A year since Brexit: How has it affected European exporters to the UK?

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The woes of British exporters to the European Union have been much documented throughout 2021, especially in the first part of the year as new border red tape tied up in knots previously smooth operations.

Yet the turbulence has also been felt on the other side of the English Channel. Although the UK has delayed imposing new import controls, some EU exporters to Britain have felt the full force of the Brexit storm.

The trade deal struck between London and Brussels at the end of 2020 excluded tariffs and quotas, but the UK’s departure from the EU’s single market and customs union still created significant barriers and costs.

Some farming sectors, especially in the EU’s northern coastal countries, have suffered wild swings of fortune since Brexit ended frictionless trade with their British neighbour.

Brittany’s Brexit rollercoaster

Laurent Kerlir, a dairy farmer from Brittany in northwest France, has noticed a difference since the new Brexit rules took effect last January.

“I sell my milk to a cooperative… it then sells butter, powdered milk and all converted dairy products, and it’s true that we export less to the United Kingdom today than we did yesterday,” he told Euronews.

Over the first nine months of 2021, farming and agri-food exports to the UK from Brittany in northwest France fell by 19% compared to the same period in 2019, bringing a loss in turnover of €53.2 million for the sector — according to a recent report. It chose to make the comparison with 2019 rather than 2020, to offset the effect of the COVID pandemic.

Kerlir can see the effect across the local farming industry — he is also chairman of the chamber of agriculture in the Morbihan département of southern Brittany. His own sector has been starkly hit: exports of Breton cheese and dairy products to the UK tumbled by 58% in 2021 compared to 2019. Beef and pork exports also fell significantly, by 43%, while poultry was down by 4%.

“The main reasons were rising costs and increased delivery times because particularly in the first quarter new measures were put in place, so this caused delays. For fresh products such as milk and meat, which have a short storage life, it was very complicated,” says economist Delphine Scheck from the Brittany chamber of agriculture, which compiled the figures.

“For dairy products, there was some stockpiling beforehand, which explains why the British had less need to be supplied by the Brittany dairy industry. Finally, the UK also restricted its own dairy exports, so products remained on its territory and there were more national goods,” she explained to Euronews.

One farmer’s loss, another’s gain

But where some sectors in Brittany lost out, others benefitted from the Brexit turmoil. Exports of cooked meats from Brittany to the UK soared by 51% in the first nine months of 2021 compared to two years earlier; fresh vegetable exports were up by 42%, vegetable products by a whopping 63%.

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Delphine Scheck puts that down to the chaotic problems on the other side of the Channel caused by huge gaps in Britain’s post-Brexit workforce, which brought a shortage of some 100,000 lorry drivers and 15,000 butchers, as well as seasonal farmworkers.

“In the spring of 2021, for vegetables, for example, British market gardeners were obliged to let their crops rot in the fields because they didn’t have the workforce to be able to harvest them. So in order to be able to feed the population, they had to call massively on imports, to the benefit of vegetables from Brittany among others.”

Large firms cope better

The whiplash from the post-Brexit world has hit smaller firms more than larger companies. Laïta, a dairy cooperative in western France, has a turnover of €1.3 billion; its export team alone is 60-strong. The UK market makes up 15% of its business and the company has a UK subsidiary in Somerset with 100 employees.

“I have experts, we have procedures, we know how to deal with export business. It’s time-consuming but we know how to deal with it. So we are probably less affected than smaller groups, smaller companies who are not used to selling outside Europe, for example, where procedures are more complicated,” Laïta’s export director for consumer goods, Yvan Borgne, told Euronews.

“It took us a lot of preparation and discussion with transport companies to find the right truck at the right moment, and sometimes we found the truck but we had delays, we got the trucks in at the last minute.”

Another large European firm, Danish-Swedish multinational Arla Foods, also told Euronews that its exports to the UK had “so far not been greatly impacted by Brexit, but it does, of course, pose some challenges”.

A recent European Commission report showed that the value of EU agri-food exports to the UK in the first eight months of 2021 had barely changed compared to the same period last year. “At just €116 million or 0.4% lower than 2020 values, this illustrates a significant rebound in recent months, given how depressed exports to the UK were in the earlier parts of the year,” it said.

Seed potato ban hits Dutch

Several EU sectors exporting to Britain noticed a sharp drop in trade in the early part of the year, before recovering some stability.

