UK food exports outside EU fail to plug £2.2bn EU loss

Global sales outside the EU rose by 13%, representing almost half the industry's exports in the first half of 2021, the FDF stated. However, despite the return to growth in these countries, overall UK food and drink sales were still £2bn below pre-COVID-19 levels, because of the sharp drop in sales to the EU. A combination of the continued impact of the pandemic and new barriers to trade resulting from the new trading arrangements were perpetuating the slump.

Exports to nearly all EU member states fell significantly, including a loss of more than £0.5bn in sales to Ireland. Sales to Germany, Spain and Italy were at half the level recorded in the first half of 2019.

The loss of UK exports to the EU contributed to reduced demand for EU ingredients for use in UK manufacturing, while import substitution by UK manufacturers and retailers also had an impact.

Imports from EU​

UK imports of food and drink were down nearly 10% in the first half of 2021 compared to pre-COVID-19 levels. However, imports from non-EU markets increased during this period. Imports from the EU were particularly badly impacted by the pandemic and the new trading relationship, falling nearly 15% since 2019, a loss of £2.4bn. 

The FDF predicted that imports from the EU were likely to deteriorate further in 2022 after the UK’s full border controls were implemented. Products of animal original were already heavily affected, with imports of pork down 19.6%, cheese down 17.6% and chicken down 17.9%.

“The return to growth in exports to non-EU markets is welcome news, but it doesn’t make up for the disastrous loss of £2bn in sales to the EU,"​ said FDF head of international trade Dominic Goudie. "It clearly demonstrates the serious difficulties manufacturers in our industry continue to face and the urgent need for additional specialist support.​

Labour shortages ​

“At the same time, we are seeing labour shortages across the UK's farm-to-fork food and drink supply chain, resulting in empty spaces on UK shop shelves, disruptions to deliveries and decreased production. Unless steps are taken to address these issues, the ability of businesses to fulfil vital export orders will be impacted.”​ 

John Whitehead, director of the Food & Drink Exporters Association (FDEA) and Food & Drink Exportese, said: “So many factors continue to impact on the drop in value of UK food and drink exports, with supply chain challenges and the inability to connect face-to-face with customers adding to the difficulties.​

"FDEA’s bespoke support to its member community is a valuable resource to identify new opportunities and accelerate new market entry. It is therefore pleasing to see growth in sales to non-EU countries. However, this in no way replaces the loss of £2.2 billion sales to the EU since 2019. There is growing evidence that the complexity of trading with the EU has led to businesses moving operations into Europe and of importers looking for alternative suppliers, contributing to the ongoing decline in both UK exports and UK jobs.”​

Non-EU trade​

Non-EU trade had been driven by a return to growth in China, Singapore, Australia, Japan and the Gulf region and had almost recovered to pre-pandemic levels. 

The fastest growing export markets in Central and South America were Colombia (+142.6%), Mexico (+111.2%), Chile (+105.4%) and Brazil (+87.2%). Success in these markets had been fuelled by a recovery in sales of whisky and vegetable oils, supported by increased demand for other UK products growing rapidly from a much lower baseline.

The growth in Mexico is particularly significant in view of the announcement that the country has given the green light to UK pork exports​​.