Widespread uncertainty has characterised Britain’s agri-food sector in recent months, which is highly exposed to internal and external factors, as well as the introduction of new requirements and certifications that are potentially costly for producers and importers.
The value of British agricultural production in 2023 was almost £35 billion (more than EUR 40 billion), of which 51% came from livestock farming, 32% from crops, and 8% from public subsidies. However, due to lower prices of major commodities, the value of output has decreased by 10% over the last year. The decrease was not offset by a drop in input costs. The 9.8% increase in the National Living Wage (the minimum wage for workers aged 21 years and over) in April will also soon have an impact on business costs for manufacturers and supermarkets, while household spending on food and alcoholic beverages fell by 1.2% to £245.5 billion in 2023 due to rising prices.
On the domestic level, moreover, the “Not for EU” labelling requirement, which is to be implemented across the entire UK market, is among the innovations most feared by the industry due to the impact on costs. The Food and Drink Federation (FDF) has estimated the cost of the initial implementation of the measure at £150 million (€180 million) and a further £250 million (almost €300 million) annually for actual implementation. The introduction of the BTOM, the new border control system, is also causing great concern, mainly due to the unclear picture of increased costs for importing agricultural raw materials and the level of adequacy of control infrastructure, as well as the preparedness of European Union (EU) exporters. Further concern comes from the Extended Producer Responsibility measure, the programme adopted by the UK government to reduce the impact of packaging on the environment, whose tariffs are still unclear and whose estimated cost is around £1.7 billion (€2 billion).
Another constraint for the sector’s development is the labour shortage, on which the government is trying to intervene with a short and long-term strategy to facilitate access to foreign labour, especially seasonal labour, on the one hand, and to reduce the sector’s dependence on these workers on the other. To do this, it is investing in automation and boosting the attractiveness of the sector, with the aim of attracting local human resources and specialised technicians. Also downstream in the supply chain, in the catering sector, staff shortages and the rising cost of raw materials used are having a significant impact on business. However, according to the Lumina UK Eating Out Market Report 2023, the eating out market would grow by 5% in 2023 compared to 2019.
In terms of foreign trade, data confirms a structurally deficit trade balance also for 2023, with a strong dependence on imports from the EU countries. Despite the reduction in exported volumes for many product categories, Italy maintains a very high ranking among suppliers of fruit and vegetables, wine, cheese, and olive oil.
