Written Evidence submitted by The Department for Environment, Food and Rural Affairs (SME0036)

 

Overview

In order to become a truly independent country, we left the EU’s single market and customs union. This has necessitated changes to border procedures and documentation since the end of the Transition Period on 1 January 2021. These changes have been disproportionately felt by the seafood and meat sectors due to the perishable nature of the product. Some of the greatest challenges have been felt by the fisheries sector due to the existing difficulties the industry was experiencing prior to 1 January as a result of COVID-19.

 

We can report there has been a steady overall improvement of flow at the border for seafood and meat through January and February. Latest figures given to Food Resilience Industry Forum (FRIF) 2 March was that trade is now up to 85% of pre 31 December 2020 trade. This reflects increasing levels of experience and knowledge across exporters, certifiers and border authorities as the practical implementation of new systems is better understood. All links in the process – catchers, farmers, processors, traders, officials – are gaining experience with the new processes. We therefore expect delays to continue to decrease.

 

Government programmes, communications and training to increase trader readiness help to mitigate delays. However, the complexities of individual businesses’ circumstances can still result in inconsistent transit times over the EU border. The delays have been and are caused by:

  1. Inconsistent readiness across both the meat and seafood sectors on 1 January;
  2. Existing business models, particularly the speed of transport-to-market cycles, being impacted by the time needed to complete the additional paperwork now required.
  3. User error when completing one or more steps in the export process;
  4. Inconsistent interpretation and application by officials. This is particularly true for Catch Certificate documentation, the Export Health Certificate (EHC), customs papers and groupage (where different products are grouped into a single consignment requiring multiple sets of paperwork, such as EHCs).
  5. Many firms have been struggling to get transport due to the combination of both COVID-19 and the introduction of new trading arrangements. This has also meant the cost of transport has significantly increased and exporters are having to absorb extra costs.

 

Engagement with the EU and its Member States

Defra’s priority is to keep exports moving and resolve remaining issues, and so we are working with industry and authorities in the EU to achieve this. Border authorities in France and elsewhere in the EU are also having to implement and understand the new processes. Our investigations and discussions have found inconsistent interpretation of the rules, between Member States, Border Control Posts (BCPs), and even within staff on duty at individual BCPs. This has meant that, even where a business is well prepared for the new trading rules, they have experienced delays at the border and do not see consistency in the time it takes to clear customs and Sanitary and Phytosanitary (SPS) checks journey-to-journey. This affects the ability to reliably deliver to customers on time. Where identified, we have worked quickly with relevant authorities to develop and promulgate agreed interpretations of guidance to assure consistency.

 

 

  1. Seafood and meat exports have been particularly affected by border delays and disruptions since 1 January, and why? 

 

Seafood

 

1.1.                   Parts of the sector have adapted and are managing well. For example, pelagic fisheries (which includes small fish such as herring, small mackerels and sardines) where exports generally consist of frozen fish to non-EU countries and domestic retail. We also found larger businesses were able to adapt quickly to resolve the difficulties encountered in the first two weeks of January, while smaller businesses, in particular those that export live shellfish, are finding it harder to adjust. This is because journey times can be more critical, and costs more prohibitive for the smaller loads.

 

1.2.                   The changes in trading arrangements for the fish and seafood industry are set against a backdrop of an industry struggling with COVID-19 restrictions, both within the UK and EU. Those traders reliant on the hospitality industry have seen demand and prices fall significantly over the last year.

 

Meat

1.3.                   Some perishable meat and meat product exports have felt impacts from border disruptions and delays. Our discussions have identified that adjusting to the need for EHCs, and the additional complexities that arise with groupage has been the most common problem for meat exports. Stakeholders say that the certification processes will require an adjustment to the 24 hour just-in-time supply chains to a 48 hour model that allows for more delays and provides a consistent and reliable delivery time for customers.

