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Brexit ... what it could mean to the flower industry

Given the total chaos of the whole process, the truth is that anything we write may change overnight. However as of 23rd January this was the current position based on both a deal and a no deal scenario and which we hope helps a bit ... if nothing else shows that, in the event of a no deal, there is a strategy.  

When preparing this guide we have predominently worked with the Fresh Produce Consortium who have been holding daily meetings with Government officials, as well as using the British Florist Association and various government websites as our source. In addition we have made some guidance notes on how you may be able to ease your situation.

However, please remember, all business are different and as such you must make your own investigations and reach the decisions that are right for you.

Report by Caroline Marshall - Foster, Publisher, Florist Trade Magazine/theflorist.co.uk.  To contact Caroline email caroline@purplespotted.com


Deal

Assuming there is a deal between the EU and UK there will be a 21 month transition period from the day we leave (currently 29th March) during which time the final details of the deal will be thrashed out. The ‘deal’ is basically a Heads of Agreement … not the finished document and as such things could still change.

However the situation, in terms of detail, is very fluid at the moment and can change day by day. So, having spoken with the Fresh Produce Consortium at 15.00 hrs on 23rd January, at this stage we would say that no deal has been agreed & no industry specific information of any proposed deal is available.

Currently the UK Government appears to have rejected the opportunity to remain in either the single market or customs union. Therefore some change from the current frictionless trading with Europe is likely to occur.

In a similar fashion the current tariff free arrangements with the EU and more widely any future agreements with 3rd countries remain unclear. However considerable lobbying has taken place to reinforce the need for clarity and the likely impact on the sector if costs rise.

The situation is in constant flux but we will keep you updated as the Brexit process continues to evolve.

No Deal
In many ways it is easier to say what will happen in the event of a no deal as there is actually quite a lot of behind the scenes work going on to make this as easy as it can be. 

That said there is no getting away from the fact that things will change whether we have a deal or not. As such it is important to understand where you are in the chain and how you will need to react. There are still things to be finalised but this is the state of play as of 23.1.19.

The main changes will be as follows: 

Inspections

EU grown flowers and plants WILL NOT be inspected
Third Country grown flowers which are delivered VIA Holland WILL need inspection – this will include South American and Kenyan product. 
As such, lorries carrying mixed loads from Holland may prove tricky and result in split deliveries or delays. To avoid problems, if you are a florist it may be worth switching your source of Third Country product from a Dutch supplier to a UK wholesaler receiving them directly into the UK. If you are a wholesaler/importer you may need to think twice about mixed shipments.

Inspections WILL NOT be done at the point of entry to avoid backlogs but in locations called Place of First Arrival (PFA’s will normally be at the most southerly point on a journey) which can be at any approved location.*1

If allowed and space permits, larger operators like packers for supermarkets and wholesalers etc are likely to create Place of First Arrival facilities at their own premises as the delivery will be door to door and the inspectors (more are being recruited) can inspect on site, albeit in a contained area.

It may be – and would make sense although it could come at a price that would need to be passed on*2 - that Dutch online wholesalers will set up Place of First Arrival centres in the UK and do the inspections before onward delivery to their UK customers.

However, if you are receiving goods on a run (like a Flying Dutchman) and are not the first florist on the route (who logically should be the Place of First Arrival if allowed/has space) you could find delays occur. Again you may choose to transfer your buying to a UK based wholesaler or build ‘delay time’ into your buying schedule i.e. order a day or two earlier than you do now.

*1 Given there could end up being hundreds of PFA’s, Fresh Produce Consortium has been liaising with Defra and has suggested that there be regional Place of First Arrival locations/hubs. It hasn’t been agreed but is being considered.

*2 We understand from the Defra site inspections costs £33.42 per 15 minutes plus certificate costs and any labour involved on the part of the importer to do the new paperwork.

Tariffs

Currently all flowers imported into the UK are zero rate; this includes products from South America, Kenya, Israel and EU member countries as they all fall under a generic EU tariff. Other countries are charged at between 8.5 and 10%.

In the event of a no deal that will change although figures have not been officially released and according to Nigel Jenney of FPC won’t be known for a little while longer but it is expected they will fall in line with WTO rates.

