Crisp production is being hit by a Brexit-induced labour shortage, the chief of the UK’s food federation has said during his starkest warning yet over a drop in migrant workers.
In an interview with HuffPost UK, Food and Drink Federation boss Ian Wright called on the Government to do more to reassure EU migrants they are welcome in the country as companies across the sector experience staff shortages.
Wright said an owner of a medium-sized crisp manufacturer told him his factory is having to operate with a 10% drop in the work force – meaning a loss in productivity – as fewer migrants are traveling to the UK for work.
The food and drink industry is the UK’s biggest manufacturing sector and contributes £28.2billion to the economy, meaning any slow-down in productivity could have implications for the country’s finances.
Speaking from his office in central London just hours after Theresa May published an open letter telling EU migrants she wanted them to stay in the UK, Wright called for the Government to go further.
“I think the Government has moved a long way from where it was the day after Brexit,” he said. But when asked if he felt recent announcements had reassured EU migrants working in the food and drink industry, Wright replied: “The ones who didn’t feel confident still don’t feel confident, and the ones who were confident are still confident.
“There’s a still a significant drain of European workers leaving and there are fewer coming.”
The latest official statistics show the number of EU citizens who came to the UK fell by 19,000 in the year to March 2017 compared to a year earlier, with the number of EU citizens leaving the country up by 33,000 over the same period.
In June, the National Farmers Union revealed the number of seasonal workers coming to work the harvest dropped by 17% in the first five months of 2017.
Even more worryingly for the industry, the number of returnees – who require little if any training because of their experience – fell by 50%.
According to Wright, what started with labour reductions for the harvest is now sweeping across the entire food and drink industry.
“Everyone I talk to is losing people and cannot replace them,” he said. “A guy I was with last week - he’s a medium-size crisp manufacturer. He runs three shifts, 24/6, they don’t work on Sundays, they clean the machines.
“Every shift he’s four or five down because he can’t replace them. It’s a big impact on productivity and a big impact on the capacity to produce stuff.
“He’s now limited, not very, but more limited than he would choose to be in his ability to fulfill orders by a labour shortage. And he’s in the north of England.”
When asked what ongoing impact of labour shortages would be, Wright said: “It’s tightening, it might be a little bit of drift in price, it might be a little bit of drift on availability, it might be a little bit of a drift on choice. It’s just the slight tightening of the circumstances.”
As for the reasons for the drop in overseas workers, Wright believes cultural and economic factors are to blame.
“One is lack of certainty and a general feeling of unease about whether you should come – but clearly others did come,” he said.
“The other is the currency,” Wright said, referring to the fall in the value of sterling against the euro since the Brexit.
He went on: “If you’re a seasonal worker and you go off and do the harvest somewhere and you get 16% less for your money for your work here and you’ve got the opportunity to go to Germany or France or Spain or Italy you’ll go there.”
The drop in sterling might be bad for recruitment, but it has helped food and drink exports.
In the first half of 2017, exports of all food and drink reached £10.2billion – up 8.5% on the previous year.
Increased exports to the EU helped fuel this rise, with a 9% growth in products sent to the bloc totalling £6.3billion.
While the Brexit negotiations are well underway – albeit stuck in phase one of the process – Wright is still unclear as to what immigration system the Government wants to adopt once the UK is out of the Single Market and Customs Union.
He said: “We are no closer to resolving the question of how you replace the flow of free movement of people, and that’s been kicked into the migration advisory committee.
“We won’t hear anything on that for some weeks.”
Some think the WTO is some sort of nirvana of free trade - well, it isn’t. Ian Wright
While frustrated with the Government’s overall lack of direction on key elements of Brexit, Wright is full of praise for Defra Secretary Michael Gove.
“I’m a fan, I think he’s a big beast, he’s a very, very thoughtful and able man. I think his record at Education and Justice demonstrates that he’s someone whose decisions are for the long term.
“I don’t mind there are things that you disagree with him about. I think that’s important and good. He’s extremely courteous.
“He’s the most powerful Secretary of State in Defra and the most impactful for arguably a generation - certainly since Hilary Benn in the 1997 to 2010 Government, and probably before that.
“He’s really taken the trouble to understand, think and I hope for us that he’s there for the long term.”
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Wright might be a fan of Gove, but he has far less time for Brexiteers who advocate pursuing trade arrangements on World Trade Organisation terms.
“They seem to think the WTO is some sort of nirvana of free trade - well, it isn’t,” he said.
Even when the UK strikes free trade deals with countries including New Zealand, Argentina, and Australia, that could cause some serious problems for the UK’s agricultural sector and the complicated issue of the Northern Ireland/Ireland border.
Wright said: “If you bring in beef and lamb, that is in effect like dumping, and that’s one of the barriers to an Irish border issue, as what the Europeans are terrified about is what they call backdooring.
“If we do what Owen Paterson wants us to do and get access to cheap lamb, cheap beef, cheap whatever, it comes into our market, there’s a bad effect on British beef and British lamb producers.
“But there’s a potential of an even worse effect on Northern Ireland which is an agricultural economy, and the Republic of Ireland which is also an agricultural economy.
“That’s one of the reasons why the border issue is so difficult, because you are dealing with an integrated agrarian economy and the prospect of an entry of that kind is hugely disruptive to both the economics of the countries and also the social cohesion.”