 

1.4.                   There has been a positive vote on the UK’s application to the Commission (in February) to remove the requirement for trichinella testing on all non-frozen pork products that have been certified as coming from controlled housing conditions.   The relevant regulation will be implemented on 21 April and so until then we are seeking assurance from importing Member States that they will accept these consignments of UK(GB) pig meat without the need for testing.

 

1.5.                   Official HMRC trade figures on meat exports for January 2021 are scheduled to be released on 12 March.

 

1.6.                   As with seafood, Defra is engaging directly with officials in EU Member States and the Commission, providing new guidance to certifying officers in GB, and working closely with key stakeholders, including the British Meat Processors Association (BMPA), and individual companies to ensure that businesses can adapt to minimise any impact on meat trade.

 

1.7.                   Certain Border Control Posts requested that EHCs were signed and stamped in a particular colour of ink. Through engagement with the European Commission we clarified that there is no specific requirement for a particular colour of ink to be used when signing and stamping EHCs, so long as the colour selected differs from that on the printed certificate. The Commission then communicated this to EU BCPs and we updated our certifying officers.

 

  1. What impact have delays and non-tariff barriers on seafood and meat exports to the EU had on UK businesses?

 

Seafood

2.1.                   Exports are taking place successfully and activity is slowly increasing, however, overall confidence in exporting is low, particularly among smaller businesses. The main concern for exporters is the length of time it takes to clear a consignment and there is evidence of businesses losing customers due to the unpredictability of clearance. Some businesses have now changed their business model from a 24hr fish-to-market journey to a 48hr cycle to ensure they can deliver consistently. We understand, through stakeholder discussions, that some businesses paused exports to the EU through the first part of January to avoid potential losses.

 

2.2.                   On the issue of the European Commission banning the import of live bivalve molluscs from class B waters, the UK believes that there is no scientific or technical justification for this. This is already impacting business and damaging markets on both sides of the channel. We will continue to seek a way for these businesses to access the EU market, recognising the existing high standards and history of trade between us.

 

Meat

2.3.                   Over half of the meat sector export trade is Products of Animal Origin (POAO) grouped consignments, and SMEs in particular, use this approach extensively. From discussions with stakeholders, we have identified that some logistics companies have, fully or partially, suspended grouped consignment trade to the EU.

 

2.4.                   Whilst official data on the impact of delays and non-tariff barriers on businesses exporting meat to the EU is not yet available, through stakeholder engagement a number of businesses have reported incurring additional costs or lost orders due to consignments that were rejected at the border. The Government has raised this with the EU and a response is pending.

 

  1. What are the medium to long-term implications of the non-tariff barriers for UK exporters and supply chains?

Seafood

3.1.                   For some seafood exporters, especially those using groupage approaches, businesses will need to adjust their processes to minimise the impact of non-tariff barriers. Whilst it is clear the hub model, as established in Scotland (where consignments of fishery products from different producers are brought together at a single food approved premises, a cold store, to be certified for export to the EU), has had some challenges, we are confident that this is a model that could support businesses effectively.  We are looking at what lessons and experience can now be shared and applied across the UK.

 

3.2.                   As exporters and EU authorities adapt to the new rules with a shared understanding of what is required, we expect to see an improved flow of consignments through BCPs.

 

Meat

3.3.                   Non-tariff measures largely take the form of higher trading costs for certification, inspection or customs-related costs associated with the UK trading with the EU internal market as a third country.

 

3.4.                   In general, the projected impact on farm-gate prices is a modest increase and is much smaller than the effects of tariffs. Projections indicate that the non-tariff impact on prices range from +7% for pig meat to -2% for barley.

 

3.5.                   For UK sheep, as an example, projections on the costs of non-tariff measures is less than the difference between the current price and the highest price recorded for this time of year over the last 5 years.  For UK sheep, non-tariff costs are projected at 2% of the price. Combining this with AHDB average sheep price data from the last 3 years, suggests that the price farmers receive could fall by around £1.80 per sheep. Using the current sheep price, which is unusually high compared to the 5-year average, gives a figure of £2.30 per sheep.

