Brexit could lead to produce shortages in Britain

Reassuring news for the British public about a no-deal Brexit: they’re not likely to run out of toilet paper. But they may have problems with tomatoes, according to Reuters News Service.

Brexit refers to an exit of Britain from the European Union. In 2016, British voters passed a referendum to withdraw from the EU, although details were not specified. Since then, the British government and the EU have been unable to agree on terms of the withdrawal.

U.K. prime minister Boris Johnson is pushing for a no-deal Brexit—that is, withdrawal without any agreement. Although his stance is highly controversial and has aroused strong opposition in the nation, including Johnson’s own Conservative Party, the deadline for a deal is October 31, making a no-deal Brexit a strong possibility.

There is little sign of panic buying in Britain (although the Brexit deadline is still several weeks away). Large retailers are stockpiling nonperishable items, including toilet paper, water, and cans, but it’s not possible to stockpile fresh produce to nearly the same extent.

On September 11, the British government published a paper on its contingency plan, called Yellowhammer, detailing “reasonable worst-case assumptions” in the event of a no-deal Brexit. The report tersely says, “Certain types of fresh food supply will decrease.” Much of Britain’s produce is imported from European Union nations, and withdrawal from the EU could disrupt supply.

Industry sources agree that fresh produce shortages could occur. “Fresh food availability will decrease, consumer choice will decrease, and prices will rise,” said Helen Dickinson of the British Retail Consortium.

Steve Murrells, chief executive of the retailer the Co-Operative Group, stated, “We are very clear on where we think inflation will come through, which will be, in the main, fruit.”

Murrells said that fruit such as apples, blueberries, pears, and strawberries may have to be brought in from the southern hemisphere by air freight. Vegetable supplies are also threatened, because the EU provides 86 percent of Britain’s lettuce and 70 percent of its tomatoes.

John Giles, Promar International

“We are almost totally dependent on Spain and the Netherlands for lettuce and tomatoes,” observes John Giles, regional manager of Promar International, a British agricultural marketing research firm. “North Africa”—another supplier of these items— “hasn’t got nearly the volume we need.”

Of course Brexit isn’t going to stop Spanish and Dutch farmers from producing lettuce and tomatoes. They will still be available. If a no-deal Brexit goes into effect, Giles points out, World Trade Organization tariffs will simply be applied. These are “not huge,” says Giles: “10-15 percent on produce coming in from Europe.”
There will also be another 5-8 percent in “transactional charges, additional paperwork, delays at the port, and changes in sanitary regulations,” he adds. Hence the “inflation” mentioned by Murrells.

In terms of supply, Giles sees the possibility of “short-term disruption at ports of entry, maybe even adjusting to new tariff schedules,” but “no big logjams.” After all, British and European businesses have had three years to think about and prepare for Brexit.

Increased economic isolation from the European continent could motivate British growers to increase production of fresh fruits and vegetables. But there’s one big catch: as in the United States, labor shortage is a major concern. Brexit—which is intended in part to stop unlimited immigration from EU countries—will make that labor harder to obtain.

Asked whether a no-deal Brexit offers opportunities for American companies to step in, Giles stresses the need for long-term strategic thinking.

“You have to have a chief of a big produce business in Washington state saying, ‘We’re going to go for the U.K. market.’” But Giles believes that up to this point American produce exporters have been paying more attention to Pacific markets. These companies will, he says, have to ask, “How attractive is the U.K. market compared to Indonesia, Malaysia, or China?”

Richard Smoley is Editor with Blue Book Services Inc.