37.Although EHCs—which are required for many seafood and meat exports to the EU—can be completed online, they have to be certified (i.e. signed and stamped) in hard copy form. The National Sheep Association said this “archaic system … hinder[s] trade”. Many witnesses called for the electronic certification of EHCs to be introduced. Charlie Dewhirst said that certification of EHCs were “the biggest problem and probably the easiest to digitise and modernise”, while Martyn Youell said “simple things like electronic signatures on documents would move us forward”. The BMPA said that electronic certification would allow EU BCPs to conduct procedures in advance, so facilitating the passage of lorries. The Secretary of State said that digital solutions were being explored in regard to the movement of POAO from Great Britain to Northern Ireland and, if successful, such approaches might be applied to Great Britain’s trade with the EU but only “if there were an appetite for engagement on this from the European Union”. David Kennedy added that discussions with the European Commission on the interface between their respective import and export systems were underway, and that it was “feasible that, by the end of the year, we can have these interfaces working. They are challenging, but they are doable if the political will is there”.
38.Digital certification of EHCs is a vital step to reducing trade friction with the EU. We acknowledge that the Government cannot require the European Union to accept electronic certification for GB seafood and meat exports. Nevertheless, the Government should make agreement on the digital certification of EHCs a priority in its discussions with the EU, while also ensuring that the necessary technical challenges are overcome to enable certifying officers to easily certify EHCs online. Reaching such an agreement may become easier once EU imports to the UK are faced with the same paperwork.
39.In response to the problems seafood exporters faced after 1 January, on 19 January the Government launched the Seafood Disruption Support Scheme (SDSS) with funding of £23 million. The SDSS was targeted at those SMEs who had “incurred an actual loss” in the process of exporting seafood to the EU and covered a proportion of losses—up to £100,000—incurred during January. Defra explained that the SDSS did not cover “opportunity losses”—where exporters did not or could not export to the EU—as it was “necessary to ensure that payments could be checked against evidence of losses” although it conceded that the exclusion of opportunity losses as well as business costs had “created some negative perceptions from the sector on the scheme”. Donna Fordyce said that there had been “a lot of anger” within the seafood sector about the SDSS because it did not cover the losses they had incurred to fulfil their contracts. Chapmans of Rye and Rother and Wealden District Council Environmental Health said that the SDSS was “useless” for those seafood exporters who had “worked tirelessly to prepare for Brexit”, and instead was “rewarding failure” by compensating firms “that have not put in the time and effort to perfect their paperwork”. The submission from Waterdance et al said that the SDSS was “not fit for purpose” as it excluded the costs businesses had incurred in preparing for the new trading environment, and added that businesses “may only be able to claim small amounts”. Martyn Youell of Waterdance Limited described the cap on claims of £100,000 as “a bit arbitrary”. The Secretary of State said that the SDSS was intended to help businesses that had been “grappling with some complicated situations” which meant they were not ready, and that the £100,000 cap allowed the fund to be “more evenly distributed”. The International Meat Trade Association said that a scheme similar to the SDSS should be available for meat exporters, who had also faced rejected consignments and lost product as a result. The Secretary of State said that meat exporters had experienced “fewer issues”, and that “generally speaking, although meat processors have obviously not welcomed the additional paperwork, they have managed it far better” helped by their lower use of groupage.
40.On 21 February, the Government announced an additional scheme within the original £23 million funding envelope: the Seafood Response Fund (SRF). The SRF provides a grant payment to catching and shellfish aquaculture businesses “to cover three months of average business fixed costs, for example maintenance and repairs, insurance and gear hire, incurred between January and March 2021”. The SRF was welcomed by Sarah Horsfall who said it was “very fair” that the £23 million funding “has been widened out to include the fishing fleet”, although Donna Fordyce was disappointed that the processing sector was still excluded.
41.While the Seafood Disruption Support Scheme helped to compensate some SME seafood businesses for the teething problems they faced in January, it did not offer compensation to businesses who had incurred costs preparing for the new trading environment with the EU. The arbitrary £100,000 cap on claims also meant that some larger businesses are still faced with losses. We welcome the Seafood Response Fund as a better way of supporting seafood exporters with the initial costs incurred from adjusting to the new trading regime. Both schemes demonstrate Defra’s commendable engagement with the seafood sector. The Government should take a flexible stance on the size of the £23 million funding envelope, and the cap on individual payments, once it has analysed the applications received in order to ensure that seafood exporters receive the necessary support to overcome the teething issues from the new trading arrangements with the EU. Defra should create similar schemes to support meat exporters during the initial period of the new trading arrangements with the EU.
42.Martyn Youell noted that the interventions like the SDSS and SRF “can only ever help you over a very short period of time. It cannot sustain an unviable export model”. In terms of longer-term support, the NFU highlighted the Movement Assistance Scheme (MAS). This helps those businesses moving agri-food goods from Great Britain to Northern Ireland that require an EHC, with the Government meeting the cost of inspection and certification until 2023. The NFU called on the Government to “replicate such an approach on trade between GB and EU”, a view echoed by Nick Allen who noted that “some other countries that we are competing with do stand the cost of all this export health certification”. The Secretary of State disagreed, saying that the MAS was to support “domestic trade within the United Kingdom” and said that “there would be problems under WTO rules if you were to subsidise or help people with the documentation for exporting to the EU market, but not for exporting to other third countries around the world”.
43.Certification of Export Health Certificates have created additional costs to businesses, which fall disproportionately on SMEs. Defra should explore a version of the Movement Assistance Scheme that supports businesses with the cost of exporting seafood and meat and other food. Such a scheme could apply to the EU and other third countries, helping exporters to explore new markets and support Global Britain especially as the economy recovers from the covid-19 pandemic. The design of such a scheme should be time-limited and focused on SMEs.
