Deal or no, our food sector must be ready for Brexit
:: A new world of customs and regulatory requirements for food exports is nearly upon us and businesses must act with great urgency, writes Tara McCarthy, Bord Bia CEO
AFTER a four-year Brexit journey, there are just 30 days left to the expiry of the UK’s transition period. For many businesses, the concept of post-Brexit trading has been a dot on a far-off horizon due to the political twists and turns that have commanded most of the attention. The UK’s continuing tussle with Brussels on a free trade agreement brings this into sharp focus as it carries a potential tariff regime that could cost our food and drink exporters up to €1.5bn.
Within this high-stakes context, it is essential that businesses remain resolutely focused on controlling the controllable – how prepared they are for post-Brexit trading. To remind us of the seriousness of Brexit, the UK is the number one destination for Irish food and drink exports, and we sold €4.5bn worth of such goods to this market in 2019. The fallout of the Covid-19 pandemic and subsequent closing of the food service channel in 2020 has seen a decline in this value by approximately 5pc. However if businesses do not rapidly take the steps required to prepare for the new customs arrangements with the UK, 2021 will surely see a further decline.
Remember Brexit has already happened, and when the transition period ends on December 31, the Irish food and drink industry will experience substantial and lasting change, regardless of the outcome of the negotiations.
Our client companies are very aware of this and much progress has been made. For example, earlier this year Bord Bia’s Readiness Radar report highlighted that over 91pc of respondents said they had made progress in relation to their Brexit preparedness over the past 12 months. Despite the uncertainty surrounding Brexit, over half of businesses we surveyed (55pc) told us that they were actually planning to grow sales in the UK, with the remainder saying they intended to maintain current volumes. There is certainly some optimism.
However if that optimism is to be justified, it is time for all of the sector to turn plans to action. Yes, substantial uncertainty lies ahead. But, the industry can and must prioritise the factors that it can actually control.
Firstly, every business that moves products from, to or through Great Britain will be subject to a range of new customs formalities and other regulatory requirements. It is essential that businesses continue to take steps to understand the impacts that these new rules or processes will have on their operations. Any business which moves animals, plants, animal products or plant products will face further administrative challenges.
Businesses should urgently familiarise themselves with the certificates and documentation required to continue trading with and through Great Britain. Businesses should talk to their suppliers, logistics agents and customers to ensure that everyone in the supply chain knows their role and responsibilities and is ready.
Secondly, businesses should be looking strategically at their existing markets. In the Readiness Radar, export market diversification was ranked the second-biggest focus area for the industry as a whole, with 71pc of respondents actively seeking to expand into new markets in response to Brexit. This is to be encouraged and Bord Bia’s food and drink export figures in the decade to 2019 paint a picture of much broader based global growth with 31pc of exports going to international markets.
And thirdly, exporters to mainland Europe should re-examine the routes to market they currently use. The ‘landbridge’ through Great Britain has traditionally been the fastest and most reliable route to Europe. However, delays on entry to Great Britain and then on re-entry to Europe will add costs, increase journey times to market and reduce shelf-life, with consequent disruption to justin-time fresh food delivery systems and loss of customers. It is highly likely that traffic using the landbridge will be impacted by delays at key ports immediately after the end of the transition period.
It is time to decide whether alternative direct routes to the European mainland are feasible, and to begin using them if so, rather than waiting until January 1. Some new direct services have already been launched in the last year and extra sailings are also planned in 2021.
Earlier this month, Bord Bia and the Department of Agriculture, Food and the Marine, held a two-day Great Britain virtual trade mission, engaging with UK retailers and foodservice suppliers including Asda, Sainsburys, Starbucks, McDonalds and Deliveroo. Our UK customers expect that Irish exporters will have fully prepared and taken all necessary steps ahead of January to ensure business continuity and as smooth a transition as possible. All are determined to find solutions to our joint challenges, but those businesses who have not yet taken all the steps required to prepare for the new world after January 1 need to draw on the State supports available to them. We urge businesses to act now.
See bordbia.ie/Brexit to access our latest Brexit Action Plan and gov.ie/agriculture to access all relevant Government supports.