The so-called ‘bounce back’ plan will provide ‘unprecedented help’ for SMEs designed to allow them to capitalise on new trade agreements being negotiated by the Department for International Trade (DIT) with Japan, the US, Australia and New Zealand.
The strategic interventions were jointly announced by DIT and the Department for Environment, Food and Rural Affairs (Defra) this morning (22 June). The departments said they will offer ‘immediate support’ to help businesses in the industry grow their trade activity overseas.
“More trade is absolutely critical to helping the UK’s agriculture, food and drink industry recover from the impact of coronavirus,” DIT Minister for Export Graham Stuart said.
“The package of measures we have announced today will support ‘bounce back’ in exports, and help our world-class producers and manufacturers increase trade with the rest of the world. It will also get the industry ready to capitalise on the opportunities that are being opened up by the series of free trade agreements that my department is negotiating around the world.”
Trade talks, food standards and COVID-19
The agriculture, food and drink sector is the UK’s largest manufacturing industry. It contributed £121bn to the UK economy in 2018 – supporting around 4 million jobs. In 2019, UK food, feed and drink exports were worth £23.7bn – up 4.9% from 2018.
According to figures from the UK Food and Drink Federation, in 2019 the European Union was the UK’s largest export market for food and drink products, accounting for 59.9% of sales or an export value of £14.2bn.
As the UK gears up to leave the EU, the Conservative government have already ruled out the possibility of an extended transition period, which is due to expire on 31 December 2020. Recent reports suggest that optimism may be rising that a future trade deal can be reached – but without agreement between London and Brussels the country will revert back to World Trade Organization terms in its dealings with its largest trading partner.
This is viewed as a significant threat to existing food and beverage trade with EU countries. Food and drink industry bodies have previously warned of the disastrous impact that a no-deal exit from the EU would have, particularly in light of the economic difficulties resulting from the coronavirus crisis.
DIT noted that British food and drink exports have dropped as a result of COVID-19. However, government ministers were quick to stress the new opportunities opening up internationally and the support they are putting in place to enable UK food and drink to capitalise.
“This package of measures signifies our strong commitment to support the sector in recovering from the impact of coronavirus. It includes the promotion and showcasing of British expertise and produce to new export markets, identifying opportunities and strengthening existing relationships,” Defra Parliamentary Under Secretary of State, Victoria Prentis, said.
DIT and Defra noted that in 2019 the UK exported £2.4bn of food and drink to the US, £312m to Japan, £453m to Australia and £58m to New Zealand. Over the last two months, DIT has launched the first round of talks for the US, Japan and Australia and New Zealand Free Trade Agreement negotiations.
But while the government may want to paint a positive outlook for these trade talks, the UK food sector has repeatedly warned that any free trade deal with the US in particular should not come at the detriment of UK agricultural and food safety standards. Chlorinated chicken and hormone-treated beef have become totem issues in the debate, as UK farmers worry that the country could be flooded with cheap imports from the US produced to different standards.
More than a million people have signed a National Farmers Union (NFU) petition urging the government to ensure future trade deals do not lead to an increase in food imports that would be illegal to produce domestically.
“Trade policy is complicated, but what the public are telling us is quite simple. They care deeply about their food, where it comes from and how it is produced. They do not want to see chlorinated chicken or hormone-fed beef on their supermarket shelves and nor do they want to see food imported which has been produced in lower welfare or environmental systems than is legally allowed in this country. Farmers, animal welfare groups, environmentalists and now the public have made their voices clear,” NFU president Minette Batters said.
The NFU is calling for the establishment of a Trade, Food and Farming Standards Commission, an independent body that can review trade policy and ‘ensure all of our food imports are held to the same standards expected of British farmers’.
What does the support package look like?
The new support package consists of eight initiatives that the government believes will provide a boost to UK food and drink exports.
- The launch of a GREAT DIT Food & Drink Exporting Masterclass - webinars produced in conjunction with trade associations, UK regions, DIT’s international network, and DIT export specialists.
- The launch of Food & Drink SME E-commerce Accelerator Pilot – leveraging DIT’s E-exporting programme to increase the level of international e-commerce support for food and drink SMEs, including agri-tech through one-to-one e-commerce ‘export clinics’, a new series of industry webinars and podcasts, as well as ‘virtual workshops’ on internationalising websites for companies selling direct to consumers.
- The promotion of ‘50 Food and Drink Export Champions’ to stimulate aspiring exporters, while utilising International Trade Advisor specialist networks focused on agri-food.
- The first Defra Agri-food Counsellor serving the UAE and wider Gulf Region, with the role focusing on supporting the food and drink sector and representing the interests of UK businesses already exporting to the area, as well as those looking to export for the first time. The new Defra-funded Regional Agri-Food Counsellor will be based in Dubai and will work alongside DIT’s existing sector leads in the UAE, providing specialist knowledge and engagement in Government to Government discussions on behalf of UK interests and sectors.
- A programme of physical and virtual events to connect buyers, promote the UK and reach international markets. This will include: an overseas virtual buyer trial working directly with chosen US buyers and developing a UK ‘Smart Distance Selling Process’, which includes the dispatch of food and drink samples to buyers.
- Leveraging Defra’s Food is GREAT campaign, which will extend into the UAE and the EU later this year, to provide ‘impactful and targeted activity’ in ‘priority’ export markets. Defra and DIT identified these markets as the US, China and Japan.
- Two virtual investor roundtables will be chaired by Lord Grimstone, Minister for Investment, with agri-food and drink, and agri-tech companies to inform the development of the UK’s investment strategy, the UK Agri-Tech International Strategy and the launch of Phase 2 of the High Potential Opportunity Programme.
- ‘Uplift’ of UK Export Finance’s “Exporters’ Edge” campaign to ‘identify and respond to the needs of the industry’ and raise awareness of how UKEF and Trade Finance can help businesses win and fulfil export contracts. UKEF is also accelerating the development of its products to allow a wider range of UK exporters to access its support.
The FDF, the trade body representing UK food manufacturers, welcomed the news. Chief executive Ian Wright said support on this scale was ‘extremely welcome at this uncertain time’.
“The package of measures is testament to the close and long-running work between FDF, DIT and Defra to boost our exports performance. Our success in restarting and expanding exports will be absolutely vital in aiding the UK’s post-COVID economic recovery.
“The ‘bounce back’ plan will ensure that specialist support is available to those UK businesses which trade around the world and provides fantastic potential for those companies looking to export. With a footprint in every constituency, food and drink is uniquely placed to drive an exports-led recovery. In the longer term, it is important that government and industry continue to work together to take advantage of export opportunities and address fragmentation in available support across the UK.”
The Agriculture and Horticulture Development Board (AHDB) was also optimistic that the support package will allow UK food and drink exports to recover from COVID-19 disruption.
AHDB’s international market development director Dr Phil Hadley said the move will provide ‘immediate support’ to exporting businesses. “Coronavirus has had a big impact on the UK’s export activity and while we continue to ship our produce around the world, the challenges of the pandemic have been strongly felt in all sectors. We are very encouraged to see this ‘bounce back’ plan, which will provide significant support to many of the UK businesses we assist in growing their overseas trade.”