One year since Brexit: how has it affected European exporters to the UK?

The woes of British exporters to the European Union have been amply documented throughout 2021, particularly in the first part of the year as a new border bureaucracy tied to previously fluid operations.

However, the turbulence was also felt on the other side of the 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 commercial agreement concluded between London and Brussels at the end of 2020 excluded tariffs and quotas, but the UK’s departure from the single market and the EU customs union still created significant obstacles and costs.

Some agricultural sectors, especially in the EU’s northern coastal countries, have suffered setbacks since Brexit ended frictionless trade with their British neighbor.

The Brexit roller coaster in Brittany

Laurent Kerlir, dairy farmer from Brittany in north-west France, has noticed a difference since the new Brexit rules came into force last January.

“I sell my milk to a cooperative (…) they then sell butter, powdered milk and all processed dairy products, and it is true that we export less to the UK today than yesterday “, he told Euronews.

In the first nine months of 2021, agricultural and agri-food exports to the UK from Brittany in north-west France fell by 19% compared to the same period in 2019, resulting in a loss of turnover of business of 53.2 million euros for the sector – according to a recent report. She chose to make the comparison with 2019 rather than 2020, to offset the effect of the COVID pandemic.

Kerlir can see the effect on the local agricultural industry – he is also president of the Morbihan Chamber of Agriculture department from the south of Brittany. Its own sector has been hit hard: exports of Breton cheese and dairy products to the UK fell 58% in 2021 compared to 2019. Beef and pork exports also fell significantly, by 43%. %, while poultry was down 4%.

“The main reasons were the increase in costs and the increase in delivery times, because in particular in the first quarter new measures were put in place, so this caused delays. For fresh products like milk and meat, which have a short shelf life, it was very complicated, ”said economist Delphine Scheck of the Brittany Chamber of Agriculture, who compiled the figures.

“For dairy products, there was a certain amount of storage beforehand, which explains why the British had less need to obtain supplies from the Breton dairy sector. Finally, the UK also restricted its own exports of dairy products, so the products stayed in its territory and there were more goods, ”she told Euronews.

The loss of one farmer, the gain of another

But where some Breton sectors lost, others took advantage of the Brexit turmoil. Brittany’s charcuterie exports to the UK jumped 51% in the first nine months of 2021 compared to two years earlier; exports of fresh vegetables increased by 42% and vegetable products by 63%.

Delphine Scheck attributes this to chaotic problems across the Channel caused by huge gaps in the UK workforce after Brexit, which resulted in a shortage of some 100,000 truck drivers and 15,000 butchers, as well. than seasonal agricultural workers.

“In the spring of 2021, for vegetables for example, British market gardeners were forced to leave their crops to rot in the fields because they did not have the labor to harvest them. So to be able to feed the population, they had to rely heavily on imports, for the benefit of vegetables from Brittany among others.

Big companies do better

The boom in the post-Brexit world has hit small businesses more than large ones. Laïta, a dairy cooperative in the west of France, achieves a turnover of 1.3 billion euros; its export team alone has 60 people. The UK market accounts for 15% of its activity and the company has a UK subsidiary in Somerset with 100 employees.

“I have experts, we have procedures, we know how to manage export business. It takes time, but we know how to manage it. So we’re probably less affected than small groups, small businesses that are not used to selling outside. Europe, for example, where the procedures are more complicated, “Laïta’s export director for consumer goods, Yvan Borgne, told Euronews.

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

Another large European company, the Danish-Swedish multinational Arla Foods, also told Euronews that its exports to the UK had “so far not been strongly impacted by Brexit, but of course this poses 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 barely changed compared to the same period last year. “At only 116 million euros or 0.4% below 2020 values, this illustrates a significant rebound in recent months, given the drop in exports to the UK at the start of the year,” said he declared.

Seed potato ban hits the Netherlands

Several EU sectors exporting to Great Britain saw a sharp drop in trade at the start of the year, before regaining some stability.

“I hope that there will be a certain recovery: sectors such as wine, chocolate … the trade in spirits, liqueurs, mutton is the least affected. But certain businesses, for example vegetables , have experienced a particular decline, so there has also been a different impact on different sectors, “Daniel Azevedo, director of raw materials and trade at the European farmers’ association Copa-Cogeca, told Euronews.

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

Like its Scottish counterparts, the export ban hit Dutch producers hard. Previously, they sent some 18,000 tonnes to Britain each year, more than half of their total exports, mostly fish and chips.

LTO Nederland, representing Dutch agricultural producers, accuses the bad blood between the UK and the EU, and a lack of political will, of not having found a solution and of reopening the borders for a mutual trade that has existed “since 40 years. “.

One possibility, he suggests, would be for the UK to follow Switzerland’s lead and agree to “dynamic alignment” with EU rules. “Switzerland is a so-called ‘third country’ but follows EU law. There is no reason the UK can’t, but the British political situation doesn’t help,” declares his last Brexit Bulletin (in Dutch).

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

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

Recent talks have taken place with the European Commission and Parliament, but so far without apparent breakthrough.

“There has to be a solution quickly, as potato growers in the UK and EU27 will expect their seeds to arrive in time for sowing this spring. Otherwise, there could be a problem. with the production of ware potatoes in several regions, ”an LTO spokesperson told Euronews.

Brexit shakes up the markets

France and the Netherlands should benefit from a € 5 billion in EU emergency funds set up to help European businesses cope with the immediate effects of Brexit. The device should open its doors in early 2022.

Part of the 889 million euros that the Dutch are expected to receive will go into “a pot for businesses, including agriculture and horticulture”, underlines LTO Nederland. In Brittany too, farmers hope to be compensated on the 753 million euros that France must receive.

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

“What is reassuring is to see that Brittany has succeeded in conquering other markets and other destinations. What is uncertain is whether it is something sustainable that will last over time. , or if it is rather a one-off response to the problem posed by the Covid “, he specifies. economist Delphine Scheck.

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

“It is obvious that companies already established in the UK have always been able to do business with them. they will therefore seek other markets directly, ”Scheck told Euronews.

Impact of UK import controls

The last UK Agribusiness Figures show that imports from the EU in the first nine months of 2021 fell 8.4% from 2020 and 10.8% from 2019. UK exports to the EU have been fine worse.

In 2022, EU exporters will face the additional headache of progressive UK import requirements and controls, which the EU food industry says will have a “huge impact” on businesses.

Yet the UK remains the top destination for EU agri-food exports. Breton producers say the UK market is too big to ignore.

“For vegetables, for milk, for poultry, (Great Britain) remains a country that is close to our hearts for our products,” said Laurent Kerlir, dairy farmer.

“It must be recognized that, in particular in Brittany, the agri-food industry has shown an ability to recover, to reorganize – there has been both Brexit and Covid – the agility of the sector has been reassuring. But it has its limits and we hope the way forward will be one of discussion. “

Laïta, the large dairy cooperative, also expects trucks to continue transporting produce across the English Channel from Ouistreham to Portsmouth. After all, the UK is “our number one export destination,” says Yves Borgne, Director of Exports.

“This will probably remain one of the biggest markets, because the UK imports 50% of its food needs, and its food needs, so they are very dependent on the EU. We need each other, we are interdependent between the EU and the UK, commercial affairs will continue. We will find a solution. “

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