Brexit: food prices and availability Contents

Summary of conclusions and recommendations


1.The Government hopes to negotiate a free trade agreement that would allow tariff-free imports of food from the EU to continue. If an agreement cannot be reached, however, the default position would be for World Trade Organization tariffs to apply. (Paragraph 18)

2.While estimates vary, if tariffs were imposed based on EU most-favoured-nation rates it seems highly probable that food prices for UK consumers would rise. (Paragraph 19)

3.We acknowledge the Minister’s argument that food prices are affected by a wide range of factors, and fluctuate frequently. But all this means is that price rises resulting from tariffs would be on top of increases that would have occurred anyway. We do not share the Minister’s view that these levels of price increases would be marginal for UK food consumers. (Paragraph 20)

4.A number of witnesses to this inquiry stressed the importance of maintaining tariff-free trade with the EU. Given the potential impact of tariffs on food imports for consumers, we endorse their view. (Paragraph 21)

5.Agreements negotiated by the EU have allowed the UK to benefit from low-tariff or tariff-free imports of food from non-EU countries. (Paragraph 33)

6.The UK Government is confident that the majority of these agreements can be easily ‘rolled over’ and the status quo maintained. This is not, however, a guaranteed outcome, either during any transition period or afterwards. If current arrangements are not maintained, it is likely that the sudden imposition of tariffs and loss of tariff rate quotas would affect the price and availability of food for UK consumers. (Paragraph 34)

7.The Government should urgently seek agreement from the relevant third countries that existing FTAs will continued to be honoured during the transition period. Determining which might continue to apply post-December 2020 (or post-March 2019 if no transition arrangement is agreed) and which will need to be renegotiated will then become the priority. (Paragraph 35)

Non-tariff barriers

8.The Government hopes to negotiate an agreement with the EU that will allow the ‘frictionless’ import of food to the UK to continue. This was a clear priority for witnesses and, given its importance to the UK’s food supply, we strongly support this objective. It is not, however, a guaranteed outcome. We note that there will only be 21 months to negotiate a FTA and that, at the time of writing, there is a significant gulf between the ‘red lines’ set out by the EU and the UK Government, which will need to be bridged to achieve frictionless trade. (Paragraph 59)

9.The Minister told us that if no agreement is reached, the UK could decide to minimise the impact of non-tariff barriers by placing very minimal checks on imports from the EU. We note, however, that the UK Government would at the very least be obliged to comply with WTO rules. To provide much needed clarity to the industry, we urge the Government to publish exactly what customs and border requirements it would put in place on EU food imports in that situation. (Paragraph 60)

10.While the extent of future non-tariff barriers is unknown, it seems unavoidable that in either a ‘deal’ or ‘no deal’ scenario Brexit will result in some additional border checks and documentation requirements for food imported from the EU to the UK. These will increase the time it takes for food to reach shop shelves and result in additional costs to businesses, which may be passed on to consumers through food price rises. (Paragraph 61)

11.Based on the evidence we have heard, we do not believe the UK’s ports and airports will be able to cope with the additional workload that new checks will create, and this will add significantly to the import timescales. Significant delays will disrupt the ‘Just-In-Time’ supply chains that food manufacturers and retailers depend on and could affect the availability of food. We urge the Government to conduct a thorough assessment of the additional staffing, infrastructure and IT requirements that differing levels of post-Brexit border and customs checks would require. (Paragraph 62)

12.In determining post-Brexit arrangements, the UK Government will need to balance the need to maintain easy access to EU food imports with the need to maintain food standards through adequate checks on imports. The Minister’s suggestion of minimal checks on EU imports appears at odds with the Government’s obligations under the WTO and its commitment to maintain food safety and animal welfare standards. (Paragraph 63)

13.Regardless of the customs and border arrangements that the UK puts in place for imports, EU countries exporting food to the UK will have additional checks and documentation to complete. It seems probable that the costs associated with this will affect the price of food in the UK. (Paragraph 68)

14.These additional checks will create resource requirements for border and customs agencies, and ports and airports, in EU countries. Just as a lack of capacity at UK entry points would result in delays and affect food availability, a lack of capacity at EU exit points would affect the price and availability of food in the UK. (Paragraph 69)

