The UK food and drink industry was as well placed as any to capitalise on the expansion of the EU. So, two years on, was EU expansion the golden opportunity that it was painted as?
Prior to their accession, the new member states represented just 1.5% of total UK exports, suggesting enormous potential for growth. On the flip side, however, some industry pundits voiced concerns that UK food producers would be hit as cheap products from the new member states swept on to the nation's supermarket shelves.
So it seemed earlier this week, when English apple growers warned in the national press of an influx of cheap apples from Poland. Last year, the country was reportedly the biggest producer of apples in the European Union and this has not only sent prices plummeting, but led to a glut of fruit.
Even so, says Clare Cheney, director of the Provision Trade Federation (PTF), EU enlargement has not yet had the impact that was initially feared. The major stumbling block for companies in the new member states has been transport logistics, she says. "Their road systems are far too primitive, so it is very difficult to transport large quantities of products."
As for concerns about supermarket shelves being flooded with cheap imports, so far, with the odd exception, such fears have been unfounded, say the experts. That doesn't mean that the threat won't materialise however, they warn, highlighting own label goods.
In Poland, Tesco sources its own label goods locally. Emma Walters, new markets executive at Food from Britain (FFB), believes these products could eventually start to enter the UK. She adds that one of the main reasons there hasn't been an influx of foreign products to the UK so far is that food manufacturers in the new member states have struggled to get to grips with the EU's stringent regulations.
"A lot of slaughterhouses and dairies shut down because they couldn't meet these new regulations," says Walters.
Where there have been successes, they have often involved UK companies setting up local production bases in the new member states, a move that has been supported by bodies such as FFB. Walters cites Patak's Foods as one food manufacturer that has thrived thanks to its production bases in new member states.
In the decade prior to accession, a number of UK companies made significant investments in these states, most notably Poland, Hungary and the Czech Republic. In the past five years, many companies have moved processing jobs to the new EU countries to take advantage of the lower raw material prices and production costs, according to a spokeswoman for the Food and Drink Federation.
Since enlargement, commodity prices in these countries have increased as they have adopted EU farm and import protection policy. As land and labour prices have risen, the rate of relocation has slowed, although UK investment in the new member states continues to grow. However, there are doubts as to how long this investment will continue, according to Walters. "Companies may have the impression that it is cheap in the new member states, which is half true, but expectations in wages have risen since these countries joined the EU, and UK companies may not be able to use these countries as a cheap production base for too much longer."
The cost factor may persuade manufacturers to shift their attention elsewhere. To date they have been happy to focus their activities on nations such as Poland, Hungary and the Czech Republic, which are more mature in terms of infrastructure and economy than other new member states. However, as employment expectations rise in these countries, companies could start to look further east. Next year, Bulgaria and Romania are expected to join the EU - a development that Walters says will not go unnoticed.
"We already know some companies that are active in Romania. By the time it joins the EU, Romania would have the second largest population among member states behind Poland. If it goes the same way as Poland and Hungary, then retailers will target its capital city, Bucharest, first."
Agriculture is a major contributor to Romania's economy and provides more than 30% of its employment. Many people could search for work elsewhere in the EU if it becomes a member.
One of the biggest changes post- enlargement has been the number of workers - particularly agricultural - coming to the UK. In 2004, John Philpott, chief economist at the Chartered Institute of Personnel and Development, predicted that 50,000 migrants would enter the UK each year following enlargement. He now estimates that about double that number have entered each year since 2004 and says that employers have largely benefited from this influx.
"While this will have had a beneficial impact on recruitment and wage costs, there is no firm evidence of any effect on labour turnover," says Philpott.
He adds that any interpretation of migrant figures should take into account the domestic economy. "Last year was a generally disappointing year for employment and earnings in consumer-related sectors such as food and drink, and this will itself have had an effect on jobs, pay and labour turnover over and above any 'migration effect'."
The PTF's Cheney agrees that the migration of workers into the UK has generally had a positive impact on the employment market. "They came and they are probably still coming. In fact, we probably couldn't do without them now," she says. "There are so many of them working in the fields and factories, doing jobs that the local people do not want to do."
So all in all, it appears that the impact of EU enlargement on the UK food and drink industry - other than on employment - has so far been fairly modest. In the long run, however, these states, especially Poland, present a very real threat, particularly when it comes to commodities such as dairy ingredients and fresh produce.
That said, they'll have to deal with the cultural - as well as logistical - challenges of supplying the UK market if they want to further expand their exports.
The kabanos sausage from Poland may be a common fixture on the deli counter, but as Cheney points out: "It is a niche product - it's hardly going to compete with the British banger, is it?"nnew & future EU membership
Joined in 2004
Set to join in 2007/8
Along with Romania, Bulgaria is expected to join the EU on 1 January 2007, but this could be delayed if the European Commission deems it not ready. Two years ago the EC called for judicial reform, stronger public administration and a clampdown on organised crime and corruption.
The EC also voiced concerns about Romania in 2004, highlighting seven areas for improvement, including a corruption clampdown, judicial reform and state support for industry.
Talks were due to take place in March last year but were postponed until October 2005 because of Croatia's lack of co-operation with the International War Crimes tribunal. The nation could join by 2010.
Macedonia applied for membership in March 2004, obtaining candidate status in December last year. No date has been set for membership talks to begin and it is unlikely that the country would be able to join prior to 2012.
Turkey met the last condition for accession talks in July 2005, though it isn't expected to be ready to join until at least 2014.