Overview of Covid-19 impacts from January to March 2021

A summary of how Covid-19 has impacted the seafood industry in the UK from January to March 2021.

Please refer to the downloadable version of this report for a full set of references, citations, footnotes and hyperlinks to external websites.

Introduction

Early 2021 was an uncertain and volatile period for many UK seafood businesses. Increasing Covid-19 infections and restrictions remained a challenge. Within this restricted operating environment new trade requirements were introduced, following the UK’s exit from the EU on 1 January. These changes further complicated operating conditions.

Just before the start of the year the UK re-entered lockdown as Covid-19 case rates rapidly increased across the country. The UK remained in lockdown from January to March. Restaurants were closed to dine-in custom and people were told to stay at home. For many businesses, Covid-safe operating became the new ‘status quo’. These businesses reported that the impacts of Covid-19 were ongoing but unchanged from the end of 2020.

Some signs of improvement were seen in February and March. Plans for easing restrictions over the coming months were announced by all UK home nations by the end of March. The Covid-19 vaccine rollout was also well underway with the UK meeting vaccination targets to the end of March. These promising signs gave many businesses hope that domestic markets would recover later in the year.

The situation in other countries remained uncertain. Many European countries increased restrictions in March due to increasing infection rates and limited vaccine roll out. This affected Easter holiday trade. Some businesses do not expect to see significant improvements in these markets until at least the end of the summer.

The UK’s transition period for leaving the EU ended on 31 December 2020. The EU-UK Trade and Cooperation Agreement (TCA) was agreed in late December 2020. This agreement set out the new EU-UK trading relationship. The agreement included the following changes:

  • The catching sector was allocated some additional quota and enters a further transition period, with EU vessels still granted access to UK waters.
  • Tariff free trade is ensured between the UK and EU, depending on the origin of the traded product.
  • Additional paperwork and checks on imports and exports are required.
    The Northern Ireland Protocol takes precedence. Different rules apply to seafood landed in Northern Ireland and seafood traded between Northern Ireland, Great Britain and the EU.
  • Businesses that want to employ EU labour need to sponsor candidates under a new points-based system.

Businesses experienced major trade disruptions in January and February as they worked through these changes. The frequency and severity of disruptions reduced as they developed a clearer understanding of the new requirements and could more effectively identify and address issues. However, increased transit time and cost remained an issue to the end of March.

Overall, this was a challenging time for many businesses. A year of the Covid-19 pandemic had already worn down their resilience and financial reserves. Many foodservice and export businesses found themselves in a particularly precarious position.

Illustration of impacts from January to March 2021

The following diagram shows how Covid-19 and new trading requirements impacted the UK seafood supply chain in January to March 2021.

Restrictions return

Shocks: The beginning of 2021 was a highly uncertain and volatile period for many UK seafood businesses. Increasing Covid-19 infections and restrictions continued to challenge businesses, with the UK back in full lockdown during this period. New trade requirements were introduced following the UK’s exit from the EU on 1 January, further complicating operating conditions.

Diagram showing Covid-19 impacts on supply chain from January to March 2021, compared to same period in 2020. (as detailed below)
Diagram showing Covid-19 impacts on supply chain from January to March 2021, compared to same period in 2020.

Supply

  • Landings – strong negative effect
  • Aquaculture – mild negative effect
  • Imports – mild negative effect

Production and Distribution

  • Fish auctions – similar
  • Logistics and Transport – strong negative effect
  • Processing and Distribution – mild negative effect

Markets

  • Foodservice – strong negative effect
  • Retail – strong positive effect
  • Exports – strong negative effect
  • Direct sales – mild positive effect

Government Response

During January to March new seafood specific government support schemes were opened.

In January, a £23m UK fund was announced for seafood exporters that were most adversely impacted by the Covid-19 pandemic and challenges of adjusting to the new requirements for exporting to the EU. This fund was set up in recognition of the depressed market conditions continuing to face much of the industry due to the pandemic and the additional impacts of the new regulatory environment for exporters under the TCA.

The scheme was targeted at small and medium enterprises and the maximum claim available to individual operators was £100,000. The scheme opened on 9 February. Businesses were required to evidence a “genuine loss in exporting fish and shellfish to the EU”. Support was to be made available immediately and paid retrospectively to cover losses incurred since 1 January 2021.

Businesses exporting during January to March and able to document costs of disruption were eligible to make a claim. However, businesses who took the precautionary decision to suspend trade in January to avoid disruption were not able to claim for lost revenue.

In February the Seafood Response Fund was announced with additional support for the catching and aquaculture sectors.

Other, home nation specific, schemes were announced in February and March:

  • In Northern Ireland, further aquaculture support was announced to address losses from the impacts of the Covid-19 pandemic