Increasing self-sufficiency

15.The UK is capable of producing more of its own food, so if post-Brexit tariff and non-tariff barriers were to make EU imports less competitive, domestic production might be stimulated. There are differing opinions, however, about the effect that this would have on food prices for consumers. (Paragraph 73)

16.We note that increasing domestic food production will require long-term investment decisions: it would not be possible to increase food production in time to meet any immediate availability challenges posed by Brexit. (Paragraph 75)

17.UK consumers have become accustomed to being able to buy a wide variety of foods all year round, and it will not be possible to meet this demand from purely domestic production. (Paragraph 77)

18.Lack of access to EU labour, post-Brexit, could lead to an increase in recruitment and overtime costs, or alternatively food producers could seek to attract additional domestic workers by paying higher wages. Such cost increases may have to be passed on to consumers, or else some businesses may cease to be viable, reducing the UK’s ability to produce its own food, with a potential knock-on effect upon availability for consumers.
(Paragraph 88)

19.We reiterate the recommendation made in our report on Brexit: agriculture that the Government should ensure that the skills needed by the agricultural sector are recognised when assessing labour needs and access to non-UK labour after Brexit, and further recommend that this should be extended to consider the labour needs across the food supply chain. (Paragraph 89)

20.Long-term investment will be needed to maximise the potential for technology to reduce the number of staff required for UK food production. We welcome the Government’s recent announcement of additional funding for technological innovation in the agri-food sector, but reiterate the conclusion of our Brexit: agriculture report, that technology cannot reduce demand for EU labour in the short term. (Paragraph 90)

21.Increasing agricultural production will require financial incentives and investment. This could be a way of maintaining, or increasing, food availability post-Brexit, but the cost would have to be met by the UK taxpayer. (Paragraph 94)

22.UK food production is dependent on a variety of raw materials and supplies imported from the EU. As these imports will be affected by any post-Brexit tariff and non-tariff barriers, increasing the amount of food produced in the UK would not necessarily avoid these extra costs and disruptions
(Paragraph 97)

Importing more food from non-EU countries

23.When it leaves the EU, the UK will be able to negotiate new trade agreements with non-EU countries. This could offer an alternative to EU imports, if these become more expensive or less available, and could result in cheaper food prices for consumers. (Paragraph 115)

24.Not all types of food currently imported from the EU, however, could be easily substituted like-for-like with non-EU imports. (Paragraph 116)

25.We have heard significant concerns from a range of organisations, during this inquiry and previous inquiries, that cheaper food imported from non-EU countries is likely to have been produced to lower animal welfare and food safety standards, and that it could undermine the competitiveness of UK producers. (Paragraph 117)

26.We welcome the Government’s commitment that animal welfare standards will be maintained. We reiterate the conclusion of our ‘Brexit: agriculture’ inquiry, however, that it will be difficult to reconcile this commitment with a desire to become a global leader in free trade. Ensuring food imports meet UK standards will require a rigorous inspection regime, and we call on the Government to detail what arrangements it will put in place to implement such a regime. (Paragraph 118)

27.We note that some witnesses, including the Minister, feel opportunities for new trade deals are limited. Given that, and given the Government’s commitment to ensuring imports meet UK standards, it seems unlikely that imports from outside the EU will have much effect on the price or availability of food. (Paragraph 119)

Food security for all

28.Food inequality already exists in the UK, but there is a risk that this inequality could increase following Brexit. (Paragraph 127)

29.Food security is critically important, but agreeing on the best way to provide food security raises tensions between the different priorities we have considered during this inquiry. As the UK prepares to leave the EU, it is unclear whether the Government’s goal is maintaining or even reducing food prices, or maintaining high animal welfare and food safety standards; protecting UK producers, or seeking new trade agreements with other countries. (Paragraph 128)

30.We agree with witnesses to this inquiry that the Government should produce, with some urgency, a comprehensive food strategy for the UK that sets a clear policy direction for ensuring the UK’s food security in a post-Brexit world. (Paragraph 129)

© Parliamentary copyright 2018