A no-deal Brexit could see the price of meat exports into the European Union rise by around 50 per cent and threaten the competitiveness of the wider food and drink sector, industry experts have warned.
Amid growing fears of the UK and EU failing to strike a Brexit deal, James Withers, chief executive at trade association Scotland Food and Drink said the consequences could be dire for the industry.
Withers said: “Of all World Trade Organisation tariffs, the most punitive are on agricultural products. The price of Scottish beef going into France could go up 50 per cent and it’s hard to see how we could be competitive. We’ve been locked out of EU markets before, such as during the foot and mouth crisis, and that had a devastating impact.”
With 96 per cent of its exports going to the EU (compared to 70 per cent of all Scottish food and drink exports), the red meat sector is particularly worried about a hard Brexit.
These key issues and many more will be discussed at The Scotsman’s annual food and drink conference at the Edinburgh International Conference Centre (EICC) in Edinburgh on 4 September, Beyond Brexit: Future-Proofing Food and Drink in Scotland.
The event will examine the challenges presented by the UK’s departure from the EU, but also take a look beyond Brexit at how the strengths of Scotland’s food and drink sector - including high quality, strong brands and constant innovation - can help it meet its ambitious £30 billion by 2030 target.
Senior figures from the meat, whisky and seafood sectors will be joined by Scotland’s cabinet secretary for rural economy, Fergus Ewing MSP, and feisty young business people including Petra Wetzel from WEST Brewery in Glasgow.
Stuart Ashworth, director of economic services at Quality Meat Scotland (QMS), said: “Trade with Europe is very important to the red meat sector, particularly sheep meat, and therefore unrestricted tariff-free access to the European market is a key concern.
“The worst-case scenario is a short notice exit with no trade arrangements in place. This would mean Scotland trading as a third country with the EU and having to pay tariffs on meat exports – an increased administrative and logistical costs. It would also leave the UK in a position where alternative trade agreements with non-EU countries would be very unlikely to be in place.”
Withers described the current position as “Groundhog Day” and added: “The real fear is hitting March next year and still having little clarity on a future trading relationship.”
Tom Sallis, deputy director (EU and Brexit) of the Scotch Whisky Association (SWA), also highlighted concern about a no-deal scenario. He said: “While there has been a political agreement between the UK and EU on the transition period to December 2020, this is only subject to the rest of the Withdrawal Agreement being finalised.
“We need to see this done as soon as possible. The last thing we want is companies getting to Christmas and still not knowing what’s going to happen in March 2019.”
Sallis said the whisky industry’s priority is securing a trade relationship with the EU to support long-term economic success. He added: “Whether this is a free trade agreement or something slightly different is not that important. It is the outcomes that matter: zero tariffs, continued alignment on regulations, minimal delays at borders.”
Julie Hesketh-Laird, chief executive of the Scottish Salmon Producers Organisation, said a hard Brexit would add a tariff of around 2 per cent to fresh salmon, while any “value-added” products, such as smoked salmon and pâté, would face tariffs of 13 per cent. Currently, around 25 per cent of Scottish salmon exports go to the European Union.
“The issue is opportunity cost,” said Hesketh-Laird. “If you come out with no deal, it will become cheaper and more attractive for part of the processing industry to set up elsewhere.”
Joanna Fulton, a partner in legal firm Burness Paull and member of the firm’s food and drink team, expressed fears about a lack of contingency planning across Scottish industry, including food and drink. She said: “We are not receiving the amount of Brexit-related inquiries we expected. I think SMEs (small and medium-sized enterprises), which make up a large part of the food and drink sector, are waiting to see what happens – they don’t have the manpower or capacity to deal with an ever-changing landscape.”
Fulton said the forward planning that was happening tended to focus on future workforce and supply chains.