44.As noted in paragraphs 17 and 18, there have been particular issues with groupage consignments of POAO. The role of hubs as a potential solution to groupage problems was highlighted during the inquiry. Consignments of different produce from different companies are sent to a distribution hub where they are consolidated into a single lorry load, thereby reducing transport costs for businesses. An example is DFDS’s Larkhall distribution centre, which is located south of Glasgow on the M74, which Eddie Green said “is a natural funnel … All the fish coming out of Scotland passes down on the road” on the way to the Dover Strait ports—the fastest route to many European markets. This means that sending produce to the hub does not unduly increase the journey distance to market. The Larkhall site had been operating for the past 20 years, with the introduction of SPS checks for exports to the EU certification as well as consolidation now taking place at Larkhall too. Instead of producers having to arrange EHC certification locally, Eddie Green said that Food Standards Scotland staff were based at the hub providing “a lot of benefit in terms of processing the [export] health certificates” including standardisation as the same officials dealt with the same produce and the same EHCs every day. Shane Brennan said “the hub model that DFDS has developed, in partnership with the Scottish authorities, is fantastic”. Chapmans of Rye and the Environmental Health Service of Rother and Wealden highlighted that they had worked together to establish an export hub and “shared their skills and resources to create a system that works for local fishing fleets” in Sussex and Kent. They called for the Government to invest in export hubs because they are “expensive and time consuming” but were “the only way that exporting fish will be able to succeed”.
45.However, Shane Brennan said that the Larkhall distribution centre “benefits from geography” and “hubs are harder to work out when you are talking about other types of products of animal origin than fish because of that proximity”. Where producers were “not grouped together and are disparate”, he advocated a model where “the vehicle can be the hub”. Mr Brennan said that this was the approach taken for “lots of our exports to the EU … before 1 January”. In the new trading environment, however, he said it was a model “fraught with complexity and risk” due to the need for “trust between the customer and the haulier, and between the regulatory agencies”.
46.Defra said that it was “confident” that the hub model could “support businesses effectively” and that it was “looking at what lessons and experience can now be shared and applied across the UK”. The Secretary of State added that “trying to make the hub model work and having more hubs in different parts of the country is going to be quite important to allow those smaller exporters to keep exporting in the way they have in the past”. Mr Eustice said that Defra was involved in ongoing discussions about establishing a hub in the West Country, although he saw Defra playing a “facilitating role”.
47.As the problems that faced exporters in January highlighted, groupage is an important part of the export process especially for smaller businesses. With the new requirements for Export Health Certificates and other red tape when exporting seafood and meat to the EU, it is vital that groupage can be conducted efficiently, ideally without additional handling. Distribution hubs, where consignments are collated for groupage and can also be certified for EHC purposes, are an opportunity to help smaller businesses. We welcome Defra’s positive approach to hubs to date. Given the particular importance of groupage for SMEs exporting seafood and meat to the EU, Defra should continue to act as facilitator and proactively encourage collaboration between stakeholders. It should establish a ring-fenced fund that is used to help establish hubs in circumstances where the private sector will not otherwise provide. Defra should also explore with stakeholders the scope for non-hub models of groupage.
48.Since 1 January, it has not been possible to export Live Bivalve Molluscs (LBM) from aquaculture from Great Britain to the EU unless they are either from the cleanest, Class A, waters or they have been purified prior to export—something which Sarah Horsfall said increased the mortality rate. While the SAGB had put forward a number of proposals to help LBM fishers, Ms Horsfall said that the most helpful “would be if we could look quickly at the classification system for waters”. She explained “we need to get into the detail of the classification and allow ourselves some of the flexibilities that exist not only in Scotland but in France, Spain and Italy. Everywhere else has a more permissive classification system than we do”. The Secretary of State said that the Government was continuing to look at this issue, and noted that the Food Standards Agency (FSA) was considering a more “dynamic model” that classified production grounds according to the month of the year. On 1 April, the FSA issued revised classifications of LBM production grounds, which included “seasonal classification” which allowed eleven LBM production grounds to attain Class A status for several months. Many production grounds for LBM in England and Wales are predominantly Class B under the current arrangements, and therefore produce from them is ineligible for export to the EU unless purified first. We welcome the Food Standards Agency’s (FSA) April 2021 seasonal classification of LBM production grounds in England which has upgraded eleven areas to Class A water status for several months of the year, so allowing export to the EU of LBM from aquaculture without purification. Defra and the FSA should ensure that the classification of bivalve mollusc production grounds in England and Wales is in step with Scotland and EU Member States to ensure that Class A status is fairly granted wherever possible including on a seasonal basis. This work should be undertaken with the utmost urgency given the issues facing LBM fishers since 1 January.
140 National Sheep Association ()
142 British Meat Processors Association ()
145 Department for Environment, Food and Rural Affairs () paras 5.1–5.3
147 Chapmans of Rye and Rother and Wealden District Council Environmental Health ()
148 Brixham Trawler Agents, More Seafood, Passmore Fishing, Samways Fish Merchants & International Transporters, Waterdance Ltd and Western Fish Producers’ Organisation ()
151 International Meat Trade Association () para 9
153 “Increased support for fishing and shellfish businesses”, Department for Environment, Food and Rural Affairs , 21 February 2021
154 Department for Environment, Food and Rural Affairs () para 5.4
157 “Movement Assistance Scheme to support agrifood traders”, Department for Environment, Food and Rural Affairs , 16 December 2020; Department for Environment, Food and Rural Affairs, , 3 December 2020
158 National Farmers’ Union () para 25;
162 Chapmans of Rye and Rother and Wealden District Council Environmental Health ()
165 Department for Environment, Food and Rural Affairs () para 3.1
172 Food Standards Agency, , 1 April 2021