Keeping the fish moving, as seafood sector faces Brexit uncertainty

Keeping the fish moving “We have this paradox in the UK, where about two-thirds of what we eat is imported and about 80% of what we catch is exported because they are different fish,” Andrew Kuyk said

No matter what the final Brexit scenario is, it’s vital that every effort is taken to ensure that trade disruptions in seafood supply chains are kept to a minimum, writes Jason Holland.

At this very moment, the uncertainty surrounding Brexit and what the future relationship of the UK and the EU (and indeed third-countries) will look like once the two have parted is at an unprecedented level. However, from the seafood economy’s perspective, all the conjecture about the various exit scenarios is forcing its various component sectors to plan for every eventuality.

Delegates at the recent 2019 Norwegian-UK Summit in London, hosted by the Norwegian Seafood Council, heard that while nobody knows what sort of package will accompany the separation, there is a lot of contingency planning taking place at political and industry levels. Much of this is geared towards coping with the so-called “no-deal” Brexit, which is the scenario most feared in seafood circles.

“Right now, the UK government is engaging with partner countries. There are negotiations happening and the hope is to transition these to free trade agreements (FTAs). The idea is to disrupt trade as little as possible if there is a Brexit no-deal situation,” explained Ivan Bartolo, regulatory affairs advisor at Seafish.

The UK is also compiling a new tariff schedule that will give it the power to set its own tariffs in the future, and Bartolo expects this to closely mirror the current one deployed by the EU – “perhaps with a few minor tweaks.”

Legislation covering future quotas is also being prepared, while arrangements are also being made to cover any potential implementation period.

Hopefully there will be some transitional, bridging arrangements so that on day-one after Brexit, the whole situation doesn’t collapse,” he said. “We don’t know where we are with these trade agreements, but we can say that proper-formed FTAs take years. If there is no-deal and there are no trade arrangements then all imports into this country will face full tariffs.”

While all UK seafood businesses have been preparing for no-deal in a raft of different ways, Bartolo said that from his discussions with industry, most of these efforts have focused on making sure that they know what the possible effects are of the worst case no-deal will be.

“Some of them I know have been stockpiling very slightly, nothing huge. Some of them have been looking at alternative import routes so that they can avoid Dover and the Channel Tunnel, for example.”

Different agendas

The two largest facets of the seafood industry – the catching and processing sectors – are in no doubt about what would constitute the most workable divorce packages for their respective stakeholders.

With EU member state vessels annually landing around 760,000 tonnes of fish valued at £540 million that were caught in UK waters, compared with the 90,000 tonnes worth £110 million landed by UK vessels from member states’ waters, the principal want for fishers is for the UK to become an independent coastal state with full control of its waters and to have a fairer share of fishing opportunities. Processors, meanwhile, need access to markets to continue with tariff and border disruptions kept to a minimum. This is primarily due to the UK market’s heavy dependence on imported fish, and any barriers to trade are sure to add complexity, cost, time and could impact product quality.

Andrew Kuyk, director general with the Provision Trade Federation (PTF) and representative of the UK Seafood Industry Alliance, which comprises many leading UK seafood processors and traders, told the summit that while access to water and access to market should be separate negotiation processes, it’s highly probable that they will get linked and that there will be trade-offs and bargaining as a result.

“From a financial perspective, fish processing is where the money is in this industry. We generate wealth and added value; we employ more people than the catching sector; and we are the link between the fish in the sea and getting it on people’s plates,” he said.

The UK is in fact the second-largest processor in the Union with a total turnover of around £4.2 billion. It also employs some 14,000 people, a large number of whom are EU nationals.

Essential imports

Feeding into the processing sector, the UK imports around 1.3 million tonnes of seafood with an estimated value of £2.6 billion, while its exports amount to 891,000 tonnes worth £1.5 billion.

Kuyk highlighted that the UK’s reliance on imports mimics that of the EU, which is the world’s largest fish importer and relies on global supply chains to meet nearly three-quarters of its total consumption needs. For example, total EU whitefish catches are just 500,000 tonnes, compared to a total market need of 3 million tonnes.

Most UK imports come from outside the EU, with Norway, for example, supplying 28% of the cod, 40% of the haddock and 45% of the salmon consumed by Brits.

“So, from a trade and consumer point of view, who catches what in UK or EU waters is really not the issue. Maintaining the existing trade flows is essential to meeting consumer needs across the EU and maintaining market share against competing protein foods,” he said.

“I think there is an assumption in the fishing industry that because you catch, trade and market fish – it’s the only game in town. But if you go into any supermarket, certainly in the UK, fish is competing particularly with chicken but [also with] other ready meals and increasingly non-animal products with the drift towards veganism and flexitarian. So, the idea that meat, fish or dairy have a guaranteed place in the market – that is something that’s under challenge.”

“And if there are interruptions in supply or if there are doubts about management policies that lead to further concerns about overfishing or irresponsible fishing, that will damage the market image and that will switch people away from eating fish.

“The key point is that even in the most optimistic of assumptions, the EU will remain a deficit market for the foreseeable future and even assuming the UK becomes a sovereign coastal state, has a 200-mile limit and that UK vessels have larger catch shares compared to foreign boats – all of that and even doubling cod and haddock catches in the UK leaves us at best supplying just 20% of our own market and probably not even that.”

Kuyt also stressed that the bulk of species that the UK boats are landing – pelagic species like herring and mackerel, and various varieties of shellfish – are not favoured by UK consumers.

This is why they are exported in the first place, he said.

“We have this paradox in the UK, where about two-thirds of what we eat is imported and about 80% of what we catch is exported because they are different fish.”

Another crucial issue is that UK processing in its present guise isn’t tailored towards first-stage processing or to the species being landed by local vessels, said Kuyk. This is because a lot of the imported supplies that the sector is sourcing have already undergone some sort of processing and commonly arrive at facilities as a frozen block, headed, gutted, filleted etc. Therefore, if the industry was to start filleting and processing the increased UK catch from scratch, it would need many more skilled workers than it currently has at its disposal.

​“This is why we are very closely allied with our EU colleagues in wanting things to be as close to normal as possible,” he said.

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