According to the Fair Trade organisation, Kenyan roses would face an import duty of 8.5 percent (a reduced tariff through the GSP), and Colombia and Ecuadorian roses would face a duty of 12 percent (MFN tariff) from June to October and a seasonal reduction to 8.5 percent from November to May.

Conversely, in the Brexit update on the BFA site they are predicting between 4 and 12% based on WTO rates.

However, until the formal announcement takes place no firm figure can be made or assumed for either a deal or no deal situation. It is unlikely, but not impossible, that zero rates will still apply but the problem with that idea is that all 164 countries who belong to the WTO would have to be treated the same.

Given flower exports are concentrated in a handful of areas it would be wonderful if the UK decided, for the greater good, to stick at zero for everyone but we’re not holding our breath.

WHERE ARE YOU IN THE CHAIN?

Whether there is a deal or no deal there will be changes …  read on to see how it could impact on you.

Heading graphic Florist

I am a florist and buy EVERYTHING from a UK BASED wholesaler/cash and carry
You don’t need to do anything except probably rethink your ordering patterns just in case and certainly in the first few months whilst things settle down. Your wholesaler is going to carry the pain and will need to get their systems in place so, in fairness to them, the recommendation is to bring ordering and delivery back a couple of days. No flower that is good will suffer or give inferior vase life but it will give you peace of mind knowing it is in your shop, not on a lorry.

I am a florist who buys everything via a Dutch based on-line wholesaler
Unless your supplier is going to set up some form of UK distribution system and be the Place of First Arrival and whether it’s a deal or no deal YOU will be viewed as an importer and will have to register as an importer. Go to the PEACH website*, have an area near you designated as a Place of First Arrival, pay for inspectors where necessary and do the paperwork.

I am a florist who buys from both a UK base wholesaler and Dutch online suppliers
Your UK purchases will be fine – other than possibly having to bring back delivery a day or two – but your Dutch supplied products will be viewed as imports and you will have to register etc.

Heading graphic wholesaler

I am a UK based wholesaler
Depending on if you are part of a chain or independent (it all depends on where the first drop off takes place and what paperwork you already have in place) you will be classed as an importer and will need to enrol on PEACH and see if you need any phytosanitary certificates; remember from the end of 2019 the plant rules changes anyway. If you are an independent wholesaler, and have a separate area, it may be that you should apply to be a Place of First Arrival and possibly share the cost/logistics with other operators in your area but you need to talk to your local inspector.

Heading graphic ImporterI am an importer
You are probably already enrolled on the current systems but will need to make sure you are compliant with the new systems. Your Third Country imports will be treated differently so make sure you have the right systems in place for all supply lines and check out if you can set up or share a Place of First Arrival facility.

Glossary

What is the PEACH system
The 'Procedure for Electronic Application for Certificates from the HMI', (PEACH) system has been created for the Horticultural Marketing Inspectorate (HMI), and is used by businesses to apply for certificates of conformity. This electronic procedure is an aid to the efficient clearance of regulated consignments of Fresh Fruit and Vegetables (and Flowers) imported into or exported from the EU under regulation 1148/2001.
To apply or find out more visit http://ehmipeach.defra.gov.uk/Default.aspx?Module=About

What is the WTO?
In brief, the World Trade Organization (WTO) is the only international organization dealing with the global rules of trade. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible. At the heart of the system – known as the multilateral trading system – are the WTO’s agreements, negotiated and signed by a large majority of the world’s trading economies, and ratified in their parliaments.

What is the Fresh Produce Consortium
FPC is the UK's fresh produce trade association. Widely recognised as the voice of the UK industry, the FPC plays a unique and crucial role in creating opportunities, defending livelihoods and supporting the growth of its members' businesses. Although traditionally focussed on the fruit and vegetable sector, their work is now increasingly involved with the flower and plant sector and their information sources are excellent.
www.freshproduce.org.uk

What is the British Florist Association
The British Florist Association is the trade association for the retail florist sector and represents industry interests at local and national government level and to the media. The exclusive UK member of FLORINT, the European Federation of Florist Associations, the BFA is recognised as the voice of the industry representing 6,500 UK florists an runs a series of activities including Fleurex and Design schools as well as producing a quarterly magazine.
www.bfaflorist.org

Government websites
The Governments plans for a no deal exit relating to plants and flowers can be found here
https://www.gov.uk/government/publications/importing-and-exporting-plants-if-theres-no-brexit-deal


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