 

3.6.                   Supply chains may also undergo a period of adjustment which could mean there is a period where increased consumption of domestic production by UK consumers is encouraged.

 

  1. What steps should the UK Government take to mitigate these issues? What should its short and long-term priorities for action be?

 

4.1.                   We continue to speak to stakeholders, businesses, and domestic and European officials to identify challenges and respond to any new, or emerging issues. We are providing a range of indirect and direct support for traders and businesses to help them understand and implement new processes, particularly around certification and customs requirements. Our public guidance sets out what needs to be done at each step of the export journey, we share top tips and lessons learned, and host webinars. An online survey, with the journey package, will provide feedback and intelligence on export performance which will be used to improve future support. As well as broad engagement, we have provided direct and individual support to businesses to address the specific nature of some issues (e.g. how part of a form is completed, the correct tariff code to use).

 

4.2.                   We continue to provide guidance and support to Certifying Officers, updating them on common issues and interpretations by individual EU member states. Defra hosted webinars supporting Certifying Officers in the leadup to 1st January and, drawing on feedback from EU BCPs and traders, we have a rolling programme of briefing notes for Certifying Officers.

 

Seafood

4.3.                   For the seafood sector, our priority is to keep highly perishable fish and seafood exports moving at pace.  We are working with industry and authorities in the EU and hold weekly engagement with the French authorities and the EU Commission to resolve any areas of inconsistency, and to understand delays. These actions have reduced time taken for border checks, enabled us to provide updated guidance (e.g. in how to complete export paperwork), and improved business confidence.

 

4.4.                   Engagement on ink stamp colours for EHCs is again a high profile example of successful engagement with the EU Commission that has trickled down to BCPs and Certifying Officers creating a de facto change for the sector.

 

4.5.                   We have held sessions with our largest seafood exporters, offering them direct contact with export process experts from HMRC, Defra and the Marine Management Organisation (MMO). These sessions provide an opportunity to ask technical questions, make requests of Government, and inform us of exporting issues, helping to improve our guidance to the wider sector. Work is currently underway to establish sector specific sessions that will provide similar opportunities to groups of businesses exporting the same product.

 

4.6.                   We have established the UK Seafood Exports Working Group (attended by over 60 seafood businesses and organisations) which meets with Defra twice a week to address current export issues. It provides a central forum for the sector to identify and resolve key issues with UK government and the devolved administrations.

 

4.7.                   For the longer term, a Task Force has been established by the Scotland Office that will work collaboratively across UK and Scottish Governments, to resolve medium and longer-term export issues and increase confidence in the seafood and aquaculture supply chain.

 

Meat

4.8.                   Defra and the Devolved Administrations have set up the UK Agriculture Market Monitoring Group (UKAMMG). Through this, we will monitor the UK market situation across all key agricultural commodities, including the impact of any measures introduced for the import and export of commodities. The UKAMMG will flag where further investigation of market developments is required and keep policy teams and Ministers informed. 

 

4.9.                   We maintain a collaborative approach across the meat sector. For example, on 9 February Defra held a roundtable meeting with the pig sector, to facilitate discussion on industry-led solutions to their challenges.

 

 

  1. How effective and timely will the Government’s proposed £23 million support package for seafood exporters be?

 

5.1.                   To help exporters to continue to operate on 19 January the UK Government announced up to £23m to deliver the Seafood Disruption Support Scheme (SDSS). The purpose of the scheme was to support seafood exporting businesses affected by delays and disruption as a result of adjusting to new export requirements.  The scheme was open to the sector between 9 – 28 February will cover a proportion of losses incurred between 1 – 31 January. The scheme is now closed. The MMO is now assessing claims and will make payments over the course of March.

