How Brexit is impacting small exporters and importers

One in four small businesses have halted exports to the European Union due to complications caused by Brexit, according to recent research by the Federation of Small Businesses.

The survey of more than 1,400 SMEs found that one in five had temporarily halted sales to EU customers, while a further 4% have decided to stop selling to the continent permanently. Small firms that rely on imports from the EU have also been impacted by the new rules that were brought in at the start of the year, with one in five having temporarily suspended purchases from the EU.

It’s no surprise why small importers and exporters have made these difficult decisions, when the FSB found that a whopping 70% had experienced shipment delays when moving goods around the EU since the start of the year.

“Big rules have been applied to small companies”

For the food and drink industry, these challenges can be particularly difficult to navigate when products risk going off if caught up in delays. James McGoldrick, managing director of Bradfords Bakers, told Speciality Food his business stopped exporting to the EU in January after its courier struggled with the transition and difficulties with increased paperwork.

“We had to stop exporting our gifts to the EU because with the additions of extra charges and the requirement of extra certificates, for which there was a cost, it quickly started to outweigh the original costs of the goods, and there was too much effort to put into making sure we could deliver these parcels,” he said.

“We’re a small business, so it’s hard to find the time and manpower it takes to keep up with all of these changes and new demands. Our gift hampers that were headed to the EU included the likes of cheeses, patés, wines, and tins of foods like soups or haggis. If a hamper includes all these items, we must get a certificate for each individual item as opposed to one certificate for the whole gift, which is plainly inconvenient for us.”

Many EU-based businesses have likely faced similar challenges, as online deliveries from the EU to the UK slumped by more than 50% since January, according to research from shipping platform Sendcloud.

Chocolate producers, whisky distillers and cheesemakers have been hit the hardest by post-Brexit export losses, according to an analysis of government statistics by Confectionery News.

Small producers have found the new rules to be particularly damaging to business. “Brexit has meant that big rules have been applied to small companies,” said James. He said his business has faced a loss of £90,000 from not being able to fulfil EU orders.

What’s next for small businesses?

James said he would like to start delivering to the EU again as soon as possible – particularly by the time Christmas orders start coming in September. “We get a lot of customer queries about when we’ll start this again. Expats tend to enjoy our gifts as they offer a taste of home.

“In a way, we’re comforted to know that exporters in both the UK and EU are facing these difficulties, and we know we’re not alone in fighting them. When both sides are adversely affected there’s more pressure for change so everyone can keep conducting business as close to usual as possible,” he said.

Big players in the industry, such as the British Meat Processors Association, have been working to find a solution to issues at the border, and recently launched a Brexit Impact Report.

“British companies who are dealing with the new issues on the ground are best placed to offer constructive solutions; but these solutions need support and investment from Government to build a new system that is fit for purpose,” Nick Allen, CEO of the group, said.

“The export hurdles we face are now in plain sight and are not going away. We need Government to urgently re-engage with both the industry and the EU to work out detailed and lasting solutions.”

Issues in Northern Ireland continue

Michael Bell, executive director of the Northern Ireland Food and Drink Association (NIFDA), told Speciality Food that the food and drink sector in Northern Ireland has continued to urge an approach that maintains frictionless movement of goods “on and between these islands”.

“Our supply chains are highly integrated both north-south and east-west, so it is vital that barriers to trade are minimised.

“Nobody within the industry predicted that Brexit was going to be easy, and the supply chain pressures since the end of the transition period have been well documented. While in Northern Ireland we are huge exporters of food – we produce enough to feed 10 million people per year – many of the raw ingredients that are included in our recipes come from Great Britain, so it is important that trade across the Irish Sea is as frictionless as possible,” Michael said.

“Our food and drink companies have four key priorities when it comes to fixing the protocol – we want affordability, certainty, simplicity and stability. Additional administrative burdens and other barriers to trade will inevitably mean increased costs, reduced choice for the consumer and food waste. It is in everyone’s interest for the government and EU to work together to minimise frictions in GB to NI trade,” he said.

“Brexit is a challenge, but it brings with it opportunity. Our food and drink companies in Northern Ireland are truly world leading when it comes to quality, innovation and commercial success, and with the right support from Government, we can seize the potential opportunities presented by relationships within the UK and EU markets,” Michael continued. While challenges persist, many in the food and drink sector remain optimistic that a solution can be found.