As a result of leaving the EU, the way the UK trades with other countries and trading blocs has changed. The UK is now in control of its own trade deals, tariffs, and trade arrangements as well as developing future opportunities in this area. Looking ahead, there are key markets that the UK government wants to access, with opportunities for a variety of different food and drink products.

The UK food and drink industry focuses on the domestic market and fulfilling the demands of the UK population, however there are key countries it exports to and products that it exports. Despite leaving the EU, it is still the key exporting market, with Ireland, France, Netherlands, Germany and Spain being the top destinations. Outside of the EU, two other key markets are the US and China. The UK exports a lot of pork and milk powder to China, along with alcoholic drinks, and salmon. Whisky is the top food and drink export by value from the UK, with an export value of £3.9bn and is exported across the world. Other key products are salmon, cheese and a variety of meats.

In terms of imports, the UK is about 56% self-sufficient in food, and imports about 46% of food consumed. Population growth has outstripped domestic production, and imports supplement domestic supply, as well as satisfying changing dietary demands, and to provide food that is out of season or is not grown here. The UK imports more food than it exports, and the value of food imports in 2020 was £48bn. The UK’s main sources of imported food are the EU and the US.

Following the decision for the UK to leave the EU, the UK government developed the ‘Build Back Better’ export plan, which envisioned the UK becoming a greater trading nation and set a goal to reach £1trn of exports across all products (not just food and drink). The strategy focuses on securing free trade agreements (FTAs) and finding opportunities in emerging markets.

The UK no longer enjoys the benefits of the numerous FTAs that the EU had with countries around the world. As a result, the UK Department for International Trade (DIT) spent time working on ‘rolling over’ these trade agreements by negotiating the continuation of the FTAs that were in place between various countries or trading blocs and the EU. It is worth noting that even for the agreed rollover trade deals, there may be elements which differ from the original FTA that was agreed with the EU. These differences will be minor, or just clarify certain rules or barriers.

Towards the end of the Brexit transition period, the AHDB investigated the progress that the UK had made in negotiating these rollover continuity agreements. We have updated this analysis to explore where the UK is now in terms of signing FTAs, and investigate where food exports are going around the world. The up-to-date analysis shows that, although the picture looks relatively similar, exports to the EU have reduced in value, and are now 60% of UK food and drink exports. Whereas 14% of exports are to countries with an EU-FTA and 24% to the rest of the world.

UK food exports in value (2019 - 2021 average)

The Australia and New Zealand trade deals were signed at the end of 2021, and beginning of 2022 respectively, representing the first in a line of potential trade deals that the UK is hoping to sign over the next few years. It is interesting to note that exports to New Zealand and Australia make up 2% of what is exported globally. This makes sense considering that the key opportunities within those trade deals were for removing barriers for imports into the UK, but it will still be interesting to monitor how those UK exports change in the next few years and what opportunities are found for businesses to export to Australia and New Zealand.

As of 1 May 2022, the UK had 24 agreements, covering 59 countries, signed or in place, which have rolled over from the agreements that were established by the EU. There are still four rollover agreements to be agreed upon with Algeria, Bosnia and Herzegovina, Greenland and Montenegro which represent only 0.2% of the share of total UK food exports. These mainly include small dairy products such as milk and cheese, food preparations and beverages.

In addition to the New Zealand and Australia trade deals, negotiations have started for Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Canada, US, and India. There are also negotiations set to start with Mexico, Israel and the Gulf Cooperation Council (GCC). These trade deals will cover much more than agricultural trade, but for food and drink there will be key opportunities in processed food, value-added products such as cheese, high-value cuts of meat and for meat cuts not demanded in the UK.

Another opportunity stems from the growing population and growing affluence. As the population is set to increase to 9.7 billion by 2050 there is going to be a greater demand for food across the world, especially for goods that appeal to a growing middle class. There may be opportunities for the UK to benefit from this expanding demand, and AHDB is working to explore these opportunities, as well as supporting access in key markets across the globe.
The attention is now on the UK’s progression towards a ‘great trading nation’. The process of rolling over the EU trade deals has been largely successful. However, the important point is that the EU still accounts for the majority of UK exports, although this has decreased compared with the analysis in 2019. A fundamental point is that trade with the remaining countries represents a much smaller share of UK exports compared with the EU.

As more FTAs are signed, UK exports are likely to expand into new markets. AHDB international consumer insight will help the industry understand and exploit that demand where it exists.