Written evidence submitted by the British Meat Processors Association (BMPA) (SME0018)
19th Feb 2021
The British Meat Processors Association represents the majority of companies working in the British meat industry. This includes pork, beef and lamb.
Author Nick Allen
1) Which meat exports have been affected by border delays and disruptions, and why?
Since the beginning of January there have been many disruptions affecting beef, lamb and pork exports to the EU which have had a number of consequences including goods being delayed, goods being held as changes were made to documentation and goods being rejected. As an organisation we have been inundated with calls from members that have run into problems. This was in spite of those members doing a considerable amount of preparation work prior to the 1st January. Although there were reports of consignments arriving at Border Control Points (BCPs)without documentation, this was not the case with the major meat exporters who are our Members and the problems experienced can be divided into two categories 1) teething and bedding in problems and; 2) Systematic/Structural problems
a) Teething Problems included:
Official Veterinarians not being clear about the guidance and in particular, differences in interpretation between the guidance issued by APHA and that applied by the BCPs in relation to the completion of Export Health Certificates (EHCs). These differences were and remain inconsistent between BCPs.
In some cases, the UK guidance was actually not fully compliant with the regulation but in some cases the BCPs interpretation was incorrect. The reasons for delays and rejections have included numbering of pages, ink stamp colour, the stamping and signing of deletions, the deletion or non-deletion of non-applicable requirements, the completion of the Common Health Entry Document (CHED) on the EUs TRACES NT system and its compatibility with the EHCs.
In addition, exports have been disrupted due to the need for ongoing discussions and agreement with the EU on the requirement for Trichinella testing for pigs. This issue, which was believed to have been resolved, removing the requirement for testing on the basis of the UK being recognised has having controlled housing, had, in fact, not completed the EU agreement procedures and remains pending. Goods were held and eventually destroyed in some cases due to this.
Difficulties have also been encountered due to consignments not carrying the documents in the correct place in the lorry, drivers being confused by the system (a problem multiplied by the introduction of Covid testing), businesses being confused about what additional paperwork to send, misunderstandings about the role and the need for agents at the ports and the need for a physical presence of agents.
Our understanding is that in the first 6 weeks 125 technical issues were resolved to overcome these teething problems.
We would like to pay tribute to Defra staff who have made themselves available on a 24/7 basis, often at the highest level to help resolve issues regardless of it being a technical issue or just a mistake by the exporter. They have helped to resolve many problems.
The fact that there have been 125 technical issues to resolve highlights the fact that because of the late completion of the political negotiations there was no time to properly stress test the system and in spite of some Border control posts being to a degree flexible and accommodating the extra costs of these delays will have run into £millions.
b) Systemic/structural issues.
Speed; The current system has multiple steps, requires official interventions at a veterinary and customs level and is significantly paper based. It functions adequately to move containers of frozen and shelf stable products around the world. It is quite common for these containers to be held up at BCPS whilst paperwork is checked and physical checks take place. Because the product is frozen or shelf stable and delivery on the whole not time critical, a hold up of 24-48 hours is not generally an issue.
Meat sold into the EU from the UK had become part of a 24/7 just in time food supply chain with an expectation of a day 1 slaughter being delivered on Day 2. The new system as described in the two power point slide diagrams provided, adds considerable delays and exporters are pleased if they can achieve a delivery on Day 3. If there is a problem or the lorry gets pulled up for a full physical check, then it quickly moves to a Day 4 delivery. Shelf life is lost and the customer is, at best, unhappy with the disruption and at worst may downgrade the product and seek compensation. BMPA members are indicating that the additional time taken end to end is at least 24 to 30 hours. This is a 100% increase on the pre- 31/12/20 norm.
Cost; The system also adds a cost: Export health certificates are costing in excess of £200 in Vet costs product has to be stored for longer, agents fees at the ports have to be covered, and hauliers are needing more as the journey times are longer. Feedback from Members place the additional end to end cost per load at between £600 and £1000 on a load that previously would have cost £1000; that to 60 to 100% more. These on cost makes smaller deliveries even if they are on the same lorry more expensive and some of our members have already lost smaller orders as the cost has increased so much. The reason for this is that multiple destinations require multiple EHCs, multiple CHED entries and multiple customs procedures.
