Agriculture, Animal Health, and Food and Drink Manufacturing (Including Catering, Retail and Wholesale) Sector Report
Total Page:16
File Type:pdf, Size:1020Kb
Agriculture, Animal Health, and Food and Drink Manufacturing (including Catering, Retail and Wholesale) Sector Report This report covers Agriculture animal health and food and drink manufacturing, as well as Catering: retail and wholesale. 1. This is a report for the House of Commons Committee on Exiting the European Union following the motion passed at the Opposition Day debate on 1 November, which called on the Government to provide the Committee with impact assessments arising from the sectoral analysis it has conducted with regards to the list of 58 sectors referred to in the answer of 26 June 2017 to Question 239. 2. As the Government has already made clear, it is not the case that 58 sectoral impact assessments exist. The Government’s sectoral analysis is a wide mix of qualitative and quantitative analysis contained in a range of documents developed at different times since the referendum. This report brings together information about the sector in a way that is accessible and informative. Some reports aggregate some sectors in order to either avoid repetition of information or because of the strong interlinkages between some of these sectors. 3. This report covers: a description of the sector, the current EU regulatory regime, existing frameworks for how trade is facilitated between countries in this sector, and sector views. It does not contain commercially-, market- or negotiation-sensitive information. Description of Sector Sector Coverage 4. This paper covers market access and trade issues around forestry, retail, agricultural, animal and plant health, food and drink manufacturing and related biotech products. This includes: ● Basic agricultural commodities (e.g. grain, milk); ● Food (e.g. dairy, fish, processed products etc.); ● Alcoholic beverages; ● Animal feed; ● Live animals and genetic material; 1 ● Non-food horticultural products (e.g. seeds, ornamentals, trees); ● Non-food animal products (hides and skins, germplasm etc); ● Catering (retail and wholesale); and ● Timber. 5. This paper does not cover the whole range of agriculture policy issues and does not cover the opportunities provided by new trade deals with the rest of the world. It also does not cover all animal and plant health related issues but includes those that directly affect market access and trade. It does not cover R&D related aspects. We will identify these as related policy areas but not analyse them in detail. 6. We also note the strong links to agri-tech and bio-economy though these are not separately covered in the figures below (apart from the extent to which they are within the scope of agriculture itself). Agri-tech is important to the food chain: the technology sub-sectors were estimated to have contributed around £4 billion in GVA to the UK economy in 2013 and generated exports of around £2.9 billion in 2013.1 7. Separate reports cover the fisheries sector as a whole and cross-cutting environmental services – water and waste - which impact for example on pesticides and timber. However, elements of the fish supply chain (processing) are captured in the overall ‘food manufacturing’ category, and the fish exports area is also captured within the definition used here. Key messages ● The food chain is wide-ranging, crossing multiple economic sector categories – primary, manufacture, services, and intermediary sectors such as wholesale and distribution. ● Whole food chain GVA was £108 billion in 2014, around 7 per cent of UK GVA.2 ● Food and drink manufacturing, at £26.9 billion in 20143, is the UK’s biggest manufacturing sector by GVA, representing one-sixth of UK manufacturing GVA.4 UK Agriculture accounts for 0.6 per cent of total GVA.5 ● Food and Drink Manufacturing and agriculture makes a larger contribution to the GVA of Scotland and Northern Ireland than the rest of the UK.6 1 Department for Business, Innovation and Skills, Agri-Tech Industrial Strategy: Evaluation Scoping Study and Baseline, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/536388/bis-16-18-agri-tech- industrial-strategy-evaluation-and-baseline.pdf 2 Department for Environment, Food and Rural Affairs, Department of Agriculture, Environment and Rural Affairs (Northern Ireland), Welsh Assembly Government, The Department for Rural Affairs and Heritage, The Scottish Government, Rural and Environment Research and Analysis Directorate, Agriculture in the United Kingdom, 2015, Table 14.1, (Published 2016). 3 Ibid. 4 ONS, UK GDP(O) low level aggregates, https://www.ons.gov.uk/economy/grossdomesticproductgdp/datasets/ukgdpolowlevelaggregates 5 Agriculture in the United Kingdom (2015), Table 3.2. 