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Taxing times

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Time is running out for importers of food to the UK. On September 4 HMRC will demand its pound of flesh and the UK food industry will find itself between a rock and a hard place. This is not the first time that the deliberate destruction of the British economy by the departing government has been discussed on this site: it is still a live topic. Called the Common User Charge by civil servants, the UK’s stealth tax on food imports is also known as the Brexit border tax and doubtless has cruder titles.

Since August 4, many importers have been receiving their first invoices for Common User Charge (CUC. Importers of animal and plant products that would usually be considered for food safety checks can expect to pay over the odds for driving a lorry off a ferry at Dover to join the UK road network. Hauliers booking a DFDS one-way ticket online to Dover pay three pounds for this indispensable service, while lorries carrying grouped consignments of SPS foods face open-ended bills in the hundreds or low thousands for the same access. The simple explanation is that Britain is playing catch-up: the European Union had everything in place to trade with the UK as a third country the minute it ceased to be a member state. Britain was so totally convinced that it would somehow negotiate a favoured nation package Brexit that there was not even a sketchy idea of what a post-Brexit customs system might look like. The years passed, conveniently putting off the awkward moment when Brexit would be complete. As recently as November 2023,  DEFRA describes the organisational basis for European food imports to the UK thus: 

“Currently, imports from the EU and certain imports from Greenland, Faroe Islands and EFTA countries do not need to enter Great Britain via a BCP and are not subject to veterinary checks at the border.” 

(Source: http://apha.defra.gov.uk/documents/bip/iin/vcap.pdf)

Just two months later, Britain was rolling out its three-phase Border Target Operating Model (BTOM). (The label ‘world-beating’ is optional.) Lorry drivers arriving in Britain have not been impressed by the service standards they have encountered on  the ground (https://urbanfoodchains.uk/sevington-gives-cause-for-concern/), which is more of a hostile environment than a workplace.  

Brexit’s hostile environment

DEFRA has gone from absentee administrator to nitpicking zealot overnight and is chafing over the accuracy of form-filling, notably for consignment detail on Export  Health Certificates (EHC). Hang on to your hats, here is a sample:

“Continuous and/or deliberate non-compliance  

It has come to our attention, that some traders and logistics companies are making continuous and/or deliberate errors including:

mis-declaring goods as low risk when they are medium;

or as medium when they are high;

 not including a relevant Export Health Certificate (EHC) or Phytosanitary certificate.”

Or the consequences… :

“Continued non-compliance within either the EHC or the CHED is not acceptable and will not be tolerated by Port Health Authorities (PHAs). Deliberate misdeclaration is a criminal offence.  PHAs will be actively looking to identify such behaviour.

“Where there is repeated non-compliance or evidence of misdeclarations, the appropriate authority will take statutory action. This will result in goods being held at a Border Control Post (BCP) for a physical inspection, which may lead to the consignment being ultimately returned or destroyed at cost to the person responsible for the load.”

Entering a conversation with a tone like that is doomed to become a monologue. Enough said. Now it just remains for the law enforcers to round up a bunch of suspects.

Since the end of April, Dover has been receiving a steady trickle of complaints about the way the Brexit border tax has been implemented. Here is what Dover had to say on the subject, again verbatim:

“As you are aware, the Border Target Operating Model (BTOM) checks have been operational for a month. Aside from initial teething problems, we are receiving a growing number of queries and concerns about how the checks are being carried out versus the costs that are being charged, delays to consignments, poor responses to calls and/or appropriate live assistance with your imports, the impact on biosecurity and the possibility of using Dover BCP to complete checks.

“It is important to understand your experiences so far to enable us to help establish simple solutions moving forwards, so we would like to set up a short call to discuss this with yourselves.

“Please drop us a line outlining your concerns and suggested solutions so we can escalate these for you. In addition, a member of our team may also call you.” 

The simple fact is that the CUC started off on the wrong foot and is compounding ongoing problems on the way. It was cobbled together out of retained EU law. Its stated aim is to recover the operating costs of Border Control Posts in the UK, but this does not stand upto close inspection. Officially, CUC rates for privately-owned ports are set by their owners. At regular intervals, DEFRA kicks the distinction into touch by stating that the tax is being charged at Dover and the Eurotunnel terminal. 

