A Confederation of British Industry (CBI) spokesman told FoodManufacture.co.uk that the Export Credit Guarantee Department’s (ECGD’s) new provisions for exporters - due to be phased in from March - cover all the essentials of “selling products overseas and ensuring firms get paid for them”, including short-term credit insurance to cover the risk of non-payment in emerging markets.
Other key provisions include insurance regarding foreign exchange fluctuations and working capital guarantees for high growth SMEs (small to medium-sized enterprises) tendering for international contracts, which will increase their chances of securing bank loans above £1m.
However, a spokeswoman for the FDF (Food & Drink Federation) said the ECGD's new export measures did not cover exports of consumer foods sold on short credit terms (where payment is made relatively quickly) and called for more clarity: “We are trying to ascertain whether some food and drink companies would be eligible in certain cases,” she said.
Federation calls for clarity
“For example, whilst the ECGD’s short-term credit insurance policy is being extended to cover more exporters, it says that it may exclude food and drink products, but this decision will be within the ECGD’s discretion. Members need more certainty on this, as private companies may not be willing to provide insurance either."
According to the ECGD website, the extension of short-term credit insurance "may exclude clothes, consumables, foods and other perishable goods on risk grounds at our discretion".
Commenting on the measures, the CBI claims that UK SMEs (small to medium-sized enterprises) are notable for their poor export performance, but the FDF emphasised year-on-year export growth within the food and beverage industry over the last six years.
FDF figures sourced from Eurostat show that UK food and drink exports (including alcohol) grew from £11.69bn to £14.39bn between January 2007 and December 2009.
And SMEs had "undoubtedly contributed to this growth", said the FDF. "However, SMEs do face more challenges in exporting, so this could affect their performance and perhaps lead to under-performance if they are not given the support they need.”
UK food exports: the future
The FDF said steps that could be taken to “unlock the barriers” to efficient UK export practices - for SMEs in particular - should include tackling poor public perceptions of manufacturing; addressing difficulties firms face in gaining access to overseas networks; negotiating trade barriers restricting market access and handling different intellectual property, legal and regulatory frameworks.
The spokeswoman added that government agency UKTI (UK Trade & Industry) needed to prioritise the food and drink sector within a strategic framework “so that regions do not miss opportunities or compete with each other, which could result in dissipating effort and confusing customers”.
She also called for food and drink representatives to be included on outward trade missions, with more ministerial and ambassadorial support within key markets and events, adding that Local Enterprise Partnerships (where local authorities partner businesses to determine economic priorities)“must consider exports as well as inward investment”.