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Report: UK food manufacturing trade deficit is increasing

By Rod Addy , 05-Jul-2010
Last updated on 07-Jul-2010 at 13:27 GMT

The UK food manufacturing trade deficit is increasing, despite strong export growth in the sector, according to a report just published on the industry’s contribution to the nation.

Value of food and drink manufacturing to the UK was commissioned by the Food and Drink Federation (FDF) and produced by Cambridge University’s Institute for Manufacturing's (IfM's) Centre for Industry and Government.

It will be followed by another paper looking at future scenarios for the food industry to be published within two months.

The report finds that the trade's deficit almost quadrupled from 1995-2007, from £2.6bn to £9.9bn, despite food and drink exports growing by 15% in the past decade.

"Although there's a positive message in terms of exports, imports are rising faster," the study’s author, Finbarr Livesey, director of the Centre for Industry and Government, told FoodManufacture.co.uk. "Of all manufacturing sectors, food and drink has the third largest deficit."

In addition, with non UK-based firms buying large home grown manufacturers such as Cadbury, there were concerns about future UK self-sufficiency in food production, said Livesey. However, he said findings had revealed that 65% kept more than three quarters of their production capabilities within the UK.

The study also raised concerns regarding the industry's progress on reducing greenhouse gas emissions. The data indicated that it had slashed emissions by 11% since 1990.

However, this was less than the average achieved by other manufacturing sectors. That meant the sector would come under greater pressure from legislators to improve its performance, said Livesey.

Food and drink: UK's biggest manufacturing sector

Food and drink processing is the biggest UK manufacturing sector, representing about 16% of manufacturing turnover, employment and gross value added, according to the paper. It had also recovered from the recession faster than any manufacturing sector.

"In May 2008 - May 2009, food production fell 1.9% on 2005 levels, compared with an average fall of 13% in general manufacturing," said Livesey. "It's now back at 100%. Other sectors are still 2-14% below 2005 levels."

Contrary to popular belief, the IfM report also reveals that the average wage for workers in food and drink manufacturing is marginally higher than the average in general manufacturing – £466 a week versus £445.

Other findings were that UK food and drink manufacturers spent £1.13bn on research and development in 2009 and produced 36% of EU products with claimed health benefits.

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