BREXIT: Focus on Food and Drink

UK food and drink businesses looking to place their goods on the EU market will need to comply with some newly announced regulation changes post Brexit.

Most notably, from 1^st January 2021, Food Businesses Operators (FBO) will need to make changes to their labelling if exporting products to Europe.

This article outlines the new regulations for the UK food and drinks industry post-Brexit as well as potential impacts following the end of the transition period.

What are the new regulations for UK food and drink businesses?

It has been confirmed that FBOs will need to amend their labelling if their goods are being exported to the EU from 1^st January 2021. The labelling changes are as follows:

• Pre-packaged food must state an EU or Northern Ireland (NI) address for the FBO.
• The EU organics logo cannot be used from 1st January 2021 unless:
  • Your UK control body is sanctioned by the EU to certify UK goods for EU exportation.
  • The UK and the EU reach an equivalency agreement (if an equivalency deal is not reached, your organic food cannot be labelled as organic.)
• The EU emblem cannot be used on your packaging unless your company has been authorised to do so by the EU.
• New health and identification marks to be placed on produce of animal origin (POAO) from 1^st January 2021.
• Food produce from Northern Ireland can continue using the ‘origin EU’ label but Great Britain cannot.

For a full breakdown of the new labelling rules affecting food and drink businesses from 1^st January 2021, please see the government website.

UK food and drink demand

The Food and Drink Industry Report for 2020 outlines how the food and drink industry is the largest manufacturing sector in the UK, generating £31.1bn to the UK economy each year.

The report shows demand for UK produce has increased over the past 10 years, despite Brexit uncertainties.

In 2019, exports of UK food and drink increased by 5.1% compared to the previous year to £11.3bn (£6.9bn to EU countries and £4.4bn to non-EU countries).

Demand has increased amongst four of the UK’s top five markets – Germany, Netherlands, United States and France but has declined with the top trading partner, Ireland.

The US is still the top destination for UK exports outside of Europe, with UK exports across the Pond rising to £1.1 bn, up 11% from the previous year.

The report shows that the top UK products exported in 2019 include whisky, salmon, chocolate, wine and cheese.

Brexit challenges to the food and drink industry

Uncertainties over Brexit will undoubtedly continue to impose challenges to the food and drink industry. Ian Wright, Chief Executive of the Food and Drink Federation (FDF) stated that he fears the future trading relationship with the EU will continue to be overshadowed by uncertainty for a long time to come.

It was Brexit uncertainty that caused fewer numbers of migrant workers to travel to the UK to pick fruits and vegetables. It’s expected that this hesitation will continue on into next year, and have a significant impact on the labour force.

While we do not yet know what the final Brexit deal (or no deal) will bring, Irwin Mitchell provided some further food for thought on potential challenges from Brexit for food and drink companies.

Without knowing what customs regulations could be enforced on trading with the EU, businesses are anticipating increased costs and there will likely be hurdles to overcome regarding UK trade and investment.

Losing the Common Agriculture Policy (CAP) and any trade restrictions imposed will have implications for production and revenue for food and agribusiness companies.

The UK’s current ability to seamlessly trade with the EU, without tariffs, quotas or taxes, will become hindered by new restrictions.  New regulations are likely to have a significant impact on levels of trade between the UK and EU from 1st January 2021.

Brexit will allow the UK to set its own trade policies, which could bring about both positives and negatives to the industry.

There could be additional costs involved in the UK going it alone, not to mention the uncertainty as to whether the UK will be more efficient outside of the EU.

On the upside, there is the potential for trade deals to be less hassle, not requiring group approval.

With so many questions still unanswered, the future for Brexit and the consequences this will have on the food and drink industry still remains to be seen.

Get in touch with a Halo Financial Currency Consultant today to see how we can help your food and drink business plan for both the challenges and opportunities of Brexit.