FDF offers key warning as UK’s EU confectionery exports slump

The UK’s Food and Drink Federation (FDF) has expressed concern over figures revealing British export sales fell overall by 75% in January 2021, with confectionery among the worst segments affected, reports Neill Barston.

According to the latest government results from HMRC, chocolate export revenues slumped 68%, from £41 million, to £13 million, with results in other segments including cheese, whisky and meat faring even worse.

In total, the UK food and drink export value fell from £1 billion to £256.4 million, amid widespread concern from industry over increased costs of trading and impact on logistics chains.

The FDF said the effect of covid and stockpiling by UK businesses in the EU ahead of the end of the transition period were contributing factors, but much of this is likely due to new non-tariff barriers faced by UK exporters and the collapse of groupage (logistics) movements which it said had shut out many SME exporters.

Notably, imports also fell significantly in January 2021, driven by a drop of nearly 25% from the EU compared to January 2020 worth around £700m. The impact of covid remains a major issue, particularly due to the continued closure of much of the UK’s hospitality sector. In addition, the phased implementation of border checks is likely to mean that the full impacts of the end of the transition on imports from the EU will not be seen until 2022.

The UK government initially claimed that the disruption amounted to ‘teething problems’ but as an increasing volume of businesses reported major increases in the cost of transactions across Europe, it has responded with a £20 million Brexit disruption fund in the form of £2000 import/export grants for companies.

Furthermore, the situation has become more complex as the EU last week launched legal action against the UK over what it perceived as a breach of its agreed deal in relation to the border with Northern Ireland.

This was in response to a decision by Westminster authorities to extend a grace period of exporting to Northern Ireland without additional paperwork attached to shipments of food – which the EU contends is in direct violation of the treat it has signed only several months ago.

Dominic Goudie, Head of International Trade at FDF, believed urgent action to resolve trading difficulties was required.

He said: “It is extremely worrying that our exports to the EU have fallen by more than 75% in January. Businesses face significant challenges when trading with the EU and small businesses in particular have been shut out because groupage distribution is not working. In the absence of solutions, EU exporters will face much the same difficulties when the UK’s full border operating model enters into force in 2022.

“It is clear the terms of the Trade and Cooperation Agreement (TCA) will not change and businesses face unavoidable changes to the terms of trade. However, there are opportunities to address the implementation of the deal. The EU-UK Partnership Council and its Trade Specialised Committees should be convened as a matter of urgency to put in place solutions that deliver the TCA’s aim of enhancing the ability of small businesses to benefit from trade.”

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