave further examples of additional costs: “A container inspection costs £700; £80 per day would be the impound cost; and there will be the cost of the testing fees. For each additional container that might be inspected, you are talking about £1,500 to £2,000”.
This point was echoed by Andrew Opie from the BRC: “The ports, where the majority of fresh, perishable food is imported, do not have the facilities to hold vehicles for additional food safety checks and plant health checks, so if we left without a deal in March 2019 that would have a major impact on the availability of meat, processed foods, fruit and vegetables”.
Research done for the European Parliament’s AGRI Committee highlighted similar concerns:
“A lorry driver arriving at the port of entry will stop briefly only to show passport and boarding information, and on arrival will be on the motorway within minutes. This compares to lorry loads of goods entering Dover from outside the EU (around 3% of the total) which are subject to checks that take 45 minutes on average … Currently, the Channel ports do not have the parking facilities to cope with delays of this magnitude, leading to fears of massive carjams.
Frictionless
The Government hopes to negotiate an agreement with the EU that will allow the ‘frictionless’ import of food to the UK to continue.
This was a clear priority for witnesses and, given its importance to the UK’s food supply, we strongly support this objective.
It is not,however, a guaranteed outcome. We note that there will only be 21 months to negotiate a FTA and that, at the time of writing, there is a significant gulf between the ‘red lines’ set out by the EU and the UK Government, which will need to be bridged to achieve frictionless trade.
The Minister told us that if no agreement is reached, the UK could decide to minimise the impact of non-tariff barriers by placing very minimal checks on imports from the EU. We note, however, that the UK Government would at the very least be obliged to comply with WTO rules.
To provide much needed clarity to the industry, we urge the Government to publish exactly what customs and border requirements it would put in place on EU food imports in that situation.
While the extent of future non-tariff barriers is unknown, it seems unavoidable that in either a ‘deal’ or ‘no deal’ scenario Brexit will result in some additional border checks and documentation requirements for food imported from the EU to the UK.
These will increase the time it takes for food to reach shop shelves and result in additional costs to businesses, which may be passed on to consumers through food price rises.
Based on the evidence we have heard, we do not believe the UK’s ports and airports will be able to cope with the additional workload that new checks will create, and this will add significantly to the import timescales.
Significant delays will disrupt the ‘Just-In-Time’ supply chains that food manufacturers and retailers depend on and could affect the availability of food. We urge the Government to conduct a thorough assessment of the additional staffing, infrastructure and IT requirements that differing levels of post-Brexit border and customs checks would require.
In determining post-Brexit arrangements, the UK Government will need to balance the need to maintain easy access to EU food imports with the need to maintain food standards through adequate checks on imports.
The Minister’s suggestion of minimal checks on EU imports appears at odds with the Government’s obligations under the WTO and its commitment to maintain food safety and animal welfare standards.
Technology
Making greater use of technology, and automating more processes in agriculture and food production, could reduce requirements for labour.
Ian Wright from the Food and Drink Federation described one food manufacturing business which used to employ 100 people; after investing in robotics it now employs eight.113 Terry Jones from the NFU, however, told us that the timescales for developing and implementing new technology meant it was not a viable solution for post-Brexit EU labour shortages.
Professor Tim Benton agreed, summarising a World Economic Forum report on technology in food systems: “There is an awful lot of hope, but it is a 10-year or 15-year vision. It is not an immediate thing”.
Developing and adopting new technology also requires investment, as highlighted by a number of our witnesses including Ian Wright and the NFU.
We note that the Government has recently announced a new funding stream to support the use of new technology in agriculture as part of the Industrial Strategy Challenge Fund.
Lack of access to EU labour, post-Brexit, could lead to an increase in recruitment and overtime costs, or alternatively food producers could seek to attract additional domestic workers by paying higher wages.
Such cost increases may have to be passed on to consumers, or else some businesses may cease to be viable, reducing the UK’s ability to produce its own food, with a potential knock-on effect upon availability for consumers.
We reiterate the recommendation made in our report on Brexit that the Government should ensure that the skills needed by the agricultural sector are recognised when assessing labour needs and access to non-UK labour after Brexit, and further recommend that this should be extended to consider the labour needs across the food supply chain.
Long-term investment will be needed to maximise the potential for technology to reduce the number of staff required for UK food production.
We welcome the Government’s recent announcement of additional funding for technological innovation in the agri-food sector, but reiterate the conclusion of our Brexit: agriculture report,that technology cannot reduce demand for EU labour in the short term.
