'Brexit to chop food bills', said the headline in the Sun on Sunday this weekend. The paper ran some research from the campaign group Leave Means Leave, which claimed food prices could fall by hundreds of pounds a year if tariffs are axed after Brexit. Though nobody knows what deal we will strike with trading partners once we leave the EU, it’s worth exploring the basis of Leave Means Leave’s research. It hopes we will enter into a completely tariff-free world. No more eye-watering taxes slapped on the likes of Tate & Lyle’s imported sugar cane, which caused the company to lose £20 million last year. All that new-world wine and South American beef, which attracts a tariff starting at 13 per cent, should suddenly be free to enter Britain, free of any restrictions. Hooray for that. Proper free trade. Leave Means Leave's research, however, has two fundamental flaws. I know a little about this, because food prices post-Brexit is a topic that I have been exploring for Channel 4 Dispatches, airing tonight. How will shoppers win - or lose - from the UK’s exit from European Union?
First, Leave Means Leave’s research suggests that a bottle of prosecco would fall from £7 to £6.80 and a lettuce could fall from £1.25 to £1.12. Prosecco, by definition, is made in Italy. It can only be made in Italy. So, it currently attracts no tariffs - that’s one of the advantages of being in the European Union. It is baffling how it could become cheaper once we leave. Lettuce, along with other fruit and veg, are indeed often imported, especially out of season. But Spain and The Netherlands are responsible for 59 per cent of all our veg imports. We import very little veg and outside of the EU.
In fact, the figures are roughly as follows. Of all the food we eat in the UK, 52 per cent is home-grown. Of the rest, 29 per cent is imported from the EU. That leaves just 19 per cent from outside the EU – the stuff that could become much cheaper if we enter a tariff free-world. But, even assuming that 19 per cent of non-EU meat, exotic fruit, and out-of-season green beans, becomes cheaper - and, indeed, becomes a bigger proportion of our diet - it fails to address how British farmers will feel about this. Will an Aberdeen beef farmer stand by while cheap Brazilian meat floods in?
It seems unlikely. Will a Norfolk sugar beet farmer give up the protection he currently enjoys in order to give a break to Tate & Lyle’s sugar cane from Australia or the Caribbean? Again, this is doubtful. But even if we do strike advantageous trade deals that allows for cheaper food imports without damaging our own farmers, the Leave Means Leave research fails to address the real elephant in the room: the plunging value of the pound. Food is becoming more expensive because sterling has fallen 19 per cent against the dollar. It doesn’t matter whether food is made in Britain or imported. The pound matters.
The Dispatches programme features Wyke Farms, a 200-year-old family-owned dairy in Somerset, and Britain’s third biggest cheese brand. Despite making cheddar for UK supermarkets using British milk, its costs rocketed within a month of the EU Referendum, with each tonne of cheddar costing £1,000 extra to produce, a 30 per cent increase. The price Wyke had to pay UK farmers went from 19p a litre before the referendum to 29p a litre in January 2017, because milk - in powdered form - is an international commodity, traded in dollars. Farmers can, if they chose, sell their milk on this market rather than to British food producers. Richard Clothier, its managing director, says that though shoppers have not seen price rises in cheddar on supermarket shelves, it is only a matter of time. He points out that the supermarkets have started to accept some, if not all, the higher costs and, in turn, they will be passed onto our weekly shop:
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'Obviously the price has to go up, it’s inevitable, the cheese costs 30 per cent more to make and it’s just a question of how quickly we can make that happen.'
Once we finally leave the EU, I hope - like Leave Means Leave - we end up with cheaper food. It’s possible. But, over the next couple of years, we’re all going to have to get used to a return to food inflation. That’s not possible. It’s already happening.
Dispatches – Supermarkets: Brexit & Your Shrinking Shop is on Channel 4 tonight at 8pm