The port of Dover  has belonged to the town since it was incorporated in 1608 by James 1. Some members of the port harbour authority board are appointed by the department of transport, but this is a working arrangement rather than a power grab.

At the beginning of June, Dover issued the following statement, which I cite verbatim:

“We are writing to you with reference to the ‘Operational Border Target Operating Model Information’ Defra circulated on the 03/06/2024 which contained a significant inaccuracy regarding the BCP for high risk food not of animal origin arriving via Dover within the section ‘Moving high-risk food and feed not of animal origin at the Short Straits’.

“To clarify, if you are importing high risk food not of animal origin (HRFNAO) through the Port of Dover, either via RORO ferry terminal and / or deep sea cargo, you must continue to pre-notify Dover Port Health Authority on IPAFFS using the Dover Terminal BCP code GBDOV2P and not, as outlined in the Defra information update, Sevington BCP.

“Official border controls on high risk food not of animal origin arriving via RORO freight have been undertaken at the BCPs in the Western Docks for over a decade and since 2019 at the Cargo Terminal GBDOV2P (in the Western Docks).  

“Dover Port Health Authority will continue to provide this statutory function and ensure that your goods are handled efficiently and without undue delay. Please note, the Common User Charge does not apply to the Dover Cargo Terminal BCP. The Common User Charge will be applied if your goods are notified to Sevington BCP by selecting their different BCP code on IPAFFS.”

Dover puts food safety first

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 Dover port health staff carrying out food safety checks are being sidelined by DEFRA, which is telling importers that their goods should be routed through Sevington. Before shipping certain goods, importers must pre-register the shipment using a system called IPAFFS which is short for Import of Products, Animals, Food and Feed System. DEFRA is telling everyone to delete the Dover port code from the documentation and  to change their IPAFFS point of entry to  Sevington.

Staff at Dover have been carrying out SPS food safety checks for a decade, but they have never found themselves at loggerheads with DEFRA before. The root of the problem is the Border Operating Model (BTOM), which is not set up to manage product assessments requiring detailed knowledge and experience. 

Assigning three levels of risk to food imports does not cover real life situations. Take High Risk Food Not Of Animal Origin HRFNAO, which is a detailed listing of food products that need to be checked for specific  hazards. These can include central European blueberries, which are checked for radioactive Caesium 137 from Chernobyl; peanut products from north and south America, which are checked for aflatoxins; or US fishery products, for which processing hygiene standards vary widely.

There is a statutory compliance angle to these product checks, which are regulated by assimilated European laws. At this point they are beyond the remit of BTOM and DEFRA is not authorised to change their enforcement. So instead, the ministry has been advising importers to amend the IPAFFS entry from Dover to Sevington.

In the meantime, Dover port health staff continue to carry out the food safety checks that keep the nation’s food safe.

Every one of them is different

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Sky News is currently streaming an overview of British farming (https://news.sky.com/story/it-keeps-me-awake-at-night-can-british-farming-survive-13132220) which raises a number of questions that have been dodged for years and are coming home to roost with a certain inevitability. They are as predictable as ever, as intractable as ever and demand answers as urgently as ever. The only certainty is that the farming sector faces a crisis which has been ignored for years and will no longer wait in an orderly queue.

The first thing that needs to be made clear at the outset is that there is no such creature as an average farmer. The Sky presentation is very careful to choose visually tame representatives of a sector that  is universally misunderstood. Sky’s lead journalist on this reporting, the west of England and Wales correspondent Dan Whitehead, would doubtless agree that despite the rapidly falling numbers of farmers in Britain, there is no such creature as an “average” farmer anywhere in the world.

The industrial world develops and markets a range of specialist vehicles and technology for a sector that has as many solutions for its many technical challenges as it has practitioners. The general public, in Britain and further afield, has no problem synthesising a stereotype notion of a nonexistent rural world. In the process, any suggestion of  a viable business model  runs counter current to the town dweller’s vision of a rural idyll.

