Written evidence submitted by The British Egg Industry Council (BEIC)(TFA0027)

31st July 2023

BEIC response to House of Commons Environment, Food & Rural Affairs (Efra) Committee inquiry UK Trade Policy: food and agriculture

Submitted by email: efracom@parliament.uk

The British Egg Industry Council

The British Egg Industry Council (BEIC) was set up in 1986 to represent the UK egg industry. Its members are the 11 major organisations concerned with the egg industry, these are: the British Egg Association; British Egg Products Association; British Free Range Egg Production Association; National Egg Marketing Association; Northern Ireland Poultry Federation; Pullet Hatcheries and Breeders Association; Pullet Rearers’ Association; Scottish Egg Producers Retailers Association; Ulster Farmers Union; National Farmers Union; the National Farmers Union (Scotland). It is funded by voluntary subscriptions from egg packers and producers.

The BEIC owns the Lion Quality Trademark and runs the Lion Quality Scheme for egg production, which sets higher standard of food safety and animal welfare than required by UK or retained EU legislation. The Lion Quality scheme is voluntary but accounts for over 90% of UK production. BEIC funds a marketing and promotion programme for Lion Quality eggs and egg products and funds the British Egg Information Service. It also funds research and development. The principal function of the BEIC is to represent the interests of its Members (the UK egg industry) in discussions with Government, MPs, devolved institutions, and other bodies. The BEIC is recognised by Government and Parliament as the representative voice of the UK egg industry.

Agri-food strategy and oversight  

1. How coherent and effective is the UK’s trade strategy for food and agriculture? Is the Government taking account of the potential cumulative impact of new Free Trade Agreements (FTAs)? 

The BEIC has always pushed for the UK Government to publish a comprehensive agri-food strategy that helps our farmers prepare for being outside of the EU and for the potential future trade deals. This is important due to the likely increasingly liberalising trade agenda. The Government must focus on improving the competitiveness of British farming, as well as working towards greater food security, domestically, as well as looking at international trade.

The Prime Minister’s “Open Letter to Farmers”[1] set out the ambitions of the Government in terms of farming and trade, saying it was his ambition to “change the way we support farming in this country, including ensuring British farming is at the heart of British trade.”, a clear policy position. The letter also says that there will be a commitment to use “where appropriate, permanent quotas to protect sensitive sectors.” To “protect food standards” and “to uphold production standards”. The BEIC along with other farming organisations, noted that neither the Australia nor New Zealand FTAs contain quotas as a permanent feature, where quotas will be phased out on sensitive products over time. The UK egg industry has always operated as an unsubsidised/unsupported industry, making it highly efficient, innovative and responsive to consumer demands.

The BEIC has expressed serious concerns regarding the UK’s accession to CPTPP. The government has ignored industry warnings that the deal allows the import of eggs/egg products from countries that use conventional battery cage systems that were made illegal in the UK in 2012, as the agreement allows for import tariffs on eggs and egg products to be phased out over a 10-year period. The danger to British consumers is that egg products could be imported from countries like Mexico, which almost exclusively relies on battery cages for egg production. Such imports would undercut British egg producers who operate to significantly higher standards of animal welfare and world-leading food safety standards under the British Lion Code of Practice.

While major retailers’ commitment to continue to source Lion shell eggs for retail sale reduces the risk of displacement by imported shell eggs, as does the practicalities of long-distance transport, it is the fifth of eggs used for egg products that is most concerning because of the impact not only on animal welfare standards but also on British egg processors. If the UK egg processing market was taken by third countries, such as Mexico, then British egg processors would cease business and simply become traders. The result would be no outlet for the approx. 8% of a hen’s production which is Class B (plus Class A eggs sold to processors), immediately requiring disposal at a cost to the egg producer. This would affect all egg producers (including those who have invested in free range and organic). If this were to happen, then producers would need to raise prices to consumers to remain in business, resulting in consumers paying more for eggs – which is exactly the opposite of what the Government is seeking to achieve through Free Trade Agreements.

There are eight egg-tariff lines currently in place, ranging from eggs in shell, liquid and frozen whole egg / yolk / albumen and dried albumen and yolk. Currently, these are set at a level which considers the higher cost of egg production in the UK, because of legislation on animal welfare, food safety and environmental protection. A BEIC commissioned report from Wageningen University in The Netherlands showed that 16% of the cost of producing a kilogramme of eggs is the result of legislation on animal welfare, environmental protection, and food safety[2]. These costs do not apply to non-EU countries.

