Brexit challenges & opportunities for EU & UK
seafood traders Francis Murray
24 June 2021 10 – 12AM CET
Timetable• Speaker 1. Dr. Francis Murray (Foresight Aquaculture)
Introduction & overview the UK internal marketSpeaker 2. James Green (Whitstable Oyster Company)
Brexit Impacts & adaptations by an export-dependent shellfish SME• Speaker 3. Ivan Bartolo (Seafish UK)
Regulatory challenges & the external marketSpeaker 4. Carlos Conceição (Atariya Foods)
Brexit Impacts & adaptations by an import-dependent food service SME
Q&A Panel sessions: The above speakers will be joined by: • Mr. John Bostock (Foresight Aquaculture)
Prof. Jimmy Young (Emeritus Professor applied marketing University of Stirling)Olumide Sobayo (Atariya Foods)
Key Questions
1. Brexit impacts on UK seafood trade & prices?
2. Market barriers, adaptations & potential opportunities for industry & consumers?
1. Brexit impacts on UK seafood trade & prices?
Brexit & UK fisheries – supply-side bias?• UK key belief that 1973 British EEC entry deal was unfair
• CFP: EU-based fleets landed 8x more fish in UK than British vessels in EU waters
• ‘Cod Wars’ & loss of UK distant water demersal fleet with 1976 200-mile Icelandic EEZ?
• EU sought quota share status quo up to 25years to prevent ‘economic-dislocation’
• 8 member countries most affected supporting 6,000 FTEs in entire seafood sector: esp. France, Netherlands, Ireland & Denmark
• UK sought annual quota talks on % stocks within each side’s EEZ (zonal attachment)
• 57 of 90 fish categories with quota in UK EEZ (6 in Norwegian bilateral agreement)
Spain, Portugal
Source: Guardian 2019
The EU-UK Trade & Cooperation Agreement (TCA) 31 Dec 2020
• Post-Brexit mutual tariff & quota free trade - 5 ½ year transition period• 25% increase in value of UK landings – cf. ‘80% UK Govt. promise’ • Post TCA right to repatriate 100% of EU quota allocation from UK EEZ??
Market consequences – less well articulated?• Close integration of UK-EU seafood supply chains: ‘Knock-on effects of disruption
can grind the seafood supply chain, from fishing boats to haulage, to a halt very quickly’
• EU is the largest seafood market in the world and a net importer of fish.• 71% of British seafood exports to the EU - reciprocal dependency on EU imports• European fleets in UK waters often specialise in fish less popular with British
consumers• Wider ‘market access’ & potential for tariffs on British seafood sold into EU
• Tariffs on UK processed goods using EEA/EFTA & third-country raw-materials• Trade-offs - Norwegian access to UK seafood market & UK exports to Norway• In 2019: fisheries £747m & financial services £126bn contribution to UK GDP
• Greater impacts of non-tariff barriers (NTBs) on smaller enterprises across the value-chain, export v import & sectors (e.g. shellfish) – still evolving
Other supply-side factors?• Declining quota trends
41% fish stocks in NE Atlantic zone inc. the North Sea now overfished (Oceania)
• Global warming & northward movement of migratory fish stocks
• Separate bilateral fishing deals required with EAA non-EU member states
• Annual access & quota negotiations with Norway stalled
• Future of the Kirkella; the newest & largest UK registered distant water factory vessel & last in Humberside in doubt (Icelandic-Dutch-owned)
UK seafood production baseline 2019 (LWE)
• Total capture landings 622k t (£987m) - 11% vol & -2% value YoY (due to quota reductions)UK vessels land 400k t/yr in the UK
& 200-300k t/yr abroad
• Total aquaculture 238k t• Mainly salmon; trout & mussels• 23% of UK seafood production & rising• Salmon 204k t +31% YoY (highly consolidated)• Aquaculture higher mean unit value
UK Fisheries 2019• Shellfish: Scallops, whelks, clams, Nephrops,
lobster, prawns• Pelagic: Herring, sardine, mackerel, blue whiting
• >50% UK vol but only 25% value
• Demersal: Cod, haddock, plaice, turbot, anglerfish
Source: MMO 2020
• 2019 - 5,911 UK reg. vessels• 80% <10m – higher unit value inshore spp.
