Three key markets buck trend as food exports fall

By Rod Addy contact

- Last updated on GMT

Food sales to all but three of the UK’s top 20 export markets fell, according to the report
Food sales to all but three of the UK’s top 20 export markets fell, according to the report

Related tags: Supply chain, Finance

China, Canada and Norway bucked the trend as overall UK food exports plunged in the six months to the end of June, according to a trade body report.

The report​ was based on HMRC data, published by the Food and Drink Federation (FDF) in collaboration with the Food and Drink Exporters Association (FDEA) and included analysis from KPMG. It showed exports of food and drink in the first half (H1) of 2020 fell for the first time since 2015, by 13.8% to £9.7bn. 

Exports to all but three of the UK’s top 20 export markets fell, with value sales to China (+0.3%), Canada (+6.7%) and Norway (+46.9%) alone increasing compared to the same period last year. Of the UK’s top ten export product categories, only pork saw positive value growth (+17.5%) with sales of £300m, largely driven by exports to China which bought £132m of UK pork in H1. 

While the fall in exports was linked to the global impact of COVID-19, KPMG stressed that differing markets were at varying stages of the COVID-19 lifecycle. China was currently experiencing a period of growth, whereas other nations were in recession, it stated.

UK-Japan trade agreement

However, despite the downturn, the UK-Japan preferential trade agreement announced in September​ presented a key opportunity for exporters, according to the FDF.

Japan is the world’s largest net importer of agrifood and drink, and the UK’s 19th​ biggest market in H1 - worth £124.5m, the report claims. Demand for imported food and drink in Japan is growing because of its ageing population and a continued shift toward Western consumption patterns.

China, Canada & Norway

  • Canada is a valuable preferential trade partner for the UK in terms of food and drink exports, worth £163.5m.
  • The top 3 UK products sold in Canada were whisky, beer and gin.
  • Sales of UK pork were up 97.9% in China, reaching £132.2m.
  • The fastest growing UK product sold to Norway was animal fats and oils, up 2669.1%.

To support the recovery of UK exports post-COVID-19, the FDF, FDEA and the Agriculture and Horticulture Development Board have produced an export guide to help businesses successfully navigate the export process.

The guide​ signposts a range of support that can help exporters that have been impacted by COVID-19, and support for businesses post EU Exit transition. 

Earlier this week, fears were raised by the British Veterinary Association and the British Meat Processors Association about the impact of a shortage of vets on export capabilities​ from 1 January 2021.

“A fall in exports in the first half of 2020 demonstrates the huge challenge currently facing UK food and drink exporters,"​ said FDF head of international trade Dominic Goudie.

£1.7bn of UK exports at risk

"We also have serious concerns about our access to existing EU trade agreements, with more than £1.7bn of UK exports at risk where continuity deals haven’t been agreed. However, there remain many opportunities overseas as we navigate our way through economic recovery, strengthen our resilience as an industry, and build relationships through new future trade agreements such as with Japan – the world’s biggest net importer of food and drink. 

“Looking ahead, it is vital that we continue our work with Government and industry partners to deliver sustainable export growth over the next few months and beyond the end of the transition period in January 2021 to ensure our industry has the support it needs. Our export guide, made in collaboration with other industry bodies, aims to help navigate businesses through the export process with a range of practical support and advice.” 

Linda Ellett, UK head of consumer markets at KPMG, said: “While the world may be facing COVID-19 collectively, consumers across the world haven’t been behaving equally. For consumer businesses, the real challenge is keeping a finger on the pulse of change, knowing how consumers feel and behave, whilst also adapting to the various opportunities and threats presented in various markets globally. 

“Business growth – or at least resilience – remains vital despite the challenging climate. KPMG’s recent consumer insights research clearly shows that trust in brands is a key factor shaping purchasing decision. No consumer business can afford to lose sight of that.”

Welsh lamb

Meanwhile, Hybu Cig Cymru – Meat Promotion Wales (HCC) is adapting to develop overseas markets for PGI Welsh Lamb, as trade shows are transformed into virtual events during the coronavirus pandemic.

This week, HCC is part of a Welsh Government presence at the SIAL Canada food exhibition. Normally an annual event held alternately in Montreal and Toronto, this year it became a virtual platform.

Welsh Lamb has been promoted at SIAL Canada since 2018 as part of HCC’s programme to build new markets beyond the EU, helped by investment by Welsh Government through the £1.5m Enhanced Export Fund.

Sheepmeat exports to Canada up 440%

Although still a small export market, lamb sales to Canada have been growing. Welsh Lamb has featured with a number of premium retailers and foodservice providers in recent years. So far in 2020 the value of UK sheepmeat exports to Canada has grown by 440% compared with the same January to July period last year, according to HCC.

HCC’s export development executive Deanna Jones said: “Restrictions on travel and events mean that our programme of export promotion has had to be adjusted significantly this year. However we’re pleased to be joining Welsh Government in having a presence at the SIAL Canada virtual trade show.

“The Canadian export market is in an early stage of development, but it has encouraging potential. With continued work, we’re hopeful that Welsh Lamb can find its niche in quality retail and trade outlets across the country.”

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