The negotiations with countries like India, with a clear comparative advantage over the British egg industry, since they operate at much lower costs, and do not conform to any comparable standards of animal welfare, are still ongoing. If the Government continues to exclude eggs and egg products from having sensitive product status in these agreements, this will have a significantly negative impact on the British egg industry, particularly the highly price sensitive egg products sector. Furthermore, without adequate tariffs to only allow imported eggs produced to UK standards, the doors will be wide open for powdered and liquid eggs from countries with lower or no animal welfare standards – this is not what UK consumers expect of a Government that claims to pride itself on championing animal welfare, with high hen welfare, environmental protection, and food safety.

We will be vocal in highlighting the hypocrisy of potentially banning the use of enriched cages for domestic production, then allowing products from the lower welfare standard battery cages to undermine our farmers and our welfare standards.

2. To what extent has UK trade policy provided benefits to the agricultural and food sectors compared to (1) other sectors of the economy and (2) its international counterparts

The BEIC is not aware of empirical evidence yet demonstrating the impact of the UKs newly independent trade policy on the relative performance of agriculture to other sectors and countries, therefore has no position on this for the time being.

3. What impact could recent machinery of Government changes, notably the dissolution of the Department for International Trade and its correspondent select committee, have on the development of food and agriculture-related trade strategy and policy and how should any potentially negative effects be addressed?

The BEIC is unable to give an assessment of the dissolution of governmental departments or select committees in relation to their impact on agriculture-related trade strategy or indeed wider food policy. We do express concern over the dissolution of a select committee such as the International Trade Committee on the ability of Parliament to scrutinise trade negotiations and their outcomes. It is vital that Government has a clear understanding of the threats and opportunities during negotiations. The Australia and New Zealand FTAs are a perfect example of where the farming community were too late to influence the outcome, as the Government had already agreed the deals. If the Government truly wishes to bring food producers along with them, they must be better at engaging with stakeholders in the embryonic stages of any future FTAs.

4. How could FTA scrutiny and consultation (such as through impact assessment, Parliamentary scrutiny, stakeholder consultation, and the Trade and Agriculture Commission) be improved?  

The BEIC played a role in supporting the case for the creation of the Trade and Agriculture Commission, along with other leading farming and agricultural bodies, as well as animal welfare groups. However, we are very disappointed that parliamentary scrutiny of trade deals remains woefully inadequate. This will have significant economic implications for farmers and consumers in the UK, and on the protection of our standards to which the food we eat is produced. We believe that parliament should play a much greater role in scrutinising trade agreements, particularly in the earlier stages of negotiations. 

This could be achieved with the following:

• Parliament should agree to the negotiating mandate before negotiations commence and should be kept updated and consulted throughout the negotiations.
• The devolved administrations should also be consulted throughout the negotiating process, including with respect to draft texts of agreements.
• Stakeholder engagement should involve a higher degree of information sharing, under Non-Disclosure Agreements only where necessary, to ensure proper two-way communication throughout negotiations prior to trade deals being signed.
• Comprehensive economic impact assessments should be published prior to negotiations starting and once negotiations are concluded.

5. Are the UK Government's trade policy objectives consistent with those of the devolved Administrations, and has it taken those objectives adequately into account? 

The BEIC operates across the UK and believes that dialogue between the UK government and the devolved administrations must be open and consistent. There are considerable differences or variations in the British economy across regions and devolved nations, each devolved nation has its own challenges. For example, Welsh agriculture relies heavily on two sectors, livestock, and dairy – with typically smaller size farming businesses than in England. Therefore, it would not be incorrect to posit that certain trade liberalisation scenarios will risk having a disproportionate impact on Wales, compared to the rest of the UK. In addition, approximately one third of agricultural land in Wales is rented, with tenant farmers facing other challenges such as access to finance that can hinder their ability to diversify or invest in their businesses. This is just one example of how vital joined up policy making is for the integrity of the UK’s ‘single market’.

6. To what extent has the UK exploited potential opportunities for trade in the food and agricultural sectors since its departure from the EU?

The BEIC welcomes the introduction of additional agri-food attaches to help break down barriers to agri-food and drink exports. Food manufacturing is the largest component of the British economy and the British egg industry, particularly the egg products sector, plays a key role in this as egg products are used in over several thousand finished food items. However, the UK is still behind many other countries when it comes to dedicated agri-food sector representatives. The BEIC is willing to work with Government to ensure they have the right support and information to fully understand the needs of the British egg industry.

