The Food and Drink Federation (FDF) has published a report today showing that food and drink exports have increased by 5.1% to £11.3bn in H1 2019 compared to the same period in 2018. Yet the rate of growth is lower than that seen in H1 2018 of 5.7%.
FDF is urging Ministers to make further progress in securing continuity deals for EU preferential trade agreements. To date, just 15 of more than 40 deals have been successfully concluded. This represents 43% of the UK’s food and drink exports to nations where there is an existing trade agreement – £650m of a total of £1.5bn in H1 2019.
Growth in H1 has been driven by a strong increase in the value of exports to non-EU countries (+9.8%). The year-on-year increase in value of non-EU exports is almost three times that of exports to EU countries.
Having seen growth of 10.7% in Q1 2019 driven by stockpiling in EU27 countries ahead of the April Brexit deadline, export growth fell in Q2. The subsequent slowdown in sales to the EU in Q2 is in part driven by the need for businesses to sell off these stockpiled goods.
The value of branded goods sold to the EU has declined (-1.6%) whereas exports to non-EU countries have risen by almost 10%. As a result, the share of both branded and non-branded food and drink sold to the EU has declined in H1 2019. This decline has been notable in the UK’s largest export market, Ireland, where the value of branded goods fell by 2.5% in H1.
Exports of all the UK’s top 10 food and drink products have increased in H1 2019, with the value of whisky, salmon, wine, gin, and pork exports all up more than 10% on the same period last year. Salmon, beef and gin have also all seen volume growth of more than 10%.
EU preferential trade agreements
UK businesses currently benefit from more than 40 trade agreements with 76 countries as a member of the EU. Each of these are important for UK food and drink exporters and importers. Exports to these countries were worth £3.1bn in 2018, which represents 14% of total UK food and drink exports.
The highest-value product category sold via EU preferential trade agreements is ‘beverages, spirits, and vinegars’, which accounted for 48% of UK exports to these markets in 2018.
These partner countries are also an essential source of imported raw materials and ingredients that are not produced in the UK and complement our industry’s use of UK produce. Imports from these markets totalled £6.7bn in 2018. Edible fruit and nuts was the top import product category worth £2.3bn in 2018.
Loss of access to EU preferential trade agreements is a concern of our members that has consistently been highlighted in FDF’s quarterly business confidence surveys. FDF has produced a wide-range of guidance to support its members and wider industry preparations for a potential no-deal Brexit. These are available via FDF’s Brexit Roadmap and our contributions to the joint-industry produced Brexit Food Hub.
Ian Wright CBE, chief executive, Food and Drink Federation, said: “UK food and drink exports continue to grow despite our troubled times. FDF has serious concerns that the UK faces the loss of essential market access to a wide range of EU trade deals in the event of a ‘no-deal’ Brexit. This will undermine our impressive export performance. It will also restrict our access to essential ingredients and raw materials.”
“Government must deliver on its promise to ensure there is no loss of access to any of these agreements after the UK leaves the EU. The failure to secure continuity agreements with these markets will place UK manufacturers at a competitive disadvantage to EU competitors. That will harm the interests of UK consumers.”