2 ● Agri-food sector employment totalled 3.9m in 2015, representing 14 per cent of all employment.7 Other than agriculture, this is spread evenly across the UK. Agriculture employs around 480,000 workers8 representing 1.4 per cent of total employment.9 However, the agricultural sector is a relatively bigger employer in all of the DAs than England. Agriculture accounts for 70 per cent of land use and helps to underpin the rural economy.10 ● The food chain relies on significant levels of imports: £40.3 billion, of which £28.4 billion is from the EU.11 60 per cent of imports are raw and lightly-processed commodities, which will be subject to onward processing in UK food and drink manufacture.12 On the other hand only 40 per cent of exports are in this category – the UK exports a much higher proportion of finished products.13 ● Consumer expenditure was £201 billion in 2015 on food and drink and catering services.14 The Food Chain: An Overview 8. The food chain includes agriculture, food and drink manufacturing and catering/wholesale. It does not include plant health, plant breeding and forestry which are described further below. We elaborate further on this later in the document, with time series trends on several of the indicators. High-level economic indicators include: ● Whole food chain15 GVA was £108 billion in 2014, around 7 per cent of UK GVA.16 ● Agri-food sector employment totalled 3.9 million in 2015, representing 14 per cent of all employment17. ● Food and drink manufacturing, at £26.9 billion in 201418, is the UK’s biggest manufacturing sector by GVA, representing one-sixth of UK manufacturing GVA.19 ● Exports in 2015 were £18.6 billion (£11.2 billion EU), imports £40.3 billion (£28.4 billion EU).20 6 ONS, Regional Gross Value Added (Income Approach) : December 2015, https://www.ons.gov.uk/economy/grossvalueaddedgva/bulletins/regionalgrossvalueaddedincomeapproach/previousR eleases 7 Agriculture in the United Kingdom (2015), Table 14.1. 8 Includes farmers and spouses. 9 Agriculture in the United Kingdom (2015), Table 2.5. 10 Agriculture in the United Kingdom (2015), Table 2.1. 11 HMRC (2015), HMRC trade statistics, using HS codes 01-23 excluding 06. 12 Food Statistics Pocketbook 2015, p7. 13 Ibid. 14 Agriculture in the United Kingdom (2015), p.101. 15 The whole food chain ‘farm-to-fork’ includes agriculture, manufacture, wholesale, retail and catering. 16 Agriculture in the United Kingdom (2015), Table 14.1. 17 Ibid., Table 14.1. 18 Ibid., Table 14.1. 19 ONS, UK GDP(O) low level aggregates, https://www.ons.gov.uk/economy/grossdomesticproductgdp/datasets/ukgdpolowlevelaggregates 3 ● The stock of Foreign Direct Investment (FDI) in food and drink manufacturing was £57 billion in 201421, representing around 35 per cent of the stock of all UK manufacturing GVA.22 ● Food is one of the UK’s (13) critical infrastructure sectors.23 ● The food chain is dispersed: ○ The food chain represents between 11–13 per cent of employment in all areas (with London being the lowest and South West/Yorkshire & Humber the highest), although the makeup of employment is differentiated: employment in services is higher in London & the South East.24 ○ Scotland, the East Midlands and Yorkshire/Humber are the largest areas by manufacture GVA (and food and drink manufacture represents 5 per cent of Northern Ireland’s GVA).25 ○ Agriculture represented just 0.6 per cent of UK GVA in 2014, but represented 1 per cent of GVA in Scotland and 1.4 per cent in Northern Ireland.26 It was 1.4 per cent of employment in England as a whole in 2015, 2.7 per cent in the South West and Scotland, and 4.8 per cent in Wales.27 ○ Consumer expenditure was £201 billion in 2015 on food and drink and catering services.28 9. The food chain is wide-ranging, crossing multiple economic sector categories – primary, manufacture, services and intermediary sectors such as wholesale and distribution. We have focused this document primarily on the ‘production’ end of the chain – agriculture and food & drink manufacture – which is more engaged in exporting. However, the service part of the food chain has an interest in market access issues from an importing perspective. Caterers (e.g. cafes, restaurants, canteens) and food and drink retailers accounted for £59.3 billion of GVA in 2014.29 10. There are interdependencies across the food chain. Agriculture and food and drink manufacture (FDM) produces primary and processed foodstuffs, which in turn are 20 HMRC (2015), HMRC trade statistics, using HS codes 02-23 excluding 06. 21 ONS, Foreign direct investment involving UK companies: Inward tables, https://www.ons.gov.uk/businessindustryandtrade/business/businessinnovation/datasets/foreigndirectinvestmentinvol vingukcompanies2013inwardtables 22 Ibid. and Regional Gross Value Added (Income Approach): December 2015, https://www.ons.gov.uk/economy/grossvalueaddedgva/bulletins/regionalgrossvalueaddedincomeapproach/december 2015 23 Centre for the Protection of National Infrastructure, https://www.cpni.gov.uk/critical-national-infrastructure-0 24 NOMIS, Business Register and Employment Survey, Based on NUTS 2013 (Level 1) Geography and Defra 45114 Industry codes, https://www.nomisweb.co.uk/query/select/getdatasetbytheme.asp?opt=3&theme=&subgrp= 25 ONS, Regional Gross Value Added (Income Approach) : December 2015. 26 Agriculture in the United Kingdom (2015), Table 3.2.