Food and drink wholesale is a critical part of the British economy. Food and drink wholesale distribution is a sector in its own right, turning over £29 billion, employing nearly 60,000 people and generating gross value added of £3 billion annually. Wholesalers’ depots are located in all regions and devolved nations to distribute goods to independent retailers and caterers in local communities.
There are a number of issues which pose challenges to the future success of the sector including the impending exit from the European Union, food inflation and the automation of manual roles. FWD are already working, along with our businesses in the sector to ensure that we and the sector are well placed to manage the challenges posed by Brexit.
One of the really key challenges for our labour intensive industry will be ensuring a good and skilled workforce. Many wholesalers employ high number of European Migrant workers. It will be critical to us to ensure this supply of labour.
Over 90 per cent of the value of direct purchases by food and drink wholesale distributors are from suppliers in the United Kingdom. However, the food and drink manufacturers that they purchase from import a much larger share of their goods and 70 per cent of their imports come from the European Union. As such, the sector would be best served by a comprehensive trade deal after Brexit which keeps tariffs or trade barriers to a minimum.
If there is no deal agreed between the United Kingdom and the European Union and trade is conducted under World Trade Organisation rules it will be essential to ensure tariffs imposed under these rules aren’t overly burdensome. The sectors which they will affect most are related to food, drinks and tobacco. If a free trade agreement is not reached then the food and drink wholesale distribution sector will face further upward pressure on their suppliers’ prices.
The Government has now published the full presentation from the Exiting the EU Select Committee which details the Government’s Brexit Analysis. Food and drink as a sector was found to be worse off in all three of the economic scenarios the report modelled, with the WTO trade model the worst for the sector.
The House of Commons Transport Committee have launched an inquiry into the effects of Brexit on UK freight operations. The Committee is particularly interested to receive written evidence on:
The Government has published provisional analysis of which returning EU powers will be retained in Westminster and which will be devolved to the regions. There are 24 policy areas that are subject to more detailed discussion to explore whether legislative common framework arrangements might be needed, in- cluding: food labelling; food and feed safety and hygiene law; drivers hours; animal health and traceability.
A report commissioned by the Food and Drink Federation (FDF) and the National Association of British and Irish Flour Millers (NABIM) from Global Counsel has found that the UK’s food and drink sector could face a hidden ‘hard Brexit’ once the UK leaves the EU, as a result of rules of origin.
The reports says that due to the international nature of food and drink manufacturing, many UK producers have built supply chains within the EU’s Single Market which may fail to comply with future origin requirements. The report also sets out eight practical recommendations the UK and EU can take to minimise disruption to our essential and seamless trade in food and drink.