Labour shortage
The shortage of labour is acutely affecting a number of parts of our food and drink supply chain. Shortages are being reported across the seasonal agriculture, food processing and – in particular – haulage sectors. The risks to the food supply chain are considerable. If you are facing particular challenges, or seeing the impact of labour shortages elsewhere in your supply chain - please let us know via info@foodanddrink.scot. Clearly, there have been underlying challenges in workforce availability for some time, but both Brexit and Covid has combined to exacerbate these particularly in relation to availability of EU workers. This week, we have been in discussions with 30-40 other organisations on a joint letter to UK Government to highlight the scale of concern and suggest some short-term remedies. It is estimated that 1.3 million migrants left the UK between July 2019 and September 2020, representing over 4% of the UK workforce. One potential, short term, remedy we are advocating is to allow all those who have worked in the UK over the last 3 years to be given the freedom to return to work here with less restrictive immigration regulations. We will keep you updated as the issue develops.
Concerns at lack of industry engagement of trade deals
We have joined 13 other Scottish food and drink supply chain bodies in writing to Trade Secretary Liz Truss on trade issues. The letter sets out our shared objective of pursuing an ambitious trade policy but expresses concerns at the lack of engagement on trade policy. It calls for impact assessment work to be done and the recommendations of the Trade and Agriculture Commission to be implemented (which include a demand for much greater transparency, industry engagement and scrutiny of trade deals). Brexit has been a cautionary tale in not understanding the challenges in the detail of trade deals and we are anxious for that not to be repeated in future deals. You can read the letter here and we await a response from UK Government.
The Australia deal
One of the big trade stories this week was the announcement by the UK and Australian Governments of a trade deal. There is good news for the Scotch whisky industry with the planned removal of a 5% tariff, worth around £6 million for the sector. The concerns of Scotland's farming community – in particular beef and sheep producers – were not allayed however with immediate tariff-free access for Australian product when the deal comes into force. There are quota limits on tariff-free imports which amount to 25,000 tonnes of lamb in year one, rising to 75,000 over ten years. The equivalent figure for beef are 35,000 tonnes, rising to 110,000. Both these limits are vastly higher than the current level of imports but in a complex global marketplace it remains to be seen just how much of this will be taken up. The thornier issues have been around animal welfare and environmental standards. Whilst the symbolic issue of hormone-treated beef is not included in the scope of allowable imports, there are a number of other standards of production that are lower than UK standards, raising farmers fear that their efforts to operate at higher standards could be undercut. There is a lot of analysis to be done and detailed questions still be answered to fully understand the potential impact. The latest detail on the deal has been published here.
US tariffs on Scotch whisky to be dropped
There has been a major breakthrough in the EU/US aviation trade dispute, leading to an agreement between the US and UK to suspend tariffs on single malt Scotch whisky. For a sector completely detached from the actual trade dispute (which is about subsidies provided to Boeing and Airbus), the £600 million in lost sales for the Scotch whisky industry has been a brutal hit. The breakthrough removes the threat of tariffs being reimposed on Scotch Whisky next month. Technically, the tariffs are suspended for five years so it requires ongoing dialogue to maintain stability but this is a hugely positive development and just reward for two years of hard work from our partners at the Scotch Whisky Association. More detail is available here.
