Food and Drink Federation issues further plea for support as exports continue to fall
The UK’s Food and Drink Federation (FDF) has issued an urgent plea to government for enhanced assistance to businesses as latest figures show exports fell by 11.6% for the third quarter, to £5.5 billion, year-on-year, owing to the pandemic, reports Neill Barston
As Confectionery Production previously reported, the previous half-year figures showed a similar downward trend and the first dip in results for five years, as chocolate – typically Britain’s second biggest export item, also being hit, with sales of £542 million, down 5.5% year-to-date.
The FDF has repeatedly warned of the impact of the covid crisis upon the sector, including retail and hospitality sector closures, with figures for the first nine months of the year revealing food and drink exports fell to £15.2bn (-12.9%) when compared to the same period last year.
It has also issued particular concerns regarding the impact of a ‘No Deal’ Brexit, which is presently looming large as Boris Johnson enters last-ditch talks with the EU chief Ursula von der Leyen, said to have revealed ‘very large gaps remaining’ between the two sides. The UK is set to conclude its transition period from the 27 member trading bloc at the end of this month unless an 11th-hour agreement can be salvaged by the end of this weekend.
As the FDF has noted, should no future trade agreement be determined, both the UK and EU will be faced with additional tariffs on World Trade Organisation terms, which supermarkets have already warned could increase prices of goods significantly.
There has also been widespread concern in the wake of the Bank of England assessment that the UK faces the worst recession seen in 300 years, as the economy is expected to be hit by 11.3%, and not return to pre-covid levels until some time in 2022. Exports to the majority of the top 20 markets decreased from January to September, with sales to Spain falling significantly by -33.8%, with Ireland remaining a key retail partner and was the top export destination for five of the top 10 product areas.
However, there were a couple of increases registered, with produce to Norway experienced the most substantial increase, rising by 38.4% to £198.8m. When looking at UK export products, pork and breakfast cereals were the only products within the top 10 to show growth, up 12.7%, and 2.5%, respectively.
The significance of the European market to Britain was underlined by the fact that over 60% of British food and drink exports head to EU markets. Within the top five products exported to the EU, whisky sales suffered the most, experiencing a reduction of 19% to £901.4m from January to September.
Ireland was the top EU destination for food and drink exports, making up almost 30% of overall sales in the EU, reflecting the close integration of UK and Irish food and drink supply chains. Ireland has been a key export market for the UK, particularly over the past 10 years, totalling around 18% of total sales during that time period. Most of the top 10 products exported to Ireland fell in value terms, with cheese and savoury snacks the only categories to show growth.
The FDF said that maintaining these highly integrated supply chains across Great Britain, the Republic of Ireland and Northern Ireland as we leave the EU will be essential for future growth in our industry.
Dominic Goudie, Head of International Trade, FDF, said: “The continued decline in exports in the third quarter of 2020 shows the immense dilemma that UK food and drink exporters are currently facing. With less than one month to go, businesses are still in the dark about what arrangements will be in place following the end of the transition period in January 2021.
“As the UK makes it way towards economic recovery, ensuring a quick return to growth will be essential to strengthen resilience in our industry. It is vital that we continue to work closely with Government and industry partners to ensure that food and drink exporters have the support they need. Today’s news of the launch of Open Borders Direct® is a most welcome development and promises to deliver urgently needed support for UK SMEs, helping them to safely navigate key crunch points when trading overseas.”
Furthermore, Graham Hutcheon, Managing Director, Group Operations, Edrington and Chair of the Food and Drink Sector Council Exports Working Group, added his concern on the issue.
He said: “Our industry has experienced a substantial drop in exports in 2020 largely due to the impacts of COVID-19 on the global hospitality sector, after a decade or more of continuous growth. With the end of the transition period now just days away, food and drink businesses are facing another massive export challenge.
“More specialist support is urgently needed to ensure our industry comes through these challenges and can fully take advantage of opportunities arising from new UK trade deals. The Food and Drink Sector Council helps to ensure a collaborative approach between Government and industry and in 2021 it will set out a shared action plan to drive a return to export growth.”