Zero tariff trade to EU does not mean zero friction and effort

We are half way through winter and it has been relatively mild in Sussex although further north there has been a couple of cold snaps with some snow. My Australian friends tell me that their summer in Victoria is disappointingly cool with very little real sunshine this year as the La Nina is felt. What will the rest of our winter bring? There has been a great deal of fuss in the media about the upheaval over the Arctic, but whilst it will remain cold up north this week, there is no Beast from the East in sight as yet, and it will be milder and wet in Sussex.

Things are beginning to stir in the wild; foxes are calling and screeching in the night as the mating season begins, we have seen our starlings in the garden start to pay attention to their nest and some of the songbirds are singing softly just before dawn. Spring is on its way, although a little early to get too excited.

Trade affected by Brexit is filling all media and agricultural pages as delays and problems cause huge disruption. The fishing industry is very badly affected given the speed of delivery needed in order to keep it fresh and many fishermen have actually stopped fishing whilst the paperwork and bureaucracy is sorted out. Traffic at the ports is still nowhere near normal and hopefully things will improve quickly before it gets any worse.

I see that supermarket trucks returning to Europe to re-stock are to be given priority at the border under new government proposals in order to prevent food shortages. The new Expedited Return Scheme allows empty lorries to jump ahead of traffic jams at Dover and the Eurotunnel, returning quickly with full loads.

The ‘just in time’ nature of food supplies makes it vulnerable to delays at the ports and the closure of ports in December meant that a quarter of supermarket deliveries were not completed for several days. Consumer panic buying and stockpiling last March also left supermarket shelves empty on a daily basis. The new system will be limited to 300 permits per day as it will otherwise overwhelm the system.

Meanwhile supermarket bosses are demanding urgent intervention to prevent the significant disruption to food supplies in Northern Ireland. Many retailers in the area have been unable to fill shelves with M&S short of several hundred product lines and Sainsbury’s selling Spar products sourced from the Irish Republic. Major retailers are warning government that there will be further shortages when the grace period ends on March 31.

Supermarket price inflation has escalated to its highest level for five months as Brexit reversed deflationary trends in grocery. The disruption to supply has seen inflation return as supermarkets adjust promotional mechanics. Asda and Sainsbury’s are the exception with prices still down year on year.

However, as Brexit reality bites, and the realisation that zero tariff trade does not mean zero friction, cost and effort, it will become harder in time as both the UK and the EU become less relaxed about enforcement. Unfortunately, retailers have little appetite in assisting, with suppliers typically taking the risk and impact of importing. There could be an opportunity for UK suppliers to have a competitive advantage over EU suppliers if this continues?

We now see data showing that the Covid pandemic wiped £75million off chilled ready meals last year as there was more time (and inclination?) to cook from scratch with fresh ingredients.

It is predicted that sales of ready meals and convenience foods will struggle to recover as we all spend more time at home again this year, less time on the move and our eating habits changing accordingly. There is a real fear that child hunger will remain a big issue as the economy grapples with both Covid and Brexit fallout. Food banks have seen exponential growth in need over the last year and over one million school children signed up for free school meals last September, bringing the total to 2.5million. There will be little choice of ingredients for them as it will be about buying the cheapest.

In agriculture we see problems for the pig sector as a combination of border bureaucracy, Covid restrictions and soaring feed prices threaten to cause real problems on farms.

Delays at the border are causing cancellations of some shipments to the EU which accounts for 44 per cent of total UK exports last year and this is causing backlog on pig farms with animal numbers increasing as abattoirs have not been taking them. Pig prices have fallen, and with pigs fit to go being fed with more expensive feed, something will have to give soon.

Sheep meat exports are faring rather better and demand is still very strong and everyone is learning as they go along. Lamb prices are staying high despite the red tape, some of the trucks are moving through the ports and it is being done literally load by load at the moment.

Meanwhile Secretary of State George Eustice is battling to lift the EU ban on seed potatoes as this trade is worth £13.5million a year and hits Scotland particularly hard as they produce most of the seed potatoes. The EU is insisting that the ban stays unless the UK fully aligns its rules with the EU. There is the possibility of applying for equivalence, but that cannot be done until the end of the transition period.

Tim Smith, chairman of the new Trade and Agricultural Commission, spoke at the virtual Oxford Conference citing that there must not be any backsliding on food standards and that the clear message from over 300 stakeholders consulted so farm is that there is a need to uphold the UK’s world leading standards.

“Our starting point is for a UK trade policy that creates a fair and safe food and farming system for all,” he said. “We have spent decades developing and honing our world leading standards and there will be no turning back the clock.” There was general agreement that high quality, strong branding and innovation will be the key to fulfilling trade opportunities.

As if there are not enough challenges in farming currently, the National Trust is becoming more difficult towards its farming tenants. Complaints have been filed with the Charity Commission asking it to investigate and for the creation of a protective ombudsman. Farmers are pressured to avoid normal practices such as removing stones from fields and restrictions on the future use of land which now amounts to 36,000Ha.

During the debate at Westminster, MP Derek Thomas (Cornwall) said the cost of litigation to defend themselves in the absence of an ombudsman leaves farmers buckling under the pressure and that during his brief five years as an MP, he has found the caseload of National Trust related issues disproportionate to the many other issues an MP deals with.

As predicted in this column, sadly the total deaths in agriculture reached 40 last year which was a big increase and makes it the most dangerous industry. Quad bikes, falling from and through roofs and stock bulls were the main reasons for the fatalities. Something will need to be done as this is far too high.