Flashback to 2016…
David Cameron was the prime minister and the national referendum was all that anyone could talk about. In June 2016 the results of the national referendum revealed that 52% of the country voted in favour of leaving European Union and 48% voted to remain.
A lot of boring and incompetenant negotiations followed with confusion across the country as to what a “Deal” and a “No Deal” actually meant. As Theresa May famously said, “No deal is better than a good deal”.
The deadline for the EU and UK to come to an agreement was extended to 1st January 2021. Long and behold, a few days before the deadline, while we were all busy preparing our Christmas turkeys, Boris Johnson and his henchmen proudly announced they had struck a deal of the century, allowing free trade and national sovereignty for the UK..
Folks… The devil is in the details especially when it comes to BoJo!
The UK public was left feeling confused and uncertain about the changes that would inevitably affect all of our lives. One of the questions that has yet to be answered is what will be the effects of Brexit on food pricing in the UK?
Let us start right from the beginning and fill in the gaps of everything you need to know!
UK imports a whopping 45% of its food. So that means only 55% is actually home grown. If you dig down deeper, you will be shocked at the data you uncover.
We import 10 times more fruit and vegetables than we export and 3 times more meat.
Let’s look at some data on the chicken industry...
The UK consumes 2.5 million chickens a day! 60 million people eat chickens 2-3 times a week. This means that the UK consumes close to roughly one billion (1,000,000,000) chickens a year.
With the Brexit Trade deal, this has made it increasingly difficult and expensive to import chickens from Europe, as there are additional fees payable and paperwork required, which many of the producers are not familiar with in the process and need to use a middleman. As a result, the demand for UK bred chickens has surged, essentially increasing pricing by 20% overnight. Inevitably, this has meant that the supply of European chickens has reduced significantly whilst the demand for UK chickens is soaring. Therefore, the price of both European and UK chickens has inflated.
The UK is one of the most price sensitive consumer markets I have ever worked in. The big retailers have high margin requirements, which constantly needs improvement year after year. Analysts are now predicting that the UK will buy chlorinated chickens from the USA in order to hit margin requirements. But, who really wants to eat these big artificially chemically enhanced chickens?
At Love Yourself we are part of the Better Chicken Commitment scheme and have signed a pledge that we will not be involved in such trade or product. A happy chicken is a healthy chicken after all.
Chris Legg, Ruislip Manor Butchers ....“I sell Irish foods and it's impacted deliveries coming over from Ireland, it's all to do with paperwork and the hauliers having to adapt. Meat prices are rising, lamb and cattle price creeping up”.
Fresh Fruit and Veg
If you ever have the pleasure to go to a commercial night market, Covent Garden or Western International market, a good 70% of all commercial produce is imported from Europe.
Even your humble broccoli is going to be affected. Broccoli season has now finished in the UK, so right now, our Broccoli’s are coming from Spain.
If you are a UK exporter or UK farmer, the situation is much worse in my opinion. The French government is considering placing a £80 tariff on each UK pallet that enters the country, even if it is only in transit across Europe. If there is any paperwork that is not 100% correct, they will refuse entry, and the goods need to go back to the sender (at exporters cost).
Country of Origin
This is where things become a lot more complicated under the trade deal. Let's assume that a UK retailer was buying cheese from Germany. However the milk is coming from Ukraine, therefore the country of origin is a non EU member state, and when the goods arrive in the UK, they could be hit with an import tariff.
Brexit will have major consequences for UK exporters. The UK is greatly known for its innovation across many different sectors. However, most of the items it trades “Made in China” items. Therefore any exports to Europe will be double taxed. One time upon UK port entry and another on EU port entry, hence making the UK a not so competitive marketplace for trading with our nearest neighbours and also increasing pricing for our consumer here in the UK.
Increased transport and document handling
Is it time to buy some shares in haulage companies ? I don't think so.
With Brexit requirements, import and export has become complex as each EU country has different procedures with dealing with non EU countries. The requirements for them to claim their VAT on export differ country to country. The “dead” waiting time at port has increased the amount of drivers hours increasing haulage costs. If you are importing multiple skus, each sku on the invoice, will have a handling charge, and clearance charge. Ultimately the demand for UK exports and EU imports will reduce as a result, and there will be less cargo and freight.
We have already experienced a 15% to 25% increase in pricing this month from fruit, veg, dry goods and meat suppliers regardless if they are from EU or UK origin. The demand has surged for UK farmed goods due to supply shortages and the cost of importing from the EU has increased with additional time constraints causing pressure.
Can you imagine what would happen if we were not currently living in a pandemic and all restaurants and hotels were fully open? There would be even bigger stock shortages and higher prices.
No matter which way you look, there is going to be price rises (now and in the future). I do predict that a new equilibrium will be reached and prices will stabilise over the coming months, however not to the pre 2021 levels..
Time will tell once the demand in the restaurant and catering trade returns to normal and the formalities associated with importing and exporting with our European neighbours are ironed out.
At this point in time, Brexit seems like a bad choice for the UK food industry and ultimately for the consumer; affecting their wallet and their health.
Love Yourself Meals