Fears of UK Food Crisis Post Brexit

UK grocers worry how the countries departure from European Union will impact food shipments ( MGN )

(Bloomberg) -- Brexit would lead to an unprecedented food shortage if the U.K. leaves the European Union without a deal, the CEO of the country’s second-biggest grocer said.

“The impact of closing the borders for a few days to the free movement of food would result in a food crisis the likes of which we haven’t seen,” J Sainsbury Plc Chief Executive Officer Mike Coupe said in an interview. “It’s inconceivable to me that there won’t be a solution found.” 

Tensions are simmering between London and Brussels, with U.K. Prime Minister Theresa May saying Wednesday that no one in her position could ever agree to the draft Brexit treaty published by the EU. May is seeking to get the EU to sign on to a transition phase at a summit of leaders later this month, but Michel Barnier, the EU’s chief Brexit negotiator, warned Thursday that any such agreement could still unravel before Britain’s scheduled exit in March 2019.

Almost half of the food eaten in the U.K. is imported. Trade barriers would be especially damaging to Britain’s fresh-food retailers, who rely heavily on the unencumbered movement of perishable goods throughout the EU. In 2016, the U.K. imported 22.4 billion pounds ($30.8 billion) worth of meat, fish, dairy products, fruit and vegetables, according to the Department for Environment, Food and Rural Affairs.

Officials at Dover, the island nation’s busiest port, estimate that an extra two minutes to clear trucks through customs would lead to 17-mile (27-kilometer) traffic jams. EU President Donald Tusk warned Thursday that frictionless trade would be impossible with the U.K. if it sits outside the customs union. 

“At the moment we put tomatoes on lorries in southern Spain, they drive for 24 hours and arrive directly in our distribution centers unencumbered,” said Coupe, whose company trails only Tesco Plc in U.K. food sales. “Anything that puts a barrier in that flow will increase the cost and reduce the freshness.”

Former Prime Minister John Major said this week that the likelihood of the U.K. leaving without a deal is increasing because of May’s intent to exit the customs union and single market.

In a speech on Friday, May will call for the “broadest and deepest possible agreement -- covering more sectors and cooperating more fully than any free-trade agreement anywhere in the world today,” according to excerpts released by her office.

The U.K. government is seeking to leave the EU single market and customs union so that it can take control of its own laws, curb immigration and have the freedom to sign new trade deals with other countries.


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