Brexit Update

Delays and disruption expected to lead to some major EU Countries seeking alternative markets Uncertainty is the word being used by most suppliers, importers and traders as we approach the October 31st deadline for the UK’s exit from the EU.

At the current time it is still unclear as to how this exit will be executed – “Deal or No Deal”. What is clear that if a it is a no deal scenario, we can expect significant disruption to the supply chain especially with long delays and rejections expected at border points. Given this there is a danger that some exporters will seek alternative markets for their goods rather than risk of being held up or refused entry at port.

Only this week in recent meetings between government officials, Germany's Agriculture Ministry told Britain that the country's food producers would likely sell elsewhere rather than face border queues after a no-deal Brexit.  German officials have expressed their frustration at how the Brexit negotiations had gone and said that food businesses in Germany "expected" huge delays at the borders. They said that despite the industry's efforts to prepare, the delays, coupled with any rise in tariffs, could persuade food producers to focus on other markets.

The warning will add to fears of food shortages in the UK in a disruptive no-deal scenario. Although the government has taken steps to keep cross-channel trade flowing — including temporarily removing tariffs on most imports from the bloc, even though they will apply to British goods heading in the other direction — trade experts say there’s a serious risk that food supplies will be disrupted. Around 30% of British food comes from the EU, including nearly 40% of fruit and vegetables.

Recently leaked Cabinet Office documents, named Operation Yellowhammer, stated that the flow of freight lorries could be reduced to "40-60%" of current levels on the main crossing between Britain and France. The documents also stated that supplies of certain types of fresh food would decrease, while the food production chain – especially fisheries, dairy, produce and meat product categories – would be hit hardest, with impacts also likely on packaging, seasonings and preservatives.

To put this in context, Germany is one of the major food exporters to Britain, responsible for around 14% of major food and drink imports. It exports over €700 million worth of meats, and the same value of fruit and vegetables, to the UK every year.

To find out how you can safeguard your business against price increases and volatility, please contact us today to arrange a chat.