The result of the June 2016 referendum has elicited plenty of commentary. We pick out some of the key statistics:
73% of the UK’s agricultural (food and non-alcoholic drink) exports go to the EU, according to data presented at the Oxford University Brexit Seminar Series (OU Seminar).
65% of the 34,513 non-UK full-time employees are from the EU, and labour-intensive seasonal workers schemes are highly dependent on EU labour, with 21,250 workers from Bulgaria and Romania alone, according to the OU Seminar.
60% UK food production is below 60% of consumption and particularly reliant on imports for fruit and vegetables according to the Food Research Collaboration paper of March 2016 (FRC Report).
40% The approximate percentage by which exports have grown over the last 10 years according to DEFRA.
£21bn The food trade gap shows that the UK is reliant on the rest of Europe for food and the gap is a drain on the national balance of payments, according to the FRC Report.
40 It is estimated that there are approximately 40 different fake Scotch whiskeys in Australia. As the UK leaves Europe, it is hoped that there will be additional resources to control intellectual property violations.
30 In a letter to the Guardian newspaper in December 2016, 30 food and drink associations have warned that the UK faces higher food prices without continued access to EU workers. In a letter published in the Guardian, they argue that EU workers play an important role in the supply chain and some are already starting to leave.
13.2% The House of Commons Library has estimated that 13.2% of UK primary and secondary legislation enacted between 1993 and 2004 was EU related. The review of all EU-related legislation, as well as that which will be transposed by the Great Repeal Bill, makes this potentially one of the largest legislative projects ever undertaken in the UK. Food and drink-related legislation will be a proportion of that 13.2% figure.
1 in 8 In 2014, the food supply chain contributed £108bn to the UK economy, employing 3.8m people, equivalent to 13% of national employment or, 1 in 8 workers according to DEFRA.
We have seen clients seeking advice on a smorgasbord of issues as businesses grapple with the result of the June 2016 referendum. Specific advice that our clients have sought include:
1. Impact on day-to-day contracts:
- What does material adverse change actually mean?
- Does the result of the referendum count as “force majeure”?
- Who bears any exchange rate risk?
2. Impact on branding:
- What steps should I be taking now to protect my brand?
Impact on workforce:
- Some of my best people are European; what should I be doing to retain them?
- I rely on seasonal workers from Europe: how can I continue to secure these?
3. Impact on data management:
- Notwithstanding the result of the referendum, the General Data Protection Regulation will come into force: how do I need to prepare for its introduction?
- As the impacts of the result of the momentous global political events of 2016 start to become a little clearer, locally sourced food will continue to grow in popularity.
- The plight of the NHS will continue to feature in the headlines. Healthy food options will increase in popularity.
- Consumers enjoy choice. Quality and service will win at the expense of loyalty. Retail food outlets will be responding by introducing delivery services and/or takeaways. Suppliers will need to think creatively about packaging to respond to the changes in consumer behaviour.
2016 – The Year of Great British Food was the start of a five-year DEFRA-led campaign to celebrate the best of our food and drink and build Britain’s reputation as a great food nation. A refreshing impetus from DEFRA in 2017 will include:
- assistance for exports
- supporting foreign direct investment
- helping to treble the number of apprenticeships in the food and drink industry
- increasing the number of protected food names
The Prime Minister announced that Article 50 will be triggered before the end of March 2017 and that the Queen’s Speech will include a Great Repeal Bill to repeal the European Communities Act 1972.
While the Prime Minister’s speech marks clear intent on timing on the government’s part, it does not spell out the approach the government will take in its negotiations for withdrawal from the EU, nor does it provide any detail on what the process will be for unpicking EU legislation from the UK statute book, and whether transitional provisions will be put in place.
The government has announced that the Great Repeal Bill will incorporate European Union law into domestic law, “wherever practical”. The government has indicated that these legal changes within the bill would take effect on “Brexit Day”: the day the UK officially leaves the European Union (EU).
The orderly departure from the EU will undoubtedly be the dominant work for 2017 and for years to come.
The strategic aims of the Food Standards Agency will wash down the legal issues. Stated achievements for 2016 include tackling campylobacter and the introduction of a sustainable funding model for meat official controls.
2017 should see the following activities of the FSA:
- a continued reduction of cases of human campylobacteriosis
- changes to FSA delivery models
- changes to food law codes of practice
- working through the implications of the Elliott Review with specific reference to the National Food Crime Unit
- publication of guidance on date marking on food; and
- movement towards a data-driven organisation
The Sugar in Food and Drinks (Targets, Labelling and Advertising) Bill will continue through the Parliamentary process. As previously reported, producers could take advantage of the R&D tax credit scheme to create significant savings.
Gavin Poole is a partner in the corporate team at Stephens Scown. If you have any queries then please do contact Gavin on 01872 265100, or by email email@example.com.