Food and drink is big business in both the EU and UK. According to industry body FoodDrinkEurope, in 2014-2015, 4.2 million EU citizens worked across 289,000 food and drink companies. Food and nutrition is the leading employer by sector in the EU, providing 15.5% of all jobs. In the UK alone, the sector covers 13.1% of the national employment. The total value of food and drink exports from the UK comes to £20.1 billion, making the industry a substantial contributor to the economy and important to include in any trade deals agreed with the EU and beyond as part of the Brexit process.
The majority of EU food and feed legsilation currently emanates from Brussels. But it isn’t just the question of what EU food laws will go and which will remain after Brexit that will have a profound impact on British businesses. The fact that the UK is leaving the Single Market and the Customs Union will have a big impact on how UK and European businesses can trade across borders. Changes to freedom of movement rules for EU citizens will change the way producers and manufacturers operate, as a large proportion of the agriculture workforce in the UK originates from other EU countries.
Food and nutrition regulation – a quick introduction
EU food and drink legislation aims to guarantee a fair trade in food and feed and protect consumer health. The EU also provides a framework for the harmonisation of rules on animal and plant health.
The European Food Safety Authority (EFSA) is a vital body when it comes to regulating food safety in the EU – indeed, it was set up to provide scientific advice on everything related to the food chain. EFSA conducts safety and risk assessments in the fields of food and feed safety, nutrition, animal health and welfare, plant protection and plant health. Its activities, findings, and opinions, therefore are of the utmost importance to the industry. EFSA will no longer have legal authority in the UK and although its scientific opinions will still have an impact for those UK producers aiming to sell to the Single Market, it is the UK Food Safety Authority (FSA) which will replace EFSA in the UK.
The EU also plays an enormous role in agriculture, with almost 40% of its total budget attributed to the Common Agricultural Policy (CAP), which provides, among others, regulation for direct payments to farmers, market support measures and rural development programmes. In the UK, the Department for Environment, Food & Rural Affairs (Defra) is responsible for farming (as well as food policy). The department is expected to have one of the biggest “Brexit to do lists” as approximately 1.200 EU laws relate to policy areas Defra oversees.
- Manufacturers and producers will have to continue complying with EU law if they wish to trade in Europe – but may lose their ability to influence the regulatory framework
- EU regulations could be adopted wholesale by the UK government, denying producers / manufacturers the opportunity to take advantage of more liberal individual laws
- Potential labour shortages in the food and drink sector if there are significant changes to the immigration rights of EU workers – with a consequent rise in food prices
- After leaving the single market and customs union, UK exports to the EU will potentially become subject to tariffs and custom checks, impacting on food and drink companies’ competitiveness
- Regarding trade with countries outside the EU, unless and until it makes further trade deals, the UK will lose its preferential trading terms, making the import of raw materials for manufactures of processed foods more expensive
- Brexit may hinder supply chains which often operate across multiple European countries
- There are concerns over the ability of British food safety regulators to take over EFSA’s work
- While the UK government might adopt EU regulations wholesale, there will be opportunities for companies to press for some loosening of individual laws – creating a more advantageous trading environment
- Companies will welcome the loosening particularly of food labelling requirements to give more flexibility on how products which are not intended for the European market should be explained and presented
- The UK government will also be able to take advantage of differing labelling requirements, enabling it to better indicate the health benefits of a particular product – as it is planning to do with the labelling of teaspoons of sugar in a food or drink, something currently banned under EU food labelling law
- Leaving the EU Single Market and Customs Union will allow the UK to strike its own trade deals with third countries, allowing companies to potentially change the conditions they currently trade under and have better access to foods and materials from abroad
If you have any questions on how the Brexit deal will impact your business, please do get in touch with our team. For further information about our expertise in the food and nutrition sector, our work supporting some of the industry’s leaders and policy and political updates, please sign up to our team’s monthly newsletter here.