Groupage; The current system makes groupage consignments almost impossible. Groupage or consolidated transport defines a special type of transport consisting in grouping together goods dispatched by several different companies into a same load. This presents distinct problems for products that require EHCs and where, ideally, the vehicle is sealed. Very shortly after the end of the Transition Period (TP) most hauliers withdrew from offering groupage for products of animal origin. Certification procedures and the checks at borders were the main reasons. In the case of the latter, an entire load is at risk of delay or rejection if one small part of it is has a problem. Groupage is used widely the meat and other fresh food sectors and probably covered 40 % of meat sales to the EU. The loss of this facility has resulted in a loss of trade where customers either can’t or won’t take full truckloads.
2) What impact have delays and non-tariff barriers on meat exports to the EU had?
There is no doubt that meat and by-product exports have been lower as a consequence of the significant increase in border friction. To some extent this was due to businesses exporting more material before the end of the TP but the loss of groupage and small, pallet load type consignments, in particular those that do not have an EU infrastructure has also hit exports. .is is due to the fact that exports, pre the end of the TP were carried out on a Delivered Duty Paid (albeit that there was no duty) or DDP basis. This meant that EU customer expected the supplier to manage all of the import procedures and to do so, a business must be established in the EU. The only alternatives then are either, to have an EU base or engage an Import Agent to carry out these procedures – at a cost. Members have lost business where their EU customers have refused to cover these additional costs, making the export uneconomic.
(a) What are the medium to long-term implications of the non-tariff barriers for UK exporters and supply chains?
BMPA has surveyed its Members to establish the level of disruption to exports and, without exception the impact of the post TP export procedures and requirements has been significant.
Pork exporters have reported exports in the 6 weeks to mid-February 2021 at between 10% and 50% of equivalent 2020 levels. The situation is improving to some extent as businesses adapt to the new procedures but exports to the EU are still running at between 50% and 75% of 2020 levels and the view is that as much as 25% of the trade with the EU may be permanently lost
The picture in the beef sector is not dissimilar although the smaller businesses have been disproportionally hit due to groupage. Exports have been running at 25 and 60% of 2020 levels and this is showing little sign of improving.
To illustrate the challenge of the smaller exporters, a business that was previously exporting weekly 5 truck loads and 10 to 15 pallet loads as groupage and for whom exports was a third of their business is now only exporting one truck load and the groupage business has simply ceased. Exports now represent less than 10% of their trade. Customers are not prepared to cover the extra costs of importing from the UK and are seeking EU suppliers. Agents costs for a pallet load or a truck load run at around £300 to £400.
Lamb exports have fared a little better but are still in the order of 25% lower year on year with signs that exports to the EU will probably not fully recover unless, as is the case in all the meat sectors, there are significant reductions in trade friction and cost.
One multinational business has reported that while their UK export are 60% lower, they have made about two thirds of this up by shifting production out of UK.
The main problem stems from a fundamental mismatch between processes that work perfectly well for large volume consignments of frozen or shelf stable products delivered to ports in containers from distant markets with those required for trucks working to delivery windows measured in hours and minutes and where last-minute changes and adjustments are part of the service. Undermining this takes away a key competitive advantage we have compared with other non-EU suppliers and we need to do everything possible to protect this.
While it may be impossible to remove some of the friction which is an inevitable consequence of EU exit the following needs to be considered;
Veterinary resources; There remain both capacity and cost issues here for certification and, while the principle that was applied to non-EU exports was that these were a ‘choice’ for businesses and therefore to be covered separately through the contracting of private vets, the situation with EU trade is a result of government policy and it would be appropriate to consider what steps could be taken for this work to be covered formally within existing FSA contracts. Businesses had assumed that this resource would be made routinely available. Currently it is not.
APHA; Exports to the EU, especially bearing in mind that this is a fast-moving fresh trade, require 24/7 coverage to deal with issues, respond to queries and issue ‘cancel and replace’ EHCs. It is clear, even at the lower level of trade, the speed of response and turnaround on critical documents where an issue occurs is too slow. This has not only commercial implications but in most cases drivers are not permitted to leave their vehicle even for basic needs so delays of 24 hours or longer are difficult.
Dialogue with the Commission and BCPs; This is taking place but more needs to be done to secure the cooperation of the EU to ensure that there is consistency. Consignments are still being delayed and rejected for ‘new’ issues or where one BCP does not adhere to the same requirements as another. Businesses need to know precisely what the rules are.
