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UK grocers, fast food warn of major disruption from no-deal Brexit

UK grocers, fast food warn of major disruption from no-deal Brexit
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Peter Summers(Reuters)
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By James Davey

LONDON (Reuters) - Britain's food security could be threatened if it leaves the EU without a deal and suffers an abrupt hit to trade with the bloc, a lobby group representing firms including Sainsbury's, Asda, McDonald's and KFC said on Monday.

Business leaders have expressed alarm at the prospect of chaos at ports if Britain does not agree on the terms of its withdrawal from the European Union, scheduled for March 29.

The British Retail Consortium (BRC) made its latest warning in a letter sent to MPs. It was also signed by the bosses of supermarket groups the Co-operative, Marks & Spencer, Lidl and Waitrose.

"While we have been working closely with our suppliers on contingency plans it is not possible to mitigate all the risks to our supply chains and we fear significant disruption in the short term as a result if there is no Brexit deal," the letter said.

"We are therefore asking you to work with your colleagues in Parliament urgently to find a solution that avoids the shock of a no-deal Brexit on 29 March and removes these risks for UK consumers."

The letter was published ahead of key Brexit votes in Parliament set for Tuesday.

It noted that nearly one third of the food eaten in the UK comes from the EU. The situation would be even more acute in March when British produce is out of season, with 90 percent of lettuces, 80 percent of tomatoes and 70 percent of soft fruit sourced from the EU at that time of year.

"As this produce is fresh and perishable, it needs to be moved quickly from farms to our stores," it said. "This complex, ‘just in time’ supply chain will be significantly disrupted in the event of no deal."

The BRC noted that even if the British government does not undertake checks on products at the border, there will still be major disruption at Calais as the French government has said it will enforce sanitary and customs checks on exports from the EU.

The BRC letter highlighted the UK government's own data suggesting freight trade between Calais and Dover may reduce by 87 percent against current levels as a result.

"For consumers, this will reduce the availability and shelf life of many products in our stores," it said.

The BRC also expressed concern about the pressure on food prices from higher transport costs, currency devaluation and tariffs.

Only around 10 percent of Britain's food imports are now subject to tariffs. If the UK were to revert to WTO Most Favoured Nation status in a no-deal scenario, it would greatly increase import costs, which could in turn put upward pressure on food prices, the BRC said.

It said the UK could set import tariffs at zero but that would have "a devastating impact" on Britain's farmers, a key part of the supermarkets' supply chain.

The signatories said they were stockpiling where possible, but noted that all of Britain's frozen and chilled storage is already being used, with very little general warehousing space available.

They said it is impossible to stockpile fresh produce, such as salad leaves and fresh fruit, with supermarkets typically storing no more than two weeks’ inventory.

(Reporting by James Davey; Editing by William Schomberg and Peter Graff)

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