Traders will not be able to absorb estimated £10m extra cost on goods entering from EU, warns the Fresh Produce Consortium.
The UK’s post-Brexit border strategy risks further pushing up food prices, according to key representatives of Britain’s fresh produce industry.
Traders in the food supply chain are warning they will not be able to absorb the extra cost of charges levied for import checks on goods entering the country from the EU and the rest of the world, due to be introduced in the new year.
Estimated additional annual costs of more than £10m stemming from import charges would have to be passed on to consumers, fuelling food inflation just as prices are thought to have peaked.
The Fresh Produce Consortium (FPC), a leading industry body that speaks for 70% of the UK’s fresh produce supply chain – including businesses that produce, package, move and sell fresh fruit, vegetables, cut flowers and plants – has written to ministers to share its members’ concerns about the UK’s post-Brexit border strategy.
In a highly critical submission to the government, the FPC accused ministers of adopting “an outdated and highly inefficient border solution which fails to meet the needs of a modern progressive industry and simply adds cost for consumers”.
“UK border strategy will be directly responsible for UK food inflation” ~Nigel Jenney, Chief Executive, FPC.
The trade body, which has about 650 members and is known as the 'voice' of the fresh produce industry, said the current border proposals would add cost, delays and disruption to imports of fresh produce and could lead to gaps on retailers’ shelves, similar to those seen earlier this year.
It said “anticipated additional costs, delay and disruption” for checks on perishable goods would “materially contribute towards consumer inflation, business on-costs, food waste, and carbon emissions”.
Unexpected increases to delivery times are particularly problematic for perishable items and could have a big impact, explained FPC, as the UK imports about two-thirds of the fruit and vegetables eaten by British households.
The FPC’s warning of the impact of the new border proposals on food imports was sent in response to the government’s consultation with industry on its new border strategy, known as the target operating model (TOM).
Among the proposals made in the draft strategy issued by the Department for Environment, Food and Rural Affairs (Defra) and the Cabinet Office is the introduction of a charge of up to £43 for each consignment from January 2023.
FPC estimates that lorries carry on average 10 consignments, while 1.2m consignments of fresh produce enter the UK each year. As a result, it estimates that the fresh produce industry could face up to £11m in extra costs each year, just as a result of the introduction of a £43 charge on each consignment arriving in the country.
"Businesses that are struggling to keep their spending under control at a time of elevated inflation will have no option other than passing on the new import costs," said Nigel Jenney, FPC's chief executive.
“The highly efficient logistics model widely adopted by our sector to deliver a complex range of highly perishable goods rapidly to several customers will be compromised at considerable additional cost,” he said. “UK border strategy will be directly responsible for UK food inflation.”
The UK sources fresh produce from about 100 countries, but the majority of imports enter the country from the EU, even if they have not been produced there.
FPC is warning that small and medium-sized UK businesses will be hit hardest by the planned import charges, while smaller producers overseas may decide to avoid the administrative burden and ditch exporting to Britain altogether.
The Cabinet Office has previously estimated that the government’s proposed lighter-touch border regime, without the requirement for certificates or physical checks on low-risk goods entering the country, would help to save UK importers about £400m annually when compared with the previously proposed border model, a figure disputed by FPC.
A UK government spokesperson has previously said the estimated import charge of between £20 and £43 was “an indicative range” while it continued to “determine the full scale of operating costs and finalise the risk categories under the target operating model”.
They said the government was consulting with businesses to ensure “the fairest approach that works for them, while also facilitating the movement of goods into the country and protecting our biosecurity”.
The final border strategy is expected to be released in the coming weeks.