It would not be productive to imagine that rural businesses are complementary to industrial or urban economic structures. Nor can the transport and distribution networks that link urban consumers to an imagined rural hinterland ever ensure that each business gets what it needs in a timely manner.

A frequent town dweller’s  notion of a farm is more like a zoo than a production unit. Go back a century or so to George Orwell’s Animal Farm and you encounter a group of anthropocentric livestock: hens, pigs, cattle and heavy horses. Truth to tell, if it ever existed, this diverse community of livestock was a casualty of the first world war. The two million British equine casualties had a greater impact on warfare and industry than the loss of several millions of military personnel or civilians killed in air raids elsewhere. British army officers were required to supply a horse’s  front hoof when reporting an equine casualty, whereas they did not need to furnish any such grisly evidence for human casualties among their ranks.

The wartime massacre of draft horses was beyond the breeding capacity of the northern hemisphere and cleared the way for mechanisation in both rural hinterlands and metropolitan centres alike. The British army bought in horses from as far away as North America, but they were ill-suited to military requirements.

Both agriculture and industry have exhibited huge appetites for energy during the past two centuries. The combined effects of converting the plains of North America into a grain exporter on a continental scale. This was accompanied by the relentless westward advance of the railroads through the 1850s and 1860s, hauling wheat back to the east coast and shipping it on to Europe. 

The age of steam put bread on the tables of starving cities. It may even have given urban populations a passing curiosity as to where food comes from and what sort of people might produce it. But the only people that ever had contact with producers and consumers were traders with a limited interest beyond crop forecasts and spot prices. It is hardly surprising that during the intervening decades, a parallel web of dreams fed on pictures in books and magazines should inhabit part of the cultural vacuum between town and country. 

Dan Whitehead’s rural narrative assembles facets of the  agricultural world as a kaleidoscope might do. He starts by talking to Welsh sheep producer Rhodri, who has seen a 40% cut in his income, now shorn of subsidy. He is worried that his school age son will not inherit the family farm.

Outdoor pork producer Jeff laments the supposed passing of the British pig industry. Like many British pig producers, he believes his European counterparts are subsidised as generously as they have ever been. He can’t go into a supermarket without spotting foreign meat: pork chops from Spain, chicken from Poland and Brazil. He can sum up Brexit in one word: “atrocious”. From his farm in Kent,  Jeff drove a tractor up London for a city centre protest. Like many in the pig sector, he is adamant that breeders have been thrown under a bus by a government that doesn’t care. “There’s an  unfairness in British agriculture,” he argues. Looking at the deals the UK government signed with Australia and  New Zealand, he might have a point.

Nearby, fruit grower Tim has built up a strawberry business valued in tens of millions of pounds. He needs a workforce of 2000 to pick thousands of tonnes of strawberries. Most of his recruits are from EU member states. When the UK was in the single market, workers could move  freely with no time limits. Now they are limited to six months and have to move on regardless of whether or not they are a net gain or a net drain on their employer. Tim is frustrated because he cannot negotiate prices for his crop from a solid position. 

There are plenty of British pig producers who will argue that foreign pigmeat is hindering domestic producers, but the story is a little bit more subtle than that. If British producers could earn a living off the sales of pork loins, they would cheerfully do so. Since loins are used for roasting joints or bacon, there will always be buyers for this cut. This often leads to a situation whereby British loin are sold through for roasting joints. Meeting demand for bacon packers, there is a steady trade in pigs from Dutch and Danish units. These have been raised to British standards for decades and are effectively competing on a level field, even if their British counterparts see it differently. The key to staying in business is referred to as balancing the carcase, ensuring that every saleable part of the carcase is sold. Hams or gammons are straightforward to prepare for the retail market and represent a good return. What British pig breeders often overlook, however, is that they will routinely export forequarters to cutting halls in northern Europe, which have skilled workforces that make short work of the technically challenging forequarters. These are home to the animal’s powerful jaw muscles. If a pig bites your hand, count your fingers as soon as you’ve stemmed the bleeding.

