Grocery insight group IGD has produced a report to help its members deal with the consequences of Brexit, warning that grocery will be “at the forefront of change”.

The 17-page presentation, titled Referendum 2016 - Possible Outcomes for UK Grocery Businesses, appeared on its website this morning.

In the introduction, IGD chief economist James Walton said business impacts, in the UK and Europe, would be profound.

“The UK has been a member of the EU since 1973. Current business structures and processes have been shaped by decades of membership.

“This applies to the grocery industry in particular - a key objective of the EU since its earliest days was the provision of abundant, sustainable food supplies.

“Development of EU policy has therefore created numerous legal overlaps with the grocery industry. As the UK begins to extricate itself from the EU, the grocery industry will be at the forefront of change.”

The presentation warns long-standing business arrangements will be disrupted by Brexit, with £10bn worth of grocery export to the EU in 2015 out of a total of £17bn worldwide, and £25.9bn imported from a total of £36.3bn worldwide.

“The UK is not self-sufficient in food, there is a persistent food trade gap - about 38% of food eaten is imported,” the report says.

IGD said exclusion from the EU may impact what is available in stores, especially fresh produce, while food security will also need to be looked at with a fresh eye.

“Exit from the EU could create significant impacts on consumers,” the report said. “Without knowledge of the terms of an exit, consumer consequences are impossible to call. [But] grocery businesses need to remain alert and monitor the progress of negotiations closely.”

The presentation summarises how the EU affects the grocery supply chain across many interfaces, including market regulation such as product labelling, safety and product standards and enforcement, plus management of the environment, competition, free movement of labour, working conditions, human rights and the more obvious CAP and CFP.

In addition, interest rates and debt, population growth, business and consumer confidence and financial activity all have an economic impact on trade, which grocery businesses will all now need to consider post-Brexit.

IGD gives a breakdown of advantages and disadvantages of Brexit including its effect on people movement, trade barriers, financial stability and interest rates.

As far as the CAP is concerned, IGD says the UK might now have to develop an independent policy for the first time in decades, while the CFP could be changed to see the 12-mile territorial limit returning and policing of UK waters having to be done independently.

In addition, the presentation tells businesses they will need to consider terms of trade and access to markets changing after Brexit.

“Leaving the EU may mean reduced access to markets and exclusion from special arrangements, current and future (eg TTIP). Negotiating terms of trade will be high on the diplomatic ‘to-do list’ for a post-exit UK.”

Outcomes, it warns, will also depend on the attitude of remaining EU members, whether hostile or accommodating.

“The issue will affect not just trade in food and drink but other items that businesses source overseas (eg: spare parts, vehicles, professional services).

“On the positive side, new barriers to trade could mean new opportunities for UK businesses to serve domestic demand.

“On the downside, reduced trade may mean less choice and higher prices for shoppers,” the report added.

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