Summary
While the UK government refuses to release an official assessment of the impact of Brexit on food prices, the British Retail Consortium (BRC) suggests ‘the average cost of food imported by retailers from the EU would increase by 22%’ under a ‘no deal’ Brexit scenario. A ‘no deal’ Brexit could create opportunities for some ACP exporters to the UK market if current DFQF access can be preserved from day 1 of Brexit. However, this will require ACP exporters to meet logistical challenges faced in expanding just-in-time deliveries to UK retailers. This is an issue which the most favourably placed ACP exporters will need to start exploring with British Retail Consortium members in the coming months (e.g. Kenya for certain horticulture products).
The British trade union UNITE has tabled a freedom of information request for the UK government’s assessment of the impact of Brexit on UK food prices. The Department for Environment, Food and Rural Affairs (Defra) however has ‘refused to make their estimates known, citing a ‘strong public interest’ in keeping them under wraps’. Minister Gove said that while the government recognised ‘a public interest in disclosure of information concerning the increase in food prices in the run up to the UK leaving the European Union and the first five years after the UK’s departure’, there was also a ‘strong public interest in withholding the information’ (1).
UNITE representatives argued ‘the type of Brexit that the UK chooses will clearly have major implications on the nations shopping basket’ and hence the public has a right to know what these implications are (1).
The UK governments reluctance to release the findings of the study need to be seen against the backdrop of estimates from the British Retail Consortium that a ‘no deal’ Brexit could see UK food prices rise by up to a third for every day food items. This situation arises from the fact that ‘over three quarters of food imports to the UK’ originate in EU member states, with most of these imports facing new high tariffs if there is no Brexit trade deal (2).
According to BRC ‘the average cost of food imported by retailers from the EU would increase by 22%’. BRC noted that even at the lower end of the risk scenario, prices would increase by between 5% and 9%, a development which would dwarf the current food price inflation underway in the UK. Products such as beef and cheese would reportedly be the hardest hit imports (2).
According to the BRC while ‘there will be opportunities from new trade deals in the medium to long term…there is a pressing need to avoid a cliff edge situation on Brexit day’. BRC is calling on the UK government to ‘negotiate a continued tariff free trade with the EU in order to avoid upward pressure on prices’. (2)
Meanwhile the Head of the Federation of German Industries (BDI) Joachim Lang has warned German companies to ‘prepare for a very hard Brexit’, arguing that ‘whatever kind of Brexit there is, it will bring a significant number of legal, economic and business problems with it’ (3).
| Comment and Analysis
If ACP exporters can secure from day 1 of Brexit an extension of their current duty free-quota free access to the UK market, than a ‘hard Brexit’, which sees a re-imposition of MFN duties on UK imports of food and drink products from EU27 member states, could potentially create new opportunities for some ACP exporters capable of delivering comparable products in a timely manner to the UK market. Logistical considerations linked to on-time-delivery of consumer ready products will be a critical factor in the ability of individual ACP suppliers to exploit potential opportunities arising from a ‘no deal’ Brexit scenario. Currently, given the UK governments policy commitments, least developed ACP countries with good transportation links to the UK would appear to be best placed to take advantage of any market opportunities which could arise from a ‘hard Brexit’. This would appear to include countries such as Ethiopia and Senegal. The specific products where EU27/UK trade flows could be disrupted and where ACP countries have capacities to expand current supplies to the UK market will need to be identified. Looking beyond LDCs if existing EPA signatories could secure an extension of their current duty free quota free access to the UK market from day 1 of Brexit, then new export opportunities could emerge for products as diverse as beef exports from Namibia and Botswana, through horticulture exports from Kenya to refined sugar exports from Mauritius. |
Sources:
(1) newfoodmagazine.com, ‘British government refuses to reveal estimates of food price hikes post Brexit’, 26 September 2017
http://www.freshplaza.com/article/182072/British-government-refuses-to-reveal-estimates-of-food-price-hikes-post-Brexit
(2) Foodnavigator.com, ‘No deal Brexit could hike food prices by a third: BRC’, 18 September 2017
https://www.foodnavigator.com/Article/2017/09/18/No-deal-Brexit-could-hike-food-prices-by-a-third-BRC
(3) Freshplaza.com, ‘Prepare for ‘very hard Brexit’, German industry leader warns’, 6 October 2017
http://www.freshplaza.com/article/182663/Prepare-for-very-hard-Brexit,-German-industry-leader-warns