Since 2019, the British egg industry has faced multiple unprecedented challenges. Our new trading relationship with the EU and difficulty with agreeing common veterinary standards for livestock, to name just one. The difficulties of adjusting to the new trading relationship were compounded by Covid-19, the global economic slowdown, inflation, shortages of labour, and the war in Ukraine have all taken a considerable toll.

The British egg industry is worth £1.55bnm to the UK economy, (which is Industry estimate, 52 weeks to 9 July 2023) and employs over 23,000 people in the UK, either directly or indirectly through ancillary industries.[3] We also believe that the UK Government should appoint a Minister who is responsible for growing agri-food exports, as well as helping to resolve market barriers. The Minister should also play a key role in championing environmental, animal welfare, and ethnical trade standards.

Free Trade Agreements  

7. What impact have FTAs signed since the UK’s departure from the EU, such as those with Australia and New Zealand, had on the agri-food sector? Have opportunities or concerns arising from those agreements been realised? 

Many of the FTAs agreed have only entered into force recently, most FTAs being rolled over deals from the UK’s former membership of the EU. However, unlike many other livestock farming sectors in the UK, there is no threat from the Australian or New Zealand egg industries due to the size of their industries and geographic distance from the UK. There are no exports of shell egg or egg products from Australia or New Zealand to the UK. We do not foresee there being any issues for the UK egg industry in a trade agreement being concluded with Australia and New Zealand.

8. What impact will the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) have (1) on the agri-food sector and (2) future FTAs? 

The Government must review the position of eggs and egg products to ensure they are granted sensitive status in future agreements, and work toward amending the current CPTPP agreement that was signed on the 16th July 2023. If they fail to do so, the Government is complicit in bringing to the UK eggs from hens kept in conventional cages that are well below the welfare standards expected by the British consumer. This particularly affects the egg products sector which could see the importation of low welfare egg products (liquid/frozen/dried egg, whilst UK egg farmers rightly continue to invest in ensuring higher welfare standards for their birds.  Under the terms of UK’s accession to CPTPP egg imports will be fully liberalised over a period of 10 years for all countries bar Australia, who will continue to face MFN rates as per the UK/Australia FTA. We have concerns in relation to Mexico, a large producer of eggs (fourth largest in the world) almost exclusively from barren-caged systems, which has been banned in the UK and throughout the EU. This will not only set our own egg producers at a disadvantage, but it will also directly impact animal welfare assurance schemes such as the RSPCA Assured and Lion standards for laying hens.

9. What approach should the Government take to food and agriculture sector priorities and concerns in its ongoing negotiations with the Gulf Cooperation Council, Canada and India? 

There are opportunities and defensive interests to be considered for every potential FTA, and the BEIC understands that it is trade that is the driving force of economic growth. However, Government must fully commit to assessing the full impact of any agreement, on our own domestic production, and the knock-on effects these may have on our wider food and drink manufacturing industry. The BEIC has concerns about the cumulative impact of trade agreements, and the direction of travel that has been set, particularly regarding the Government’s willingness to abandon principles on animal welfare – the Government should be pushing for better standards abroad not simply opening the door to products that fall far below our minimum standards and use systems of production that are illegal in the UK. We are resolute that further concessions to sensitive sectors such the British egg industry, especially egg products, must be made.

For example, egg processing accounts for approximately one fifth of UK egg production. These plants would shut their doors and simply become traders and import. As approximately 8% of shell eggs are second quality, plus the additional 12% of first quality eggs that are currently supplied to egg processing plants, farmers would lose this income stream. Farmers would also have to pay to have the second quality eggs rendered as there would be no outlet for them. This would not just affect enriched cage operations, as it would be hugely damaging to the free range and organic sectors. Provisional data for 2022 shows that 66% of UK eggs were sold in shell to the retail market; 15% were sold in shell to the price sensitive food service sector (catering, schools, hospitals etc); 19% were taken out of their shell and manufactured into a variety of egg products for the price sensitive processing sector. At present most egg products and virtually all shell eggs that are imported come from the EU, produced to the same regulatory standards as those in the UK.

However, this is not the case with non-EU countries where conventional cages remain the most favoured production system and where any tariff reduction would see the greatest detrimental impact on British producers and British welfare standards. The British egg industry has ambitions to grow its egg product sectors, by opening new liquid and powder processing plants, which will provide both skilled and semi-skilled employment in local communities.