Pre & post-Brexit landings UK vessels by sector 2019-2021 (LWE t)March & April
HMRC 2021
UK World Seafood Trade 2019“We export the majority of what we catch in UK vessels & we import the majority of
what we eat in the UK”
• Most UK production exported to EU neighbours & >2/3 of domestic consumption imported from world & EU
• The UK has been a net importer since 1984 - In 2019:• Imports 854k t (£3.6 billion) against Exports 496k t (£1.9 billion), • Deficits 27% volume (358k t) & 31% value ($1.7 billion) – warm water shrimp
Source: MMO
Imports
Exports
Deficit
Seafish trade balance 2019: • Total imports 721k t - £4.79/kg• Total exports 452k t - £4.43/kg• 269k t deficit worth £1.45 billion
UK – EU27 Seafood Trade 2019• Combined UK-EU trade = 42% of UK-global trade
• Volume 604k t + 6% YoY worth £2.6bn + 7.7% YoY• Average price £4.22/kg + 1.7% YoY
• UK had a 19% volume (& unit value) surplus with EU• Most EU-UK import: salmon, tuna & cod from Germany, Sweden & Denmark• Most UK-EU export: salmon, mackerel, herring, Nephrops to France, Spain &
Republic of Ireland
% of UK fish exports by species going to EU in 2019• Pelagics, cod & shellfish with
greatest export dependency(Source: HMRC)
UK - EU27 Seafood Trade 2019 (000’s mt)
47 22,5 15,1 13,2 7,2 1,8
89,5
196,3
15,8 13 3,632,4
228,7
050
100150200250
Salmon Cod Tuna Mackerel Haddock Sardines Other fish Total fishexcl.
shellfish
Shrimps &prawns
Othershellfish
Mussels Totalshellfish
Total allfish
Volu
me
(000
's m
t)
64,0 49,2 32,2 11,0 7,5 6,0
96,0
265,9
3,4 10,7 12,241,2
67,5
333,4
0
100
200
300
400
Salmon Mackerel Herring Cod Saithe Sardines Otherfish
Total fishexcl.
shellfish
Mussels Shrimps& prawns
Crabs Othershellfish
Totalshellfish
Total allfish
Volu
me
(000
s mt)
UK import total 229mt
UK export total 333mt
Source: HMRC 2021
86,3 80,256,9
107,3 107,2
64,7
0
50
100
150
200
250
2019 2020 2021 2019 2020 2021
Import Export
Volu
me
(000
s mt)
EU27 EAA/EFTA Third Country
19,0 17,5 13,9
25,020,0 20,9
0
10
20
30
40
50
60
2019 2020 2021 2019 2020 2021
Import Export
Volu
me
(000
s mt)
Pre & post-Brexit UK seafood trade volume (‘000 mt)
Jan to Apr Apr
EU27 EEA/EFTAThird
CountryGrand Total
Import -27 40 12 4Export -16 14 -24 -18
EU27 EEA/EFTAThird
CountryGrand Total
Import -34 22 -2 -9Export -40 17 -25 -36
Data source: HMRC 2021
Apr - 2019-2021 YoY % changeJan to Apr - 2019-2021 YoY % change
Fish & fish preparations
Export Export
£3,80£4,00£4,20£4,40£4,60£4,80£5,00£5,20£5,40£5,60
2019 2020 2021 2019 2020 2021
Import Export
Vol w
eigt
ed A
vg £
/kg Apr
EU27 EEA/EFTAThird
CountryGrand Total
Import -0.5 -4.0 -0.2 -1.6Export -2.4 6.0 0.0 1.3
Apr - 2019-2021 YoY % change
Pre & post-Brexit UK seafood trade -Volume-weighted mean unit value (£/kg)
Data source: HMRC 2021
£3,80£4,00£4,20£4,40£4,60£4,80£5,00£5,20£5,40£5,60
2019 2020 2021 2019 2020 2021
Import Export
Vol W
eigh
ted
Avg
£/kg
EU27 EAA/EFTA Third country
Jan to Apr
EU27 EEA/EFTAThird
CountryGrand Total
Import -0.5 -8.7 -0.2 -3.5Export -2.1 1.4 0.0 -0.1
Jan to Apr - 2019-2021 YoY % change
Fish & fish preparations
Export Export
Jan to Apr Seafood Trade Vol - by Country
0
5
10
15
20
25
30
35
2019 2020 2021
Import
Volu
me
(000
s mt)
NORWAY
CHINA
ICELAND
GERMANY
SWEDEN
DENMARK
FAROE ISLANDS
VIETNAM
ECUADOR
NETHERLANDS
POLANDImport
0
5
10
15
20
25
30
35
2019 2020 2021
Export
Volu
me
(000
s mt)
FRANCE
IRISH REPUBLIC
NETHERLANDS
U.S.A.