Measuring progress

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On Your Farm presenter Charlotte Smith and Archers’ actor Lucy Speed open the programme from the middle of Devon by explaining that they are looking for a farm but are surrounded by large sheds and outwardly industrial structures. Somewhere in this seemingly inappropriate setting, they are expecting to meet Andy Gray, a possible finalist for one of the programme’s annual awards.

Andy’s business bridges the gap between livestock farmers and end users of meat. He operates the large food grade cutting and packing lines that they saw on arrival. As well as selling dog food, he also farms 150 hectares of arable crops, as well as keeping a herd of deer and a herd of cattle. Other business activities in his eclectic business include a quarry for heritage building stone.

During the visit, the conversation turns to remedial best practice for soil and the new funding schemes for English farming, based on the provision of a public good such as healthy soil. Rothamstead soil scientist Andy Neil is on hand to discuss some of the vital detail. Charlotte Smith is impressed that Andy should have engaged a Rothamstead professional to measure the recovery of former arable fields. Andy, on the other hand is pragmatic: if he can’t quantify the improvements he is making on his land, he won’t get any government cash. Gotcha.

Milestone or millstone?

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This week the UK delivered the world’s first fully digitally documented consignment of goods. Burnley engineering firm Fort Vale became the first UK exporter to put electronic documentation on an equal footing with paper forms. This was made possible by the Electronic Trade Documents Act (ETDA), which came into force on Wednesday. To be sure, the goods involved were not food products, but Urban Food Chains wanted to mark the occasion anyway. Here’s a link to the gov.uk statement.

Hard cheese

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Irish dairy farmers are seeing huge falls in demand and output in the wake of Brexit. The Irish Creameries’ Suppliers Association ICMS this week revealed that this was an ongoing situation and not a passing phase. Not surprisingly, the ICMS has some very substantial members who between them exported more than 80,000 tonnes of block Cheddar a year to the UK. Allow 13 tonnes of milk to make a tonne of Cheddar and store it for a year or two at a creamery, and it adds up to a significant business commitment.

Those with long memories will remember former farm minister Liz Truss regaling the 2014 Tory party conference with a hatchet job on British cheese imports. Surprisingly little change from today’s outbursts, really. Shows how little she learnt at DEFRA.

For a future reading list

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Pic: Canongate

In a few decades, once political sensitivities have healed, there may be a generation that seeks to make sense of the current chaos. Former public policy editor of the Financial Times, Peter Foster, has written a contemporaneous account of the poor policy making that has dogged the Brexit negotiations and beyond. What Went Wrong With Brexit is published by Canongate. Visitors to Google Books will also find a sample chapter and a download link for purchases.

Seasonal footnote 160923

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At the beginning of the week, there were clusters of ripe blackberries on the back of the estate with a sweet sugary burst of flavour as they yielded to peckish hands. After a long stretch of hot weather, the season changed almost imperceptibly: the result was a distinctly vinegary note in the previously sweet taste. The following day, distinctly chillier, dawned to reveal the previously sound fruit had rotted off.

A work in progress?

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As the world’s most recent third country, UK food exports are at the receiving end of thorough checks on entry to the EU. All animal products are allocated risk levels and inspected accordingly; plant material undergo a parallel set of phytosanitary (plant health) checks. For UK exporters, the administrative overheads of complying with food safety standards were a known quantity long before the January 2021 transfer to third country status when UK shipments were routinely checked in Border Control Posts (BCPs).

The UK has yet to carry out its longstanding commitment to implement a mirror image system with the same inspection protocols for food shipments coming into the UK. Until that happens, Brexit is no more than a work in progress, not a done deal.

At the time of writing, the UK government is poised to kick border checks on into the long grass for the fifth time, delaying the full complement of checks until autumn 2024. This should come as no surprise, given the gaps in government resources.