 

5.2.                   The SDSS was targeted at SMEs who had incurred an actual loss in the process of exporting seafood to the single market. Payments will cover a proportion of losses incurred and will be capped at £100,000. We targeted payments in this way to ensure that the fund could support all qualifying businesses and represented value for money to the taxpayer. The fund was targeted towards smaller businesses who may have less financial resilience. By targeting funding at losses incurred in January we were ensuring that support covered the period where the greatest losses were likely to have occurred and avoided setting a long-term precedent of financial support for change to export conditions.

 

5.3.                   The support was designed to cover actual losses that arose during export and therefore did not cover opportunity losses where an export did not take place, whether out of choice or because of new export rules. This was necessary to ensure that payments could be checked against evidence of losses. By their nature opportunity losses are far harder to define and verify so including them would have increased risks around value for money and fraud. The exclusion of business costs and opportunity losses has created some negative perceptions from the sector on the scheme.

5.4.                 Following the launch of SDSS we continued to monitor the market and listen to stakeholder feedback. In particular, the sector raised concerns that the SDSS criteria excluded those fishing businesses that had been affected by the closure of markets in the UK and abroad as a result of COVID-19, as well as export disruption. On 21 February, the Government announced an additional scheme, within the £23m funding envelope, to provide support to UK catching and shellfish aquaculture businesses. The Seafood Response Fund will open for applications in early March and will provide a grant payment to cover three months of average business fixed costs, for example maintenance and repairs, insurance and gear hire, incurred between January and March 2021.

5.5.                   As well as short term support, the Government has also committed funding for the development of the sector. The Government has met its manifesto commitment to maintain funding for the sector by providing £32.7 million through the Spending Review which will fund data collection, control and enforcement, and enable each nation of the UK to run their own industry funding schemes tailored to the characteristics of their sector. In addition, on 24 December, the Prime Minister announced an additional £100 million investment to rejuvenate the industry and coastal communities across the UK. 

 

  1. How useful and responsive were the guidance and support provided by the Government to business, before and since 1 January?

 

6.1.                   During the Transition Period, the Government took extensive measures to help traders prepare for 1 January. A comprehensive public information campaign was launched, reaching 17,000 people a week with targeted letters, phone calls, e-mails, webinars and events that were rolled out to raise awareness and to support traders prepare for the end of the transition period.

 

6.2.                   Before and after 1 January, the Government has produced a considerable amount of guidance across multiple platforms, which we then promoted to businesses through Defra, other Government departments and stakeholder channels. Guidance has included:

  1. Borders - guidance has focused on SPS checks for traders in general, and specific activity targeting the fishing industry.
  2. Effective trade -  we have encouraged companies new to dealing with customs declarations to appoint an intermediary to deal with import and export declarations on their behalf.
  3. Imports and exports – a step-by-step guide detailing how to import and export goods were made available and HMRC also ran a programme of webinars to support traders that can still be accessed online.

 

6.3.                   Reach of engagement with the guidance has been good, and we continue to respond to stakeholder feedback. We have undertaken regular engagement with stakeholders throughout the Transition Period and the beginning of 2021 to help shape our communications from an early stage. We have used a variety of existing and new forums to listen to concerns, discuss challenges and feedback progress. This has included F4, the Food Industry Resilience Forum and a new Fishing Industry forum. Within these forums, stakeholders have said that Defra is good at responding to businesses’ needs, ensuring we do not just rely on gov.uk but share complimentary products (handbooks, webinars, videos, step-by-step guides – so businesses can access information in a way that suits them).

 

6.4.                   Examples of our responsive approach include:

 

6.5.                   We have maximised reach by utilising various channels (direct to stakeholders, stakeholder channels, newsletters, forums, social media etc.), which saw increase in visits to GOV.UK pages across Defra’s areas.

 

Traders

 

6.6.                   Direct communications with traders were effective in driving views to gov.uk pages and the average time spent on page suggests good reach among target audiences was achieved.

