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The BREXIT impact on the UK fresh meat industry so
far
Using our trade data to establish how BREXIT has impacted
the UK Fresh Meat industry so far.
As we hit the 10-month mark since BREXIT, uncertainty over trade
continues. The Northern Ireland Protocol creates a trade border
between Great Britain (GB) and Northern Ireland (NI), allowing NI
to remain in the EU single market for goods. This means goods are
permitted to flow freely between NI and Republic of Ireland but
presents issues for GB to NI trade. One such industry affected by
these restrictions is the Fresh meat industry.
External exports of fresh meat to the EU face a number of
restrictions. This ban has meant GB suppliers haven't been able to
export certain fresh meat products to the EU since January. Post
Brexit, the UK was given a 6-month grace period, allowing fresh
meat exports to NI from GB to be sold in NI supermarkets, with none
passing the border to the Republic of Ireland. The grace period was
set to end and the bans on fresh and chilled meat exports to NI
were set to come into force in July. A last-minute extension of
this grace period to the end of September offered a small level of
comfort to those industries and business most affected. However,
for most, it has simply acted as a temporary plaster on a far
bigger issue, simply moving the deadline later as opposed to
addressing or reducing the impact. As the end of September drew
close, we used our trade data to investigate how the industry had
responded to these restrictions so far.
How significant is this ban for the UK Fresh and Chilled
Meat industry?
Using our IHS Markit Global Trade Analytics Suite
(GTAS) the UK was identified as the 11th largest exporter of
fresh or chilled meat by volume during 2018 to 2020 (Figure 1),
with exports representing $1.3 billion in value in 2019. Of the top
10 global importers in 2019 & 2020, 6 out of 10 are in the EU,
representing a significant chunk of the market (Figure 2). UK
Exports were also dominated by the EU with 8 out of their top 10
trade partners being EU members. This is partly because some of the
world's largest meat importing countries, such as Mainland China,
Japan & South Korea, mostly import meat that is frozen rather
than fresh.
The EU ban only applies to specific meat products including
minced meat of poultry and other animals, as well as chilled meat
preparations such as sausages.[i] This means, in theory, many meat
products should be unaffected by the changes, although in practice
this may not be the case.
Why Sausages?
The EU bans on fresh meat only pertains to certain chilled meat
preparations such as sausages. The UK exports relatively low
volumes of sausages (HS1601) each year, being only around the 30th
largest exporter globally, with countries such as the US and
Germany exporting far larger volumes (Figure 3). It was sausages
however, that piqued the interest on news headlines in June as the
EU ban drew close[ii].
It seems the concern from the press may have been well founded
as UK Exports of sausages rapidly decreased with a drop off in
total imports from the UK in 2020 through to 2021, despite the
grace period (Figure 4). The first 7 months of 2021 showed a drop
off of around 56% from the same period in 2019.
The top global importers of Sausages are EU dominated, but do
feature some other influences such as Mexico & Canada (Figure
5). The UK may be able to capitalise on these markets given
potential upcoming trade deals, although the difficulty here would
be the increased logistical challenges and cost implications of
shipping fresh produce over such distances. Shipping fresh meat
naturally introduces geographical limitations, which has
historically limited the UK to exports to EU as a preference.
UK Sausage exports currently primarily go to the Republic of
Ireland. These have dropped off substantially during 2021 as GB, NI
and Republic of Ireland continue to reorganise their supply chains
in advance of the upcoming ban. This drop off is therefore not
surprising, although does highlight that the UK is yet to find an
alternative consumer of its sausages.
Following BREXIT, we also observe a growth in UK exports to
non-EU countries (Figure 6). Although we see a growth in the
percentage of sausage exports going to non-EU countries, such
alternatives do not seem to offer the same size in market as that
of the EU as the overall volume of exports is still significantly
lower than previous years.
How do the bans impact Fresh meat?
Despite the fact the ban on fresh meat exports to the EU only
applies to specific products, there is an observed knock-on effect
to other fresh meat produce. Perhaps the lack of clear guidance on
impacted HS codes led to an over-cautious response and hence,
reductions in trade. As exporters become more comfortable with the
regulations, a recovery may be observed. During 2019 & 2020 the
top trade partners for UK fresh meat exports were Ireland, Germany,
Netherland, France & Belgium. Lower down the list were some
non-EU options such as Mainland China, Hong Kong SAR, Philippines,
USA, Jordan, and Australia; however, these options combined only
equate to approximately a third of the market size of Germany or
the Netherlands.
In Q1 of 2021 we saw the imports of fresh meat from the UK
rapidly decrease for most of the top trade partners of the UK
(Figure 7). We only saw an increase in France with other trade
partners dropping off substantially including 88% decrease for
Denmark, 75% for Germany and 98% for Poland. Fortunately for the UK
it appears as if some of this may have been the initial shock
factor of Brexit, with some recovery observed in UK exports in
April and May (Figure 8).
UK Trade with Republic of Ireland
Trade with Republic of Ireland is key for the UK, as Republic of
Ireland is the UK's largest trade partner for fresh or chilled meat
as well as sausages. The grace period on exports from GB to NI has
allowed some breathing room but trade has still seen a significant
impact. Total UK exports of Sausages to the Republic of Ireland are
down 56% comparing H1 of 2019 to H1 of 2021.
Additionally, total Republic of Ireland imports of fresh meat
from the UK are down by 24% in Q1 2021 v 2020. We also see a
significant shift in the % market share of GB v NI. From December
2020 onwards we see Ireland imports from NI grow as those from GB
drop off (Figure 9). This marks a significant shift in behaviour,
with the NI Protocol seeming to provide obvious benefits to NI
farmers, while the impact on GB farmers is far less positive. This
seems to apply to a broad range of fresh meat produce despite these
not necessarily being affected by the ban.
While it seems that the grace period has been positive for NI
and Republic of Ireland, allowing them the needed time to
re-organise supply chains, such positive impact has not been
observed in GB. GB produce has yet to find a suitable alternative
market and so exports are down, with limited options seemingly
available.
It is worth noting that prior to BREXIT, the UK focused its
fresh meat exports within the EU, not only due to demand but due to
practicalities. The obvious limitations of shipping fresh produce
limited the export partners available to the UK farmers. As the UK
looks forward, this also means future trade will be shaped by these
limitations. A shift towards longer distance partners may also see
alternative preparation or preservation methods such as freezing be
favoured as farmers try to capture markets further afield.
*HS Codes included as 'Fresh Meat' at a 6-digit level as
below:
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