Westminster is wrestling with a structural shortage of vets who are authorised to issue valid health declarations. This was a known issue in 2017 when a House of Lords select committee warned of a vet shortage, among other things, in its report Brexit: plant and animal biosecurity Over the past few years there have been a number infrastructure modifications at UK ports to house BCP facilities. The situation is complicated by the fact that around the UK not all ports are in public ownership and many have hybrid management frameworks. For some, the fabric of the port is its capital, meaning that a parliamentary bill may be required to underwrite loan capital for major infrastructure investments. This is only one factor among many that has cooled the government’s will and ability to act, however.

The UK food industry is caught up by its own reluctance to make the transition to full food safety checking at internal borders. This is not a public health issue so much as a tangle of red tape and knowledge gaps. At any given time of the day or night, there will be dozens of lorry movements up and down the country, heading for Northern Ireland. Leaving aside the unionist arguments against having a border check where none should be required, there is potentially a grittier problem to resolve.

There is a lack of old-fashioned stock control clerks with previous experience of customs documentation. The real problem is that the documentation travelling with a load is closer to a customs valuation than a handlist for whoever has to unpack the roll cage when it arrives instore. The stock in trade of an RDC (Regional Distribution Centre) is a loaded roll cage with dozens of SKUs, more or less stacked in the order they were picked. This is adequate for England and Wales, but is not a promising start for goods which may need to be inspected on a line by line basis in a customs shed.

The rules for calculating a customs valuation are clear and there are a number of ways in which a customs valuation may be arrived at, each with its own methodology. Think of the process as HMRC making a window into a retailer’s accounting system and then discovering anomalies with earlier figures. These could arise from the ways in which shelf money is managed or have an innocent explanation, but making a case to HMRC for a wide gap between a low customs valuation and a full retail price is not what people want to spend time on just now, if at all.

The additional cost of physical checks just adds to the awkwardness of the situation. The UK government is preparing to run documentation checks on inbound animal products for just over GBP 30, but is fighting shy of publishing a price list that would put physical checks into the six or seven hundred pound bracket. These inspection costs would feed directly into the import VAT calculations, pushing up the final figure.

The uncompromising attention to detail and the time these checks will add to operating costs — meaning that they should be blamed on a new incoming government in the wake of a general election. This morning’s BBC news carried an item to the effect that MPs standing down at the next election, or defeated at the ballot box should continue to be paid for four weeks instead of the current fortnight. Someone in Westminster is reading the writing on the wall.

Value or price?

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Today’s On Your Farm came from Yew Tree Farm, Bristol’s last city farm. Third generation farmer Catherine Withers faces existential challenges to a business that has adapted to extensive and rapid change, but is on the point of losing access to land that is vital to its survival. Part of a site of Scientific and Conservation Interest, the farm should have been spared the predatory attention of a local property developer.

Click the screengrab to access the programme on the BBC.

Instead, acres of hay and winter feed once intended for Catherine’s dairy herd is under lock and key. The tenancy on the field concerned was terminated in favour of a planning proposal for 200 homes that has yet to be agreed. When the BBC visited, the hay in the field was ready to be cut and the livestock would have been sure of winter sustenance. However, Catherine is kept away from her crop by a heavy padlock on the gate. Being able to see the crop but not gather it in just adds injury to insult.

Elsewhere on the farm, another tenancy on a field adjacent to a local council crematorium is set to end, as the town hall plans to extend the amenities for its residents. Again, it is the dairy cattle that will lose out. Catherine has a small dairy herd, as well as outdoor pigs: she also grows vegetables, which she can sell to local residents within walking distance of her farmhouse. Bristol used to have more than 30 farms within its boundaries: as the city’s only remaining farmer, Catherine is something of a local hero, not just to her customers.

Yew Tree has a high proportion of ancient meadow in its grazing, an irreplaceable asset that has been quietly sheltering threatened flora and fauna for centuries. Its value to Bristol is incalculable, but depends on being an integrated space, across which wildlife can roam. The shift from viable and productive to long term decline is an ever-present threat and determined by factors that neither Catherine nor her many supporters can control.

Listen to the programme while it is available on the BBC Sounds website. It raises questions for all of us, regardless of whether we live in a city or a rural area.