Brexit deal starts to hit food supply chain, causing widespread concern

Leading food and drink industry figures on both sides of the English Channel have expressed concern at how goods from the European Union that are processed at distribution hubs in the United Kingdom now face heavy tariffs when re-exported to the EU, because of the terms of the Brexit trade deal.

The goods in question are affected by the deal's terms on the rules of origin of products, and this part of the deal signed on Christmas Eve could cause chaos for supply chains.

When the agreement was signed, Ian Wright, chief executive of the Food and Drink Federation, or FDF, said: "The prime minister promised UK businesses over a year of transition in which to adapt to a new set of rules. He has delivered us four working days.

"Food and drink manufacturers will do their best to keep food fl owing. However… the last-gasp nature of this deal means that there will be significant disruption to supply."

One week into the new era, the FDF's head of international trade, Dominic Goudie, told the Financial Times that the organization was "very concerned" about how the rules of origin were being applied, and the financial consequences.

"Goods shipped to distribution hubs in Great Britain face the payment of full EU tariffs when they return to the EU and as a result, suppliers are being forced to cancel the delivery of products to customers in Ireland," he said.

According to figures published by the FDF in December 2020, Ireland is the UK's biggest market in the EU for food and drink exports, accounting for almost 30 percent of overall sales in the EU in 2020.

But an unnamed EU official quoted by the Financial Times has a blunt message for British food suppliers.

"You can't expect Brexit not to have consequences," they said. "The UK won't be a distribution hub for the EU anymore. EU businesses will need to stop relying on UK hubs."

The impact of Brexit on food supply has already been visible on the shelves of shops in Northern Ireland, which has remained in the EU's single market for goods, while England, Scotland and Wales have left.

The BBC reported that some branches of Sainsbury's, one of the UK's biggest supermarkets, have resorted to stocking own-brand products made for rival stores, because of the delays caused to the supply chain from the British mainland by the new regulations.

"A small number of our products are temporarily unavailable for our customers in Northern Ireland while border arrangements are confirmed," a company spokesperson told the BBC.

"We were prepared for this and so our customers will find a wide range of alternative products in our stores in the meantime and we are working hard to get back to our full, usual range soon."