What the seafood sector wants from Brexit

What the seafood sector wants from Brexit With just 12 months until the UK exits the European Union, the seafood supply chain is clear on what the post-divorce landscape needs to look like

While there is still some considerable distance between what EU and UK decision makers believe their future relationship should be following the Brexit end-date in little over a year’s time, the seafood industry has a much clearer picture on what would constitute the most workable divorce package for the supply chain, reports Jason Holland.

At the recent 2018 Norwegian-UK Summit, hosted by the Norwegian Seafood Council, Nigel Edwards, chair of the UK Seafood Industry Alliance and technical/CSR director of processor Icelandic Seachill, stressed that there is a unique set of challenges associated with the seafood sector in the Brexit negotiations.

“For most other parts of the food industry, the primary impacts of Brexit relate to terms of trade, tariffs, the availability of labour and future regulation,” said Edwards. “But seafood has the added dimension of replacing the provisions of the EU’s Common Fisheries Policy in relation to access to waters and quotas, as well as conservation requirements of the entire sector. We also need to retain consumer confidence in the commodity that we sell and wherever it might come from, which means that sustainable and responsible fisheries management is vital to the success of the industry as a whole.”

The UK Seafood Industry Alliance, comprising several leading seafood processors and traders, was established in the wake of the 2016 referendum to represent the industry's interests and to campaign for the best possible future arrangements with the EU and other trading partners. With there being something of a supply paradox in the UK seafood sector, whereby the country exports most of what it catches and imports most of what it eats, it is of paramount importance that these companies have a viable post-Brexit environment in which to operate.

In total, the UK currently imports around 1.3 million tonnes of seafood with a value of £2.6 billion, while its exports amount to 891,000 tonnes worth £1.5 billion. Most imports come from outside the EU, with Norway supplying 28% of cod, 40% of haddock and 45% of the salmon. Conversely, most of the markets for the fish that the UK fleet catches are within the bloc.

“Those asymmetric trade flows create a complexity in the negotiations, potentially also affecting trade beyond the EU. Any barriers to trade, including tariff or non-tariff barriers, will add complexity, cost, time and impact quality,” said Edwards.

To provide a common view of the industry for UK policymakers, the alliance believes it is vital that the seafood industry quickly ascertains exactly what trade it has with different countries and where the products it is buying truly originate. At the moment, its top five source countries are China, Iceland, Norway, Germany and Denmark, but of these, China, Denmark and Germany are mainly first stage processors and/or transit hubs, meaning challenging data gaps need to be filled.

With regards to consumer confidence, there was a considerable drop in economic optimism following the outcome of the Brexit referendum in 2016; it quickly recovered, but has steadily declined ever since, highlighted Edwards, adding that this development is less about Brexit and more about concerns surrounding the overall cost of living.

Nevertheless, the seafood sector has received a ‘warning shot’ from the market in that the switching of products has become a prevalent trend as prices have climbed, he said. This has been typified by sales of chilled salmon, the country’s most popular seafood, with volumes dropping as prices have risen.

Importantly, though, UK shoppers have continued to be active in chilled fish. Indeed, the number of consumers exiting chilled fish completely is negligible, which suggests that other proteins are not picking up the lost fish volumes.

“They are not swapping out of fish, what they are tending to do is buy smaller portions. Hopefully, what this is giving us confidence in is that people are not leaving the sector. They are managing their consumption but they are still there and they are still loyal. So as the volume of fish returns, they can increase their purchases.”

While the respective specific mandates of the UK and the EU for the next stage of dialogues have not been formalised, with negotiators now at the ‘end of the beginning’ of the Brexit process, the European Council has made it clear that the UK should not enjoy the same rights and benefits as the remaining EU members, said Edwards.

“Having your cake and eating it is not going to be an option. Nor will we be allowed to ‘cherry pick’ a deal. The four freedoms of the single market are indivisible – and an independent trade policy precludes remaining in the Customs Union. This suggests that the UK will have a third-country relationship. However, the EU’s position on fisheries has been released. It wants access and quotas to remain unchanged alongside reciprocal access, so they want our fish and to eat it.”

With the growing acceptance that a new, fully-fledged relationship won’t be ready for 29 March 2019 and that a transitional arrangement will be needed sooner rather than later to avoid any ‘cliff edge’ uncertainty, the UK Seafood Industry Alliance has developed a manifesto explaining the importance and size of the industry, with an overriding emphasis on the need to keep trade flows and to maintain tariff-free access or reduce existing tariffs.

“Whatever happens, regardless of who catches what in UK waters, our emphasis is about maintaining trade flows,” said Edwards

As such, it is vital that the EU’s trade and other concessionary agreements as well as its Autonomous Tariff Quota (ATQ) system remains part of the post-Brexit arrangement for UK supplies, he said, adding that there is “no obvious reason” for the EU or the UK to become more protectionist in this process.

“The UK market could even become more open than it is within the EU,” he said.

To ready itself for Brexit, Nigel Edwards said the UK seafood industry must now prepare for new customs and trade arrangements and to facilitate the most mutually beneficial arrangements possible.

But above all, it should remain optimistic, he said.

“Seafood is the most widely-traded food commodity, our consumers love it, want it and will continue to buy it as long as they can. It’s our collective responsibility to ensure they have access to the seafood they want at prices they can afford.”

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