 

6.7.                   Communications and engagement with traders included online resource hubs grouping complex forms, FAQs and process maps for new animal and plant health checks (NI showcase page). Updates and sources of information were disseminated through stakeholder forums, newsletters (e.g. Defra’s Food & Drink bulletin, HMRC monthly newsletter and the BEIS business mailing list), direct mail (e.g. to all Official Veterinarians and direct to traders) and via social media.

 

6.8.                   A simplified digital EHC leaflet was developed using insight gained from interviews with traders, with background on EHCs, who needed them and how to get one. This was distributed through GCS local, DIT delivery partners and International Trade Advisors. Throughout November and December 2020, we ran regular products of animal origin export webinars related to GB-EU movement which thousands of businesses attended. We also ran specific webinars regarding movement to NI in response to emerging challenges, which were welcomed by businesses.

 

6.9.                   Outwardly, Defra produced Gov.uk sector pages for vets, food and drink industry and farmers to signpost large amounts of relevant guidance for specific audience groups. This enabled us to provide a focal point for audience led campaigns. Case study videos on social media were posted between November 2020 and January 2021, around exporting equines, applying for CITES, REACH and exporting food.

 

Fishing

6.10.              Communications and engagement with the fishing industry included dedicated communications through stakeholder, media, social media and direct channels to launch the Seafood Disruption Support Fund and outline how to apply. We also conducted regular industry engagement to unearth issues and feedback update through the UK Export Group (twice-weekly calls) and the soon to launch commodity groups (to explain export processes for specific commodities). Defra also conduced dedicated 1:1 stakeholder engagement to address issues, two weekly and one monthly newsletters (from MMO and Defra) outlining key updates.

 

6.11.              Teams across Defra have produced digital resources including a webinar on exporting fish and fishery products for human consumption from Great Britain to the European Union (October 2020), the SPS Team developed a Fish export journey package covering end to end journey for exporting fish, and MMO created a one stop shop – a hub of all information the fishing industry needs to prepare for and navigate changes.

 

6.12.              Publicly, we have produced Gov.uk guidance, with communications directing people to this information. This has also included video walkthroughs – How to create a UK catch certificate, processing document, and storage document and one explaining the actions exporters need to take. Comms have also disseminated updates in the media including trade magazines such as a fishing News article from Minister Prentis and a press release on £100m programme to modernise their fleets and the fish processing industry.

 

  1. What can the UK learn from other countries who export food to the EU?

 

7.1.                   Defra has identified a number of lessons in analysing and evaluating the export strategies of key OECD countries, in which they highlight key sectors and target markets, and set bold targets. This is a model which Defra and DIT will follow in the new International Action Plan for food and drink exports, which is being developed in partnership with the Food and Drink Sector Council’s Exports Working Group, and which will take account of relevant Trade and Agriculture Commission recommendations.

 

7.2.                   The UK is unique among countries that export fish to the EU in that it exports large volumes of high quality live and fresh seafood to the EU, looking for the fish to reach the consumer in as little time as possible. Generally, exports from the UK’s competitors are frozen fish that have much longer journey times.

 

7.3.                   The UK has put in place structures that facilitate our exporters in accessing other markets (in the same ways as many trading countries) including identifying and seeking to address barriers to access.  The Department for International Trade has set up the market access barriers dashboard (https://market-access.trade.gov.uk/), which is a tool for businesses to submit MA barriers encountered when trading internationally.

 

7.4.                   For information, the 2016-20 International Action Plan can be viewed here

 

 

  1. How ready is the UK to introduce checks on food imports from the EU during 2021, and are there lessons to be learnt from the issues that UK exporters have faced?

 

8.1.                   The Government is introducing full import controls for GB-EU trade. Recognising the impact of coronavirus on businesses’ ability to prepare, the UK has taken the decision to introduce the new border controls in stages. This flexible and pragmatic approach has given industry extra time to make necessary arrangements.
 