“Hopefully there will be some recovery: sectors such as wine, chocolate… the trade of spirits, liquors, sheep meat is least affected. But some trade, for instance of vegetables, has shown a special decline. So there has been also a different impact on different sectors,” Daniel Azevedo, director for commodities and trade at the European farmers’ body Copa-Cogeca, told Euronews.

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Seed potato production is one area that has witnessed not a decline in EU-UK trade but rather a total collapse. The sector was excluded from the Brexit trade deal due to a failure to reach an agreement on regulatory systems. A six-month exemption for EU exporters to the UK ended in July.

As it has their Scottish counterparts, the export ban has hit Dutch producers hard. They used to send some 18,000 tonnes to Britain each year — over half their total exports — largely for fish and chips.

LTO Nederland, representing Dutch agricultural producers, blames the bad blood between the UK and the EU, and a lack of political will, for failure to find a solution and re-open borders for a mutual trade that has existed “for the past 40 years”.

One possibility, it suggests, would be for the UK to follow Switzerland’s example and accept “dynamic alignment” with EU rules. “Switzerland is a so-called ‘third country’ but follows EU law. There’s no reason why the UK couldn’t, but the British political situation isn’t helping,” says its latest Brexit bulletin (in Dutch).

The Dutch body also complains that the European Commission has shown no sign of the flexibility it has been prepared to offer the UK in other areas.

“In the potato world there is no discussion,” it says. “If you look at the space that the EU offers the UK over Northern Ireland, you wonder why this could not temporarily be done for certain products such as seed potatoes. But the European Commission maintains that no exception can be made.”

Recent talks have taken place involving the European Commission and Parliament, but so far with no apparent breakthrough.

“There needs to be a solution soon since potato growers across the UK and the EU27 will be expecting their seeds to come in time for planting this spring. If not there may be a problem with ware potato production in several regions”, an LTO spokesperson told Euronews.

Brexit prompts market shake-up

Both France and the Netherlands stand to benefit from a €5 billion emergency EU fund set up to help European businesses cope with the immediate effects of Brexit. The scheme is expected to open early in 2022.

Some of the €889 million the Dutch are to due receive will go into “a pot for businesses, including agriculture and horticulture”, LTO Nederland points out. In Brittany too, farmers are hoping to be compensated from the €753 million France is due to receive.

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Meanwhile, many Breton food exporters have managed to offset much of the Brexit damage by successfully finding other markets, according to the chamber of agriculture.

“What’s reassuring is to see that Brittany has succeeded in winning other markets and other destinations. What’s uncertain is whether this is something sustainable that will last over time, or whether it’s rather a one-off answer to the problem posed by Covid,” says economist Delphine Scheck.

Future trade with Britain promises to be radically different. In her words, the Brexit divorce between Brittany and the UK is complete.

“It’s obvious that companies already established in the UK have still been able to trade with them. Brand new companies are unable to enter the British market because it’s too complicated, they don’t even try because it’s so complicated in terms of administrative steps and so they will directly seek out other markets,” Scheck told Euronews.

Impact of UK import controls

The latest UK figures from the food and drink industry show that imports from the EU in the first nine months of 2021 fell by 8.4% on 2020, and 10.8% compared to 2019. UK exports to the EU fared much worse.

In 2022, EU exporters face the added headache of phased-in UK import requirements and controls, which the EU food industry says will have a “considerable impact” on companies.

Yet the UK remains the top destination for EU agri-food exports. Producers in Brittany say the British market is too big to ignore.

“For vegetables, for milk, for poultry, (Britain) remains a country that’s important to us for our products,” said dairy farmer Laurent Kerlir.

“We should recognise that particularly in Brittany the agri-food industry has shown a capacity to recover, to reorganise — there’s been both Brexit and Covid — the industry’s agility has been reassuring. But this has its limits and we hope the path ahead will be one of discussion.”

Laïta, the large dairy cooperative, also expects lorries to continue carrying produce across the English Channel from Ouistreham to Portsmouth. After all, the UK is “our first destination for exports”, says export director Yves Borgne.

“It will remain probably one of the biggest markets, because the UK is importing 50% of their food needs, and food requirements, so they are very dependent on the EU. We need each other, we are interdependent between the EU and the UK, so trade business will go on. We will find a solution.”

This article is part of a five-part series looking at the impact of Brexit, one year on.

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