Since Food From Britain, the government agency set up to promote the country’s food exports was closed in 2009, the debate has raged over how the UK should push its wares overseas.
The current coalition government has often emphasised how important the UK’s food manufacturing sector is to the country’s recovery – and how vital success in export markets is to both the industry’s and the nation’s economic performance.
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Some UK food manufacturers have praised the Government’s efforts to help exporters, notably the assistance that another agency, UK Trade & Investment, can provide within markets. Others have been cautiously positive, noting how the current organisation in place compares to a distinct agency like Food From Britain. Others have glanced nervously at the likes of Ireland, Germany and Spain – and competitors further afield like Canada – and the work they are doing to boost their industries on the world stage, notably key emerging markets like China.
One cannot doubt UK government ministers are more visible at international trade events. Next week, Owen Paterson, Secretary of State for the UK’s Department of the Environment, Food and Rural Affairs, will attend World Food Moscow, the latest trade show at which he has sought to boost the exposure of UK exhibitors.
The UK exports more goods to Ireland than to the BRIC markets combined but the Government has embarked on a series of initiatives to try to improve the presence of British businesses in these key emerging markets. The trade event in the Russian capital is the latest of those moves.
“Russia is very important, we are taking the largest food and drink delegation for many years and they’re right across piece. Russia as an increasingly wealthy nation, real interest in Western clothes, media and tastes and Britain, British food, British products are of real, iconic interest to them. I’m pretty positive,” Paterson tells just-food in an interview at his office in London.
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By GlobalDataWhile Paterson is at World Food Moscow, the UK government hopes to announce a new trade deal with Russia on British beef.
Russia lifted its ban on British beef last year but some restrictions remain in place, including on offal.
“We hope while we are there to finalise and announce a deal opening up the whole Russian market to British beef and lamb,” Paterson said. “Because that will be both prime cuts and offal, [it] could lead to a trade in up to GBP100m in exports in the next three years. We are pretty sure we are there. Our veterinarians and officials have been working very closely with the Russians for years now. It’s a real opportunity to open into a huge and expanding market.”
The UK food sector appears to need such opportunities. According to data issued by The Food and Drink Federation in March, exports of UK food and soft drinks to Russia fell 12% last year to GBP92m.
2012 was a year in which UK food and soft drink export sales were flat year-on-year. When it announced the export figures, the FDF cited falling GDP in the eurozone in the fourth quarter as a factor in the results. It also pointed to the “significant” strengthening of sterling against the euro in 2012.
The wet summer in the UK also affected food exports, it said. The FDF said a “poor” UK harvest in the autumn hit grain exports. The value of cereal exports in the fourth quarter dropped GBP160m compared to the last three months of 2011.
However, the results, combined with buoyant performance by the likes of Ireland, which saw its food and drink exports break the EUR9bn barrier in 2012, have caused some concern about how the UK industry – and government – can build the presence of British food companies overseas.
Paterson says the work the UK government has put in on the potential new deal with Russia on beef is an example of how it can help industry.
“This is a very good case. There have been a whole raft of animal disease crises around the world in recent years and you’ve got to be very respectful of individual nation states being very cautious and rigorous of what food and drink imports they allow in. Instead of fighting it, you’ve got to work with them. Our veterinarians, officials and embassy in Moscow have worked very closely with the Russian authorities.”
However, Paterson says once the government has worked to open up a market, companies then need to exploit the opportunity.
“Once you’ve got the door open, it’s up to the industry to make the best of this enormous opportunity. It’s not up to me to tell Eblex: ‘Go to such and such store or such and such meat distributor down in southern Russia. It’s up to them to open up. But without our help at government level, they can’t get in,” he says.
“It’s a team effort. You have to respect other people’s regulations, all the import certification demands. That’s where we can help at government level. After that, it’s up to them to grab that opportunity. It does take perserverance.”
Paterson says the UK government has made food exports “a major platform”. However, as he acknowledges, another way to boost the industry is to try to encourage the sector within the UK. “Twenty-two per cent of the food in this country is imported but could be produced here so there is an import substitution target,” he notes.
Nevertheless, there has been some concern with the industry about exactly what the UK government is doing to try to assist the domestic sector in another form of competition – not between exporting nations but between the country subsidiaries of major multinationals. How will, some industry watchers ask, the Government help the UK arm of an international company secure part of a capex budget when a multinational is considering where to put its resources?
Paterson points to the coalition government’s recent economic policies. “We’ve seen significant reductions in corporation tax, signficant increases in capital allowances and we’ve got a competitive labour market – those are the things that will decide whether a big food company like Nestle will stay in Britain or go elsewhere in Europe.”
