A large number of grim scenarios about food are in the news. None of them are positive. All of them point to major crunch times in the UK economy.
Let’s start with the food safety standards. Johnson wants “ not to be too closely aligned” with EU food standards. The stated reason is that it could obstruct trade deals with other countries.
The fact is that the UK currently has no trade deals. That countries like Japan have told the UK to finalise the deal with the EU before doing a deal with them doesn’t help matters. The other countries also trade with the EU, and are bound by their trade deals to EU rules.
The UK will have to accept EU trade rules itself in order to trade with the EU at all. That also means complying with food safety standards. According to current rumours and unconfirmed semi-official information, the safety issues include some very controversial things, like genetically modified foods, hormones, and acid washing of poultry.
The rules scenario for the UK isn’t much clearer. Food industry heavyweights recently published a report outlining the issues for the development of future UK food policy, and it’s a great shot at trying to be optimistic about this complex, start-from-scratch position after Brexit at best.
The UK food situation in 2021
Other perspectives are far less optimistic. (See video) The UK imports roughly 40-50% of actual foods, and the big gap starting in January 2021 is on everyone’s minds. Imports of food will be slowed at the border with the EU. Perishable foods may be at risk. Tariffs will be payable under WTO rules, which is the default trade process without a trade agreement.
As of January 1 2021, the UK is out of the EU, deal or no deal. Exactly how the UK is expected to make up a shortfall of such a huge amount of food is a lot less than clear.
The current theory is that food supplies will be deficient because:
• Many UK businesses simply won’t be able to support the added delays and costs of importing. That’s quite possible, especially if profit margins are tight.
• EU suppliers to the UK may have to raise prices to cover the added costs of tariffs and border checks, which will be passed on to UK consumers. That one’s almost 100% certain.
• Transport costs may blow out, particularly in a “big queue” road transport scenario. This is transport stopped for checks and compliance, with each and every load requiring specific checks. Every minute in a queue of trucks costs big money. That’s both a risk to food supply and to the cost bases of many businesses.
Grow your own? Ah…not really
The “solution” is to increase domestic UK food production. Not everyone’s convinced by that option, for a few good reasons:
1. Increasing food production by such a vast amount takes time.
2. A lot of money has to be spent to create the production process and infrastructure.
3. A lot of time will be required to set up a fully functional food sector able to meet domestic demand. (You don’t “just happen” to produce a few million tons of anything, let alone foods like meat and vegetables.)
4. For processed foods, the UK imports a lot of ingredients. To make the ingredients locally may be more expensive, and may not meet the required volume of demand.
5. Most of the work in UK food production was done by EU workers. The UK workforce hasn’t done that sort of work for decades. If trials are anything to go by, it’s like the US; UK workers simply don’t want to do jobs like that, even if they have the skills.
6. Not complying with EU food safety standards basically writes UK food producers out of that market which was until last month a major earner for existing UK food businesses and producers.
7. Where are the existing producers supposed to get their capital, if they can’t sell to a huge market like the EU? Exporting is a costly business, and profits must be significant to do so.
8. Failed food businesses will also inevitably lead to other business failures in supporting sectors, manufacturing, retail and food processing. It’s a whole deck of houses of cards, in fact.
The Rise and Fall of the Boris Empire
If the British Empire was rather well off, the Boris Empire, based entirely on theoretical trade, isn’t looking too good. The British Empire was based on a lot of hard-nosed trade. The Boris Empire, and its revenue base, which looks even worse after the food industry revelations, doesn’t even have any trade yet.
The British Empire fell as nations became independent, but the UK remained, if in a somewhat worn condition after world wars, etc. The Boris Empire is comprised of the UK only, which can fall apart if the constituent nations decide to leave. Ironically, the structure of the UK is somewhat like the EU. It’s a union. Scoxit and Wexit, Scotland and Wales, may decide to leave. Scotland was almost unanimously opposed to Brexit, Wales a bit less so.
Is this how it ends? A few much smaller nations? Food shortages? Massive job losses? Vast numbers of business failures? Food and other price rises? All for the sake of a sort of tantrum by idiots?
I have one question for Boris Johnson:
Do you have the slightest idea what you’re doing?
An answer is not expected, for obvious reasons.
