Brexit added to food price woe says LSE

The EU’S large positive balance of payments gap between food exports and imports hit a new high for 2022 in August. The figure for the month was just under £5 billion.

This reflected higher exports and imports – with exports up by 6% and imports by 3%.

The combined trade flows were £30bn, confirming the EU’S position as the world’s biggest agrifood trader.

The biggest export gain in August was for wheat, destined mainly for the Middle East and North Africa. For food products the EU’S biggest markets were the UK, the United States and China.

Wine is one of the export success stories, with over a third of EU wine exports in August destined for North America.

The biggest sources of imports were Brazil and the UK. Imports from Ukraine increased, but remain a fraction of what they were before the Russian invasion.

Like the UK, the EU is targeting India for a trade deal. Brussels is well placed to succeed, with India one of its largest trade partners and imports significantly greater than European exports to that country.

The main imports from India are tea, coffee and soya while the main European exports include dairy products and fruit.

As concerns grow around food price inflation in the UK now topping 12.4%, a report from the London School of Economics says Brexit has added to this problem.

The report says red tape and restrictions associated with Brexit added almost £6bn to the cost of food over two years.

Researchers say this equated to £210 extra for every family in the two years studied. These were 2020 and 2021, well before the present inflationary spiral added to the problem. The researchers also say that because poorer families spend a greater proportion of their income on food, they were disproportionately affected by the Brexit-driven price increases.

The report claims the impact varies between products, with higher-value imports from the EU, including meat, facing the greatest regulatory burden – known in trade terms as non-tariff barriers that make trade less attractive.

Ireland has become the latest EU member state to bring in legislation for an agrifood regulator. The government has promised funding of up to four million euros a year and says the new regulator will have meaningful legislative powers to bring prosecutions. In a statement the government promised the new regulator would have “real teeth” and would be an “advocate” for farmers. It says the office will be about protecting the primary producer and ensuring price transparency.

Areas of responsibility will include price and market information, and crucially the enforcement of legislation around unfair trading practices by processors and retailers that are to the disadvantage of farmers. The legislation has been welcomed, with some caveats, by the Irish farming lobby.

Meanwhile EU experts involved in food emergency preparations have warned the European Commission of the dangers around food affordability and called for tighter controls against the actions of speculators seeking to gain from market manipulation.

SOARING COSTS: Food price inflation has hit 12.4%.