Renewed sector warnings as Brexit date draws near
With the clock rapidly ticking down on the UK’s planned departure from the EU, confectionery, ingredients and firms across the food sector have warned of major problems on the horizon. Neill Barston reports
Companies across the British food and drink sector, including confectionery-based businesses, have renewed warnings on urgently securing a trade deal over Brexit.
With less than a month to go before Britain is scheduled to leave the EU, the UK government has yet to establish an agreement for a so called ‘orderly exit’ from the European bloc.
Leading confectionery businesses including Mars, Ferrero and Cadbury have expressed concern over potential ingredients supply shortages should no deal be agreed upon, leading to stockpiling of bars and ingredients. Even Charbonnel et Walker, which holds a royal warrant for producing confectionery for the Queen, is reportedly keeping additional reserves at the ready in case of a ‘no deal’ Brexit.
Consequently, major business groups including the Food and Drink Federation and CBI have continued to warn of the potential major challenges posed by leaving without a trade agreement – with logistics chains and labelling set to cause potential major problems across the continent.
Speaking to Confectionery Production, French-based ingredients business Tereos, which has strong British markets within the confectionery sector, expressed concerns regarding ongoing uncertainty.
“Tereos has a long-term commitment to the UK, and we believe that it is vital that an agreement is made between the UK and the EU in order to continue sugar supplies. As a business, we need to be prepared to support our customers,” explained a spokesperson for the company.
He highlighted the fact that its EU-based business presently supplies nearly a quarter of Britain’s sugar requirements – and for 2018/2019 there is expected to be a UK production gap of around 700,000 tonnes, meaning that non domestic supplies must be maintained.
But as the business explained, the potential introduction of trade barriers post Brexit could potentially create a near monopoly situation – which in turn may lead to significant price rises for UK consumers.
The spokesperson for Tereos added that presently around 70% of food and drink imports to Britain are from the EU, so removing the uncertainty over those links is a matter of upmost urgency, in its opinion.
According to the company’s analysis, failure to arrange a deal could end up costing the industry a huge total of £9.3 billion a year with increased costs and logistics barriers.
Meanwhile, writing recently in PoliticsHome, Richard Laming, head of public Affairs for Ferrero UK, said the business faced an “unprecedented challenge” with Brexit, should no deal be agreed before the end of March.
He highlighted the fact that within the UK alone, Ferrero’s product ranges included ingredients from six nations, mainly within the EU, which could cause supply issues regarding labelling and logistics.
“We can work with our partners to build up stocks, but there are limits to what we can do,” he explained.
Similar concerns have been stressed by the UK’s Food and drink Federation. Its chief executive Ian Wright has consistently urged the government to resolve the matter, with just weeks remaining to do so.
Commenting on the prospect of a delay to Brexit, which has been raised by many in the parliament, he said: “Businesses will have to continue planning for such a scenario until the 29 March date is removed from the Withdrawal Act.
“A three-month delay would provide a little more breathing space, but it could also play havoc with careful supply chain and logistical planning based on a 29 March exit and the seasonal availability of ingredients and warehousing space.
“Such a delay may also mean three more months of diverted time, effort and investment. Based on the last three months – which have at times been shambolic – the food and drink industry will seriously question what government could achieve by extending the Brexit deadline for such a short period of time.”