FDF trade snapshot shows key export losses, including within confectionery markets

Dover, Kent, England, UK. 2020. Trucks queue on the A2 highway to enter the Port of Dover and a cross channel ferry to France.

The UK Food and Drink Federation’s latest full-year trade snapshot for 2021, has revealed sector exports were 13.1% down against figures from three years ago, at £20.2 billion, reports Neill Barston.

Its results, which were unveiled as markets destabilise further amid the Ukranian crisis, showed the majority of categories negatively affected, including for chocolate, with overseas sales down 1.6% against 2019 figures (at £755 million), having previously been one of the industry’s strongest performers.

As the FDF noted, the situation in Ukraine has already influenced supply chains, with key crops of grain and wheat (with Russia and Ukraine accounting for a quarter of international volumes), under pressure as a direct result of the fast-evolving conflict.

Despite such considerable wider turbulence, the organisation’s trade snapshot revealed some potentially encouraging signs, with sales to non-EU countries grew over 8% compared to 2020, driven by recovery in exports of whisky (+18.7%) and salmon (+20.6%). This included Central and South America exports increase by 62% since 2020 (to £533 million to the region for the period), which was reportedly above pre-pandemic levels. Trade to Asia also stood up 9.6% at 3.7 billion.

Crucially, these gains could not overcome the losses of more than £1 billion to European markets over the past three years, with trade to some of its core export markets down notably (including Ireland (down 21% compared against three years ago, to £3 billion), the US (down 17.6% to £2 billion and Spain losing out by 45% for the same time period, at £559 million.

According to the FDF, its latest report notes the drop in exports during the past two years was largely down to Covid – and mentions ‘the ‘transition period’ with no specific reference to Brexit, other than to state that implementing the UK-EU trade agreement remains a priority for the sector.

Yet as Confectionery Production has previously reported, the implications of the Brexit vote in 2016 have already been felt by a number of businesses within the confectioner, snacks and wider food sector. From significant increases in costs in paperwork and time delays for exports, through to a loss of orders from the continent experienced by businesses that saw the UK now as a ‘third country’ with different operating standards.

Furthermore, figures from the UK’s Office for Budget Responsibility found that the forecasts showed that leaving the EU would reduce the UK’s potential GDP by around 4% in the long-term, far outweighing the impact of Covid-19, which its head Richard Hughes last autumn said would reduce the nation’s income by an additional figure of 2%.

Speaking on the FDF’s latest Snapshot, its new chief executive Karen Betts said: “These figures are encouraging, with rises in UK food and drink exports across the Americas and in Asia. Less good was our export performance in established markets in Europe and Australasia. But we have a good base to build on, and the FDF is committed to working closely with the UK government and devolved administrations to ensure that their weight is fully behind further building exports in great British food and drink.

“The war in Ukraine is likely, however, to negatively impact our businesses’ trading ambitions, at least in the near term, with supply chains and trade routes disrupted. That underscores the need for business and government to work closely together, ensuring that companies can develop new markets and seize new opportunities in a difficult economic environment, to underpin their resilience.”

Sharing her assessment, John Whitehead OBE, Director of the Food & Drink Exporters Association (FDEA), commented that he was pleased to see exports recovering in certain product categories.

He said: “Finding customers in new markets is particularly challenging at a time when supply chain issues, shipping costs and inflation are impacting pricing, and our members continue to report major issues with bureaucracy as they strive to retain sales and win new business.

“With travel now opening up, our team is rebuilding its programme of UK groups at international trade shows to connect UK exporters with potential partners across the US, Europe, Japan and ASEAN countries all of which have great potential. We urge Government to increase its support for trade shows, a vital tool in accelerating international growth.”

 

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