Brexit Could Negatively Impact Trade For Food Manufacturers

According to food industry insiders, food manufacturers could face customs barriers and shipping delays if Britain decides to exit the EU. UK-based food companies which trade with various other members of the EU, currently benefit from a fairly inexpensive and easy trade process between member countries.

If the UK votes in favour of Brexit on June 23, analysts warn that customs procedures for trade between the country and those still within the EU will become more complicated and involve additional paperwork. This increased trade regulation as well as the introduction of VAT and duties could be a major issue for perishable food manufacturers.

“A vote to the leave the EU has the potential to decimate the British food industry,” said Ranjit Singh Boparan, founder and chief executive of 2 Sisters Food Group. “Challenges Brexit could create will put many businesses at risk.”

According to Boparan, uncertainty regarding the implications of Brexit could lead to a decline in consumer spending. In addition, he believes that access to a single market and a wide labour pool across countries are other compelling reasons for Britain to stay in the EU.

“It’s already a tough environment; highly-labour intensive, high volume, producing very low cost products for low margins, and operating in a deflationary market,” said Boparan. “The additional challenges Brexit could create for my industry will put many businesses at risk and I don’t think that’s a risk worth taking.”

In contrast, some members of the food industry in Britain are hesitant to share their official opinion on Brexit just yet. Though the Food & Drink Federation – a trade organization representing companies in Britain’s food manufacturing sector – had previously shied away from sharing their official stance on Brexit, the organization’s director general, Ian Wright, has disclosed his personal views.

“We are an industry that exports and imports,” said Wright. “If access to markets outside the UK is affected that will have a material and detrimental impact on our business.”

The Food & Drink Federation has since mirrored Wright’s views by stating that the UK should stay a member of the EU. Critics of Brexit have also pointed out that food manufacturers within the EU that currently import their products into Britain could face the same trade challenges as UK-based exporters if the country exits the EU.

The food industry in the UK is one of the largest sectors, with food exports totaling approximately £18.8 billion per year, according to the UK’s Department for Environment, Food and Rural Affairs. Currently, 54 percent of the UK’s total food supply is produced in the country, with 27 percent imported from other members of the EU and 19 percent from the rest of the world.