SPAIN
CHINA
DENMARK
ITALY
POLAND
GERMANY
LITHUANIAFish & fish preparations Export
Imports to UK 2019-2021 YoY change2021 top 12 = 142k t (68%)• Norway + 139%• Ecuador + 244%• Germany – 44%• Denmark – 43%
Exports from UK 2019-21 YoY change2021 top 12 = 74k t (79%)• France + 9% (Apr rebound)• Lithuania + 271% to 6.3k t• Poland + 70%• Irish Republic – 79%• Netherlands – 66%• Spain – 61%• Denmark – 80%• Italy – 69%• Germany -89%
HMRC 2021
Brexit impacts on farmed salmon trade• 19,410 t salmon (>£100m) exported to EU in Q1 2021, up on 11,500 t (£84m)
in Q1 of 2020 (SSPO)• Additional EU transit delay of 2-4hrs per load for health certification &
discounting – loss of comparative advantage for EU v third-country markets• £11m loss attributed to Brexit:
• Discounted market prices assoc. with customs delays• £200k/month on paperwork, logistics & veterinary costs. • ‘Teething’ v longer term-structural problems? (Ivan)
• Unharvested fish – in 2020 21% of farms (210) applied for SEPA derogations on biomass limits; on-going application re. customs delays & quality risks
Salmon fillets Avg. UK Retail Price 2017 to May 2021
Source: ONS 2021
Brexit
May 2021: £13.69/kg
Whitefish fillets Avg. UK Retail Price 2017 to May 2021
Brexit
May 2021: £15.86/kg
Source: ONS 2021
Preserved, processed fish & seafood
Brexit
May 2021: 117.1
Source: ONS 2021
Seabass & seabream retail price by form & multiple-outlet Nov 2020 & Jun 2021
Survey data
2. Market barriers, adaptations & potential opportunities for industry & consumers??
UK seafood market channels • >2/3 all sales through retail multiples• Retail sector & its UK processing supply
base highly concentrated • further amplification by Covid & Brexit • high entry barriers
• HoReCA forecast 9% rise in 2021 after 14.75% fall in 2020
• But - deferred rents, social distancing & capacity reduction, staff shortages
• >150,000 jobs to be shed post-furlough
UK species & form preferences• Preference for ‘Big 5’ species (65-75%: cod, tuna, salmon, haddock &
prawns) still increasing - but• Shift from wild caught white fish (cod & haddock) to farmed spp.
(salmon & warm water prawns)• Generally poor demand for whole fish in retail, in favour of fillets &
processed products• Especially pre-packed chilled (defrosted) & to lesser extent frozen
Pre Covid-Brexit consumption trends• Value growth but declining consumption
(lowest since 1982)• 25% decline in retail purchases over 10 years
= £5.4 billion lost sales• Demographic change, loss of cooking ability & fall
in at-home consumption (pre-Covid 19)• Ambient & frozen retail down; ‘fresh’ sales up• Demand growth for prepared fish products
& salmon
DEFRA family Food 2019
Post Covid/ Brexit demand drivers• Income inequalities: exacerbated by uneven Covid19 recovery – lower
discretionary spending?• Disposable income: UK GDP-growth revised to 5.7% for 2021; still 4%
lower in 2025 than pre-Covid/ Brexit forecast (-£1,350/person/yr)• Uncertainty re. monetary policy, inflation, exchange rates
• Sterling >5% appreciation against Euro post-Brexit
• Govt. policies for increased domestic fish consumption?
