Those in the food business had a bewildering time during the EU Referendum campaign last summer.
It wasn’t the easiest of tasks to discern the facts amidst all the hyperbole, the claims and counterclaims, but is it now easier to see through some of the fog and identify at least some of the probable implications of Brexit for food inflation?
What we’re able to see at this stage will also have implications for future food trends, food procurement and food management, so we’re concerned here at YourPSL to shed more light than heat on the issues. Perhaps the first point to emphasise is that, whether pessimistic or optimistic about the post-Brexit trading climate for the food business, most of the expert opinion we’ve looked at (and dozens of studies have been published in the last few months alone) is united on one issue: it remains too early at present to make hard and fast predictions.
There are simply too many variables and unknowns to ponder. For example, we can’t yet gauge what level of import duties or quotas will be set for what kind of food product, nor can we quantify how much farmers will lose out on CAP subsidies.
Some established facts pre-date the referendum campaign and can reasonably be taken as solid ground. Projections made by the National Farmers Union (NFU) in 2015, for example (as reported in The Guardian), indicate that the UK, already a net food importing country, will need to import more than half of its food within a generation. The proportion of foods consumed in the UK that were actually produced here dwindled from 80 per cent in the mid-1980s to 60 per cent today, chiefly due to an expanding population and stuttering agricultural productivity.
Harry Smit and John David Roeg, Senior Analysts at Rabobank’s Food and Agribusiness Research and Advisory department (FAR), strike a sombre note: independence from Europe is likely to mean no more easy access to an abundantly supplied food market, nor untrammelled opportunities to sell to a 500 million-strong consumer market. The days of the UK’s global empire, in which the Commonwealth supported our cheap food policy, are long gone. Today’s world, Smit and Roeg assert, is a far less reliable low-cost sourcing partner, and they anticipate significant food cost increases in the UK.
However, redirection of food flows can also result in prices going down and less regulation from Brussels may have advantages. In October, the Institute of Economic Affairs produced a report suggesting that Brexit would enable the UK to avoid what it called “costly agricultural regulations” stemming from Brussels, as well as making it easier for Britain to buy food from around the world. According to the IEA, both would serve to bring food prices down, as well as freeing British agricultural productivity from “being constrained by the sheer volume and intrusiveness of regulations” under the CAP.
Perhaps the only conclusion one can draw at this stage is that for all of us involved in food procurement and food management, there’s nothing more difficult to predict than the future. We will, however, keep our readers briefed on emerging developments in food trends and food inflation. Please watch this space.