UK food and beverage bodies fear ramifications of NI deal

UK food and drinks industry bodies have expressed concern new rules governing products sent from Great Britain to Northern Ireland could have a major impact on manufacturers and processors.

While the exact contents of a bill that will see a power-sharing government restored to Northern Ireland after a two-year hiatus have not yet been published, organisations representing the food and drink industry fear proposed changes will hit their members in the pocket.

They are assuming ‘not for EU’ labelling will need to be included on products shipped from Great Britain to Northern Ireland, which could force exporting companies to establish separate production lines depending on where products are heading.

The Food and Drink Federation (FDF) further suggests the UK government is proposing that from October all products in the scope of ‘green lane’ product labelling – items not intended for sale outside the UK – should be labelled ‘not for EU’ when sold on the GB market, even if there is no intention to send the product to Northern Ireland.

It said: “Ambitious firms that want to expand through exporting will find they have to produce a separate production line at significant cost. Small production runs and volumes will make it too expensive to justify selling abroad. Some SMEs [small- and medium-sized enterprises] that already export will find the additional costs and burdens of running separate production and storage too much and will stop exporting.”

The UK government is expected to publish further details of what it has agreed with Northern Ireland’s Democratic Unionist Party (DUP) today (31 January) and push the bill enforcing the changes through Parliament tomorrow.

The DUP has refused to take part in power-sharing at Stormont, Northern Ireland’s devolved seat of government, for the past two years in protest at trade arrangements after the UK left the EU following the Brexit vote. It protested that those arrangements treated Northern Ireland differently to the rest of the UK.

Last year’s Windsor Framework replaced the Northern Ireland Protocol, which had effectively seen the province remain part of the European Union for trading purposes because of its land border with EU member the Republic of Ireland.

That meant goods exported from the UK mainland to Northern Ireland faced border checks, additional duties and paperwork, vets checking some meat products and a ban on others, including sausages.

While the Windsor Framework did away with most of the checks for goods staying within Northern Ireland – the so-called ‘green lane’ – it did not go far enough for the DUP.

But a new attempt by the UK government to end the impasse has been backed by the province’s largest unionist party.

The new deal will mean no checks on goods crossing from Great Britain to Northern Ireland, according to the DUP’s leader Sir Jeffrey Donaldson.

He has promised “zero checks, zero customs paperwork on goods moving within the United Kingdom”.

But that could be bad news for food and drinks manufacturers, it is suggested.

Karen Betts, chief executive of the FDF said: “We’re waiting to hear from the government on what yesterday’s deal with the DUP means for the food and drink industry. It’s critical to food and drink businesses that any deal does not cause unnecessary costs to manufacturers and, ultimately, to consumers across the UK – particularly when households are already grappling with a cost-of-living crisis.

“The impact and costs of requiring ‘not for EU’ labelling on products sold right across the UK, not only in Northern Ireland, would be significant. We estimate the costs would run into hundreds of millions of pounds.

“Manufacturers could be forced to reduce the number of products they sell in the UK and food and drink exports are likely to fall, particularly those produced by SMEs.”

Peter Hardwick, trade policy adviser at the British Meat Processors Association (BMPA), agrees. He said: “We share the wider concerns that this will add significantly to costs as it will require duplication of labels and businesses to hold more stock. It will also increase the risk of waste if packed products are limited to one market.

“Currently, a GB business which is fully compliant with EU rules, as the vast majority are, can have a single multi-language label or, as in the case of trade with the island of Ireland, an English language label along with the addresses of a UK and EU-based responsible business allowing it to use a single label to sell goods across the GB and the EU. If this option is lost, businesses will have to manage two sets of stock and labels without the ability to flexibly switch destination.

“The just-in-time supply chains that operate across the industry want manageable volumes frequently and flexibly to meet demand as it changes and to minimise stock and waste.”

Meanwhile, Rod Addy, director general of The Provision Trade Federation, shares the concerns expressed by the FDF and the BMPA.

He said: “We have case studies suggesting ‘not for EU’ labelling could cost millions of pounds for individual producers.

“GB-wide ‘not for EU’ labelling, which is currently slated to kick in from October this year is not in the Windsor Framework or Withdrawal agreement and not required by EU law. This is a government fix that placates the DUP as it avoids a border in the Irish Sea. It also ensures the EU market is not flooded with goods that haven’t passed through customs.

“It sounds clever but it will result in huge cost to business and is not needed for Great Britain. The problem is a lot of businesses either in the EU or GB supply the same product lines to EU and GB markets. Obviously, you can’t label these products ‘not for EU’, so instead companies will have to create two separate lines, re-jigging production schedules, adding to staff costs and run times and paying for different labelling or stickers.

“Even the sticker option costs millions when multiplied over millions of products.”

Just Food asked the UK government’s Northern Ireland Office for clarification on the matter and for a response to the industry bodies’ concerns.

A spokesperson replied: “The deal will be published in full later today.”