8.2.                   Since January 2021, for all high-risk live animals and high-priority plants and plant products, traders have been subject to physical checks at the point of destination or other approved premises, and businesses have been required to obtain the relevant documentation and to pre-notify for certain movements. At this stage, they are not be required to enter GB via a point of entry with an appropriate Border Control Post (BCP).

 

8.3.                   Preparations for further import controls are underway for the introduction of checks on all products of animal origin (POAO) – for example meat, honey, milk or egg products.  All regulated plants and plant products will also require pre-notification and the relevant health documentation. Physical checks will continue to be conducted at the point of destination until we have sufficient BCP capacity to conduct checks on arrival. If traders are importing POAO or a regulated plant and plant product, they must be prepared to submit pre-notification and the relevant health documentation.

 

8.4.                   Once our import controls are fully operational; SPS goods must arrive at an established point of entry with an appropriate BCP and there will be an increase in physical checks and the taking of samples. SPS checks for animals, plants and their products will take place at GB BCPs. Traders must enter GB via an appropriate Border Control Post either at port or an inland site, with all necessary SPS documentary requirements.

 

Trader readiness

8.5.                   To ensure stakeholders are ready for the introduction of import checks, we are building on the experiences of exporters earlier this year. The next phase of readiness seeks to validate assumptions, update models, and seek assurance on the delivery of robust import and export capability during the implementation of the Border Operating Model. Our preparations include feasibility testing and mock operations.

 

8.6.                   Defra’s experience of delivering communications to exporters in the run up to 1 January and the issues that were encountered by GB exporters at the EU border since the end of transition have informed the department’s approach to import checks. Defra has put in place a bespoke suite of communications targeting EU exporters for the phased import milestones. This is being delivered through a dedicated programme of webinars, translated guidance for the EU audience and targeted marketing. The focus of Defra’s activity is to increase levels of compliance and understanding among EU traders with the actions that they need to take to export to Great Britain. In addition, Defra is amplifying the messaging to those GB businesses that receive imports from the EU, urging them to check that their EU counterpart is compliant with the new arrangements. This two-pronged approach, focusing on exporting EU business and importing GB businesses aims to reduce the overall risk of non-compliance. Defra is working closely with DIT, BPDG and FCDO colleagues to deliver key messages to EU stakeholders.

Resourcing

8.7.                   To support local authority (LA) readiness for delivery of the new import controls on animals and animal products, Defra has provided £14m funding to LAs in England to support Port Health Authorities (PHAs) with the recruitment and training of over 500 new staff, including Official Veterinarians, to support them with their readiness preparation. 

 

8.8.                   Defra is also working closely with the Animal and Plant Health Agency (APHA), who are responsible for carrying out checks on live animals, to ensure the recruitment and training of the additional staff required.

 

8.9.                   APHA has also recruited over 180 new plant health inspectors (PHSIs) to service the demand for import and export checks from January 2021. APHA has resources in place to meet current demand for phase 1 of the introduction of the post-TP plant health regime SPS checks for both imports and exports.

 

8.10.              A further recruitment campaign for PHSIs closed for applications on 18 January. These new staff will be deployed to deal with increasing trade volumes forecast over the coming months. APHA is considering whether another recruitment round is required.

 

Infrastructure

8.11.              Defra continues to work across Government and directly with ports and airports to prepare the necessary infrastructure, staff and IT systems for SPS checks to be completed. We continue to monitor port BCP delivery and will support ports to achieve an initial operating capability as import controls are phased in

 

8.12.              In assessing capability, some ports were identified as being unable to develop a BCP or extend an existing one within their own boundary due to geographical constraints. For Eurotunnel and Port of Dover in Kent, HMG is constructing two BCPs at nearby sites to support these ports. Subject to planning consent, there will be a BCP at Sevington, Ashford for Eurotunnel and a BCP at Dover Whitecliffs to support the Port of Dover. Department for Transport (DfT) are responsible for delivery of the BCPs in Kent.

 

March 2021