Today is the day that 10 more countries join the EU. We consult the experts on what enlargement means for the UK food industry
Tell me: what’s actually happening?
Before May 1, the EU family comprised 15 countries. From today, these 15 member states become 25. The newcomers are Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. Bulgaria and Romania are set to join the Union in 2007, providing they meet the required standards. Turkey and Croatia also have applications in the pipeline. Jim Dougal, head of European Commission in the UK, says: “EU enlargement will benefit those countries joining the Union and existing members. The creation of a single market of 455 million consumers, where goods and services are freely traded, presents a good opportunity for UK businesses and industry to tap into new markets. Independent reports suggest it will boost UK GDP by £1.75bn and create more than 300,000 jobs.”
Is Dougal right? Does enlargement offer a fantastic opportunity for British grocery?
Matthew Nash, Food from Britain’s head of new market development, is upbeat about export prospects. “The removal of barriers will bring real opportunities. All major retail players in the market have ambitious private label expansion plans, but local industry lacks the expertise. Cuisines in the region remain traditional but are becoming influenced by Western Europe. With the huge growth of tourism in the region comes opportunities to provide high quality products to foodservice outlets.” But he warns exporters must do their homework. “Entry costs are high so companies must think carefully about distribution strategy and a partner,” he says.
Nash also highlights the fact that while British food and drink exports to the region increased 30% to £79m between 2001 and 2003, imports increased 64% to £194m. “UK suppliers must address the opportunity of export development and the threat to their domestic markets from the ever improving and comparatively cheap food production in Central Europe,” he says.
Uh-oh, does that mean we will see the UK market being flooded with cheap foods?
Not really, say the experts. Claire Cheney, director general of the Provision Trade Federation, explains: “There are several reasons why there won’t be lots coming here, the main one being whether they produce enough and another our geographical location. So, we won’t be swamped in the short term and the longer term depends on whether they will be able to produce the quantity. There are also questions over quality and the specifications we require.”
Okay, if we are not going to be flooded with cheap commodities, isn’t there a danger manufacturing jobs will be exported?
Enlargement will bring about a level playing field which will make disinvestment in the UK less likely, according to Jonathan Peel, director of European international trade policy at the Food and Drink Federation. “Eastern Europe has been very attractive since 1992. Many multinationals have been attracted by the lower labour costs and lower commodity prices,” he says. The BCCCA estimates 10,000 jobs in the confectionery and chocolate industry have been lost in the UK in the last five years. But from now the lower commodity prices will be lost and in the Czech Republic, for example, investment by food companies is falling off.
There is a risk that UK supermarkets may source more from Eastern Europe if they can get products more cheaply, Peel says, but it will depend whether lower labour costs are enough to offset higher transport costs.
Smaller UK-based companies that build up export trade may wish to build plants in the accession states to produce locally, but this will be expansion and not replacement of existing plants and production.
Will enlargement help the industry sort out its recruitment headaches?
Possibly, says John Philpott, chief economist at the Chartered Institute of Personnel and Development. “With unemployment at a 30-year low, and many employers desperate to fill vacancies at all skill levels, enlargement offers the prospect of a quick fix. Probably, 50,000 workers from these states will enter the UK jobs market between now and the end of 2005. Professionals will fill skilled jobs in management and many will seek routine jobs at pay rates well above those they can obtain at home.”
Tell me: what’s actually happening?
Before May 1, the EU family comprised 15 countries. From today, these 15 member states become 25. The newcomers are Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. Bulgaria and Romania are set to join the Union in 2007, providing they meet the required standards. Turkey and Croatia also have applications in the pipeline. Jim Dougal, head of European Commission in the UK, says: “EU enlargement will benefit those countries joining the Union and existing members. The creation of a single market of 455 million consumers, where goods and services are freely traded, presents a good opportunity for UK businesses and industry to tap into new markets. Independent reports suggest it will boost UK GDP by £1.75bn and create more than 300,000 jobs.”
Is Dougal right? Does enlargement offer a fantastic opportunity for British grocery?
Matthew Nash, Food from Britain’s head of new market development, is upbeat about export prospects. “The removal of barriers will bring real opportunities. All major retail players in the market have ambitious private label expansion plans, but local industry lacks the expertise. Cuisines in the region remain traditional but are becoming influenced by Western Europe. With the huge growth of tourism in the region comes opportunities to provide high quality products to foodservice outlets.” But he warns exporters must do their homework. “Entry costs are high so companies must think carefully about distribution strategy and a partner,” he says.
Nash also highlights the fact that while British food and drink exports to the region increased 30% to £79m between 2001 and 2003, imports increased 64% to £194m. “UK suppliers must address the opportunity of export development and the threat to their domestic markets from the ever improving and comparatively cheap food production in Central Europe,” he says.
Uh-oh, does that mean we will see the UK market being flooded with cheap foods?
Not really, say the experts. Claire Cheney, director general of the Provision Trade Federation, explains: “There are several reasons why there won’t be lots coming here, the main one being whether they produce enough and another our geographical location. So, we won’t be swamped in the short term and the longer term depends on whether they will be able to produce the quantity. There are also questions over quality and the specifications we require.”
Okay, if we are not going to be flooded with cheap commodities, isn’t there a danger manufacturing jobs will be exported?
Enlargement will bring about a level playing field which will make disinvestment in the UK less likely, according to Jonathan Peel, director of European international trade policy at the Food and Drink Federation. “Eastern Europe has been very attractive since 1992. Many multinationals have been attracted by the lower labour costs and lower commodity prices,” he says. The BCCCA estimates 10,000 jobs in the confectionery and chocolate industry have been lost in the UK in the last five years. But from now the lower commodity prices will be lost and in the Czech Republic, for example, investment by food companies is falling off.
There is a risk that UK supermarkets may source more from Eastern Europe if they can get products more cheaply, Peel says, but it will depend whether lower labour costs are enough to offset higher transport costs.
Smaller UK-based companies that build up export trade may wish to build plants in the accession states to produce locally, but this will be expansion and not replacement of existing plants and production.
Will enlargement help the industry sort out its recruitment headaches?
Possibly, says John Philpott, chief economist at the Chartered Institute of Personnel and Development. “With unemployment at a 30-year low, and many employers desperate to fill vacancies at all skill levels, enlargement offers the prospect of a quick fix. Probably, 50,000 workers from these states will enter the UK jobs market between now and the end of 2005. Professionals will fill skilled jobs in management and many will seek routine jobs at pay rates well above those they can obtain at home.”
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