APS2017: Global industry must contribute to Brexit solutions
Both the international fresh produce community and its U.K. counterparts must press their trade bodies and national governments to find solutions to the trading challenges posed by Brexit, while innovative solutions will need to be implemented in the supply chain, especially regarding border crossings.
Those were two of the stand-out messages from the Brexit educational seminar at last week’s second annual Amsterdam Produce Show and Conference (APS17), during which the panelists painted a fairly bleak and complicated picture of the current trade negotiations for fresh fruits and vegetables entering the U.K., following the country’s departure from the European Union (EU).
The panel was chaired by Nigel Jenney, chief executive of the Fresh Produce Consortium (FPC) in the U.K., featured Gert Mulder, director of the Fresh Produce Centre in the Netherlands; Alan Forrester, managing director of Greenyard Fresh U.K.; and Dr Siemen van Berkum, a senior researcher at the Wageningen Economic Research Institute (WEcR) in the Netherlands.
Jenney began by calling on the global produce industry to play its part, pleading export trade representatives within the audience to ensure their voice is being heard by their respective national governments, local politicians and trade associations.
“This is not a U.K. issue, it’s a European and worldwide issue because we [the U.K.] want to buy your produce and we have to get the most cost-effective and seamless way of achieving that,” he stressed, pointing out that current political discussions are a “long, long way” from achieving expectations of a frictionless border with the EU.
“The push has to be from the industry on both sides,” Jenney urged.
“The U.K. is very keen to maintain, develop and find new solutions. If we don’t, it’ll be a very serious issue for the U.K. in terms of costs and consumer prices.”
Indeed, Jenney emphasised the significance of produce imports to the U.K. market, noting the U.K.’s “huge dependency and interdependency” on a wide range of countries for the two-thirds (62%) of food consumed in the U.K. that is not homegrown, in addition to the 150 million young plants imported each year to support local softfruit, topfruit and glasshouse production.
With the clock ticking on political negotiations as the 15-month deadline looms, Jenney explained that as yet there are no real firm answers or conclusions, which is becoming of increasing concern to commercial businesses.
Potential trade agreement
In summing up the issues at stake, Dr van Berkum at WEcR said one of the major points still to be discussed at a government level is the future trade relationship between the U.K. and the EU, and how it will be organized; whether under a free trade or World Trade Organization (WTO)-type agreement.
For his part, Jenney said he hopes the U.K. government does negotiate a special partnership with the EU that will allow free trade. Otherwise, he noted that it must be understood that the U.K. may risk becoming a third country in European terms.
Forrester from Greenyard Fresh U.K. described dealing with WTO terms as “the worst case scenario” for the U.K., particularly in view of rising costs and currency devaluation.
“The only real option would be to have a transitional period of two years which the U.K. government is looking for, or [another] timed period,” he stated.
“If we look at how we would manage quotas and duty rates [under a WTO agreement], from a U.K. business point of view – and we are primarily an importer – we are potentially facing an 18-20% duty rate increase, on top of which we’ve got currency devaluation of 15-20%, while our import costs are rising and utility bills are moving up.”
If the trading panorama does prove unfavorable, Dr van Berkum also pointed out that Dutch traders are accustomed to looking for alternative markets – a scenario which he noted has already played out as a result of Russia’s import ban.
“New markets have been found and it will also happen if Brexit turns out to be a worst-case scenario of a WTO-type trade arrangement,” he warned. “But let’s hope it will be more positive and both parties will come up with solutions.”
Speaking about the Dutch-U.K. trade specifically, Mulder from the Fresh Produce Centre said the Netherlands is well-prepared in the event of a closed-border situation and potential customs controls, on account of the systems the country already has in place to support its worldwide exports.
But the real challenge, Mulder warned, would be dealing with holding up the “enormous” number of trucks that usually flow from the Netherlands to the U.K. and visa versa on a daily basis.
“Some 50% of the total production of tomatoes [in the Netherlands] goes to the U.K. during the summer months alone,” he pointed out.
“We’re talking about huge volumes, so it’s absolutely necessary that the whole trade process goes as smoothly as possible. We want continuity.
“Consumers want freshly picked produce, so the [journey] time between picking and selling on supermarket shelves needs to be very, very short. Currently we’re able to achieve that within 12 hours of picking.”
However, Mulder lamented the fact that discussing solutions to such matters is hampered by EU countries not being able to negotiate individually with the U.K. before an end deal is reached.
“I think there are practical and digital solutions but we are not able to discuss them yet at the proper level,” he said.
“That is a real pity. The industry may be able to come up with solutions but we need the government to present them to the U.K..”
Possible pre-clearance programme
For instance, Mulder suggested the Netherlands and the U.K. could agree on a pre-clearance programme – a solution Jenney said the FPC was certainly in agreement with, although he admitted it was a long way off.
Under such a move, Mulder explained produce could be cleared at Rotterdam ports before shipment to the U.K. to avoid time-consuming border inspections, and, in turn, the need to recruit and train inspectors.
“The U.K. faces such a huge volume of imports it needs to be innovative to allow new [supply chain] systems to come into operation, especially in relation to border crossings,” Mulder noted.
“The Dutch like to tackle problems head-on, and we want to stay and be your business partner. I hope what can come out of this is that the industry can come up with the solutions that fit it best, and that those solutions are embraced by governments.”
Forrester agreed that Dutch and U.K. traders must figure out how to handle imports; explaining that 600 of the 7,000 trucks believed to pass through the Port of Dover daily carry fresh produce.
“We’ve got to encourage all of our trade bodies and associations to work to a solution,” he advised. “We can’t afford to slow that import process down.
“We need systems-based solutions and an Assured Trader Scheme but getting some of those ideas over to government is proving difficult, although FPC is trying hard.”
Plant health harmonization
With regards to maintaining harmonized food safety and phytosanitary standards, Mulder also suggested that the U.K. could still take part in the European Food Safety Authority (EFSA).
“The most logical and practical solution would be for the U.K. to still take part, to share knowledge and information,” he explained. “It’s something we’re working on, and it’s one of the things we’ve asked our politicians about.
“We’ve had 25 years of harmonization of food safety and phytosanitary standards,” Mulder continued. “The U.K. is an island, so what we are afraid of is that the U.K. will, in the end, diverge from those standards that have been set over the last 25 years.”
Dr van Berkum welcomed the proposal of solutions by trading parties, explaining such steps would lead to a more positive outcome for the benefit of traders and U.K. consumers.
“There’s a common interest among both EU countries and the U.K. to have borders open and trade as smooth as possible,” he said, adding that the same goes for maintaining harmonized food safety and quality standards.