10. Should potential new FTAs with specific countries or organisations be prioritised for agri-food reasons and why?  

The BEIC believes that, as well as looking at new markets for export, we must strengthen the UK’s foothold in existing markets. This means as a matter of priority, enhancing the terms of trade with the EU. The EU’s Single Market remains the most important market in terms of UK agri-food exports.

The Government should focus on the following:

• developing SPS systems that recognise the shared objectives of safe and healthy food and the overwhelmingly common legislative starting point of the UK and EU, thereby removing remaining barriers to trade, as well as complex administrative requirements and high frequency of border checks;
• jointly investing in the development of IT-enabled, trade eliminating, paper-based systems and streamlining processes, including simplified certificates where these continue to be required;
• mitigate the administrative burden for authorities, food and drink businesses and hauliers to avoid delays, particularly relevant for mixed consignments and fresh produce;
• ensuring facilities and resources are in place at Border Control Posts where there is a requirement of entry into each other’s territories. Seek easements where entry via a BCP is practically not possible, whilst ensuring that biosecurity and human health concerns are upheld;
• cooperating in the development of science underpinning future policy development thereby ensuring a common basis for action;
• introducing processes for consulting stakeholders in Northern Ireland of all regulatory changes that will directly impact their business, including secondary legislation;
• using the TCA level playing field provisions to build processes that provide a basis for the management of proposed future regulatory divergence. 

Standards and welfare  

11. Is the Government’s approach to trade aligned with its commitment to high standards for health (including plant and animal health), food safety, animal welfare and environmental protection, and the UK’s right to regulate in these areas? 

The Government should seek to reach trade agreements with countries that share our values and positions on the environment, biodiversity, the responsible use of antibiotics, and animal welfare. The public expects the UK to champion these values at home and abroad, one without the other is not only hypocritical but an own goal in terms of the UK’s food security. The BEIC urges the Government to ensure that championing these standards is at the heart of its trade policy, and that liberalised market access is dependent upon meeting thresholds in these areas. If products fail to meet minimum legal standards for animal welfare and the environment that are equivalent to those for domestic producers, then they should not be granted preferential market access. The Government should launch a formal process to develop these core standards when it comes to agri-food imports, which would then form the basis of future FTA negotiations.

Support for businesses 

12. Is the Government providing sufficient support and guidance for agricultural and food exporters and importers, and how could that support be improved?  

The BEIC welcomes the support of the Department for Business and Trade (DBT), with its network of international trade advisers and Defra’s work both in the UK and overseas. Producers of egg products, such as liquid or powdered egg may not have the time and resources to search multiple government landing pages around the world on how to export, understand tariff duties, import requirements etc. The BEIC would support the formation of a central hub where all the information on how to export goods, within it the option for exporters to be notified of third countries and any changes to the import requirements. The British egg industry has a strong egg products sector, and it has ambitions to grow and export. This price-sensitive sector will struggle to do so if it is undermined by imports that do not conform to the high standards of animal welfare that our farmers must comply with.

13. How effectively is the Government engaging with industry stakeholders and to what extent is it tackling non-tariff and technical barriers to trade for UK businesses? 

The BEIC expressed concerns over how much engagement was taken seriously by the Government and feels that much of what was said within the Trade Advisory Groups were not given proper consideration or simply ignored. In the past, the details of the significant tariff concessions conceded by the Government have not been properly shared, tested or interrogated for their impact by affected domestic stakeholders before they were announced as part of an agreement that was largely or for all intents and purposes, completed.

The BEIC has engaged with Defra, and DIT, over many years, providing significant amounts of quantitative and qualitative data on how the British egg industry will be impacted, if not afforded sensitive product status in FTAs. Unfortunately, the Government has chosen to ignore all this research, e.g. the economic data which was independently produced, but commissioned by the BEIC. One specific example of this was the CPTPP agreement when, at a stakeholder meeting with ministers, Government tried to justify its position by stating that currently, the UK does not import eggs/egg products from Mexico, therefore liberalisation will not threaten our industry or undermine animal welfare standards. This is a farcical position, as the current level of import tariffs that reflect our higher standards of animal welfare, environmental protection and food safety, are set at a level that excludes such imports. The key issue is that in 10 years time these import tariffs will be removed, opening to door to imports of egg products, produced in systems of production that are illegal here.

July 2023

ENDS