£: Euro XR Jun 20 – Jun 21
UK Gini coefficient disposable income
1977-2019
Transition challenges & opportunities• Challenging retail prospects for less familiar, hitherto exported species• Greater substitution opportunities for species that can be converted
to more popular processed forms• Increasing demand for warm-water prawns – little evidence of
domestic Nephrops substitution despite discounting• Smaller processors & wholesalers specialised in food service heavily
impacted - absorbing losses; hoping regulatory burden will ease• Loss of flexibility for small volume ‘just in time’ specialist sourcing for
high end food service • Fast food & fish & chips >40% HoReCA – ‘Staycation’ boom…
Direct Sales• Fishing vessels, processors, fish-mongers – developed or expanded
small-scale markets based on direct sales – including online• First lockdown internet food sales increase 125% & continue to grow• Vegetable box concept extended to seafood - building customer
relations based on freshness sustainability and provenance attributes• Capture of market share by disruptive technology delivery companies;
Uber Eats, Deliveroo, Just Eat etc.
% Change value internet food sales Jan 17 to Nov 21
Thankyou
https://www.eurofish.dk/contact-uswww.foresightaqua.com
Francis [email protected]
John [email protected]
Appendices
• UK and EU landings by EEZ & domestic/ foreign ports• Pre & post-Brexit UK seafood (fish & fish preparations) trade to/from
EU, EAA/EFTA & third-countries: value• Pre & post-Brexit UK seafood (fish & fish preparations) trade to/from
country: value
2019 Landings by EEZ (LWE)• UK vessels from UK waters:
• 81% of fish volume (502k t)• 87% of first-sale value (£851m)• Declining volume increasing value
• UK vessels from EU waters:• 15% of volume (91k t); 11% from Irish EEZ• 8% of first sales value (£81m)
• Mainly from NE Atlantic waters• EU vessels volume
• 27% (706k t) from UK waters• 68% (1.8m t) from EU waters
Source: MMO 2020
2019 Landings into UK by EU/EEA vessels (t)• 51k t –5% YoY• 57% demersal, 39% pelagic, 4% shellfish• 31% of total from Norway (demersals)
2019 Landings into EU/EEA by UK vessels (t)• 231k t –15% YoY • 37% of UK landing volume & 23% of value• 60% pelagic (mackerel & herring; reduced quota)• 36 % of total to Norway (pelagics)• 20% to Netherlands (UK reg., Dutch owned)
Source: MMO 2020
£0
£200
£400
£600
£800
£1.000
£1.200
2019 2020 2021 2019 2020 2021
Import Export
Valu
e (£
mill
)
EU27 EAA/EFTA Third Country
Pre & post-Brexit UK seafood trade value (£mill)
£0
£50
£100
£150
£200
£250
£300
2019 2020 2021 2019 2020 2021
Import Export
Valu
e (£
mill
)EU27 EEA/EFTA
Third Country
Grand Total
Import -19 14 -7 -6Export -32 19 -43 -36
EU27 EEA/EFTAThird
CountryGrand Total
Import -32 41 3 0Export -6 -7 -31 -15
Data source: HMRC 2021
Jan to Apr Apr
Apr - 2019-2021 YoY % changeJan to Apr - 2019-2021 YoY % change
Fish & fish preparations
Export Export
020406080
100120140160180200
2019 2020 2021
Export
Valu
e (£
mill
)
FRANCE
U.S.A.
IRISH REPUBLIC
SPAIN
CHINA
ITALY
NETHERLANDS
GERMANY
POLAND
SOUTH KOREA
Fish & fish preparations Export
0
20
40
60
80
100
120
140
160
2019 2020 2021
Import
Valu
e (£
mill
)SWEDEN
ICELAND
NORWAY
FAROE ISLANDS
CHINA
GERMANY
VIETNAM
DENMARK
INDIA
ECUADOR
NETHERLANDS
POLANDImport
Jan to Apr Seafood Trade Value - by CountryImports to UK 2019-2021 YoY change2021 top 12 = £724mill (70%)• Norway + 135%• Sweden + 63%• Ecuador + 157%• Iceland – 24%• Faroes – 37%• Germany – 52%
Exports from UK 2019-21 YoY change2021 top 10 = £328mill (82%)• France + 5% (Apr rebound)• Poland + 109%• Irish Republic – 77%• Germany - 92%• Italy – 74%• Spain – 68%• China – 66%• USA – 38% HMRC 2021