Guidance to Vets; The experience of the first 6 weeks has confirmed that our processes were not adequately stress tested nor did government cross check the guidance given to UK vets with the EU and BCPs to ensure they were full aligned. Work is being done to update this but the EU is about to introduce new format EHCs for 21 April and it is paramount that UK pre-emptively engages with the EU to agree in detail how these should be completed and to agree with Brussels that all BCPs will be communicated with to apply the rules the same way.
Costs; In addition to the veterinary costs, the other transactional costs of export are too high even for the largest operators and prohibitive for the smaller ones. Many of these business have or will simply stop exporting unless this is resolved. Areas of cost that need addressing include the cost of customs declarations, the cost of customs agents including the obligation by some BCPs to use freight forwarders even if consignments do not have problems.
Modernising and streamlining the certification process; The UK needs to work urgently with the EU to reduce the requirements for the issuing of paper EHCs that accompany loads. The EU has a e-certification system in place and the UK should work with the EU to develop a reciprocal system. This does not obviate the need for certification but allows the secure use of e-signatures to provide secure electronic versions of EHCs which, in turn, allow BCPs to conduct procedures in advance.
In the meantime, the current paper EHCs can be streamlined and the opportunity should be taken with the change to the new format EHCs to print certificates that do not require deletions of non-relevant / non-applicable paragraphs. Currently the EHCs contain all the information covering all 3rd countries irrespective of their animal health status and, based on their 3rd country listing, the signing vet crosses through, stamps and initials all those requirements that do not apply. This is time consuming, prone to error and leads to heavily over-written and over stamped EHCs. This has been a major source of error and misinterpretation. If the new format EHCs from21 April 2021 were set up to only print applicable paragraphs, this would be a major improvement.
4) How useful and responsive were the guidance provided by Government?
Senior and junior government officials have worked hard to help businesses with problems overcome them and have been very reactive to problems raised. This is much apprciated
Guidance still needs addressing better and communicating the guidance needs to improve. Webinars and briefings were a mixed bag some very good and some poor and the speakers were barely up to speed, sometimes they were unable to answer some quite basic questions and sometimes they gave incorrect or confusing answers.
Most exporters are fully familiar with export health certification procedures and, in any event, this work is carried out by official vets. There is far less familiarity with customs and VAT procedures and, while guidance was provided, it was not particularly user friendly and assumed a high degree of experience and knowledge. Guidance needs to consider more carefully that many, if not most businesses were engaging in export procedures for the very first time having never exported before.
5) What lessons can the UK learn from other countries?
Given the uniqueness of the UK situation, there are not that many practical lessons we can draw from other countries that export to the EU.
The comparable near markets have different trade arrangements with the EU being either in the Customs Union or Single Market. The distant markets do not have the same challenges in terms of moving fast-moving goods at pace, sometimes in small but frequent consignment into the EU. There few comparable arrangements to that the UK faces in trying to maintain pre 31/12/20 trade patterns in the post TP environment.
Where the UK could usefully look is at the options for a greater degree of co-operation on veterinary and public health standards. While a veterinary equivalency agreement along the lines of the agreement between the EU and New Zealand might reduce the requirement for physical checks on consignments, it does not remove the requirements for certification and documentation checks. What is needed is an agreement which, while not tied to regulatory alignment, is based in a high degree of mutual recognition and a bilateral consultative process which ensures that standards are broadly aligned on an ongoing basis. The arrangements between the EU and Switzerland and the functioning of its Joint Veterinary Committee are a good example of this. Friction is minimised because there is an agreement that there is a Common Veterinary Area. Establishing this alone would completely remove the need for veterinary controls and there is no practical reason why the UK should not want to agree to this. Among other things, it would resolve most of the issues regarding the movement of products of animal origin from GB to NI.
6) How ready is the UK to introduce checks on imports
It is quite apparent that the UK is currently not ready to introduce checks on imports. Although, superficially, there is a two stage process for products of animal origin imports from the EU with the requirement for export health certificates and the pre-notification of imports on the Import of products, animals, food and feed system (IPAFFS) from 1 April, government has stated that there will be no compliance checks at the border and goods will not be turned back if these are incorrectly completed. Indeed, it is not clear whether consignments will be rejected even there is a failure to pre-notify or if EHCs are absent.
This means that it will only be in July that checks start and compliance will be required.
Before 31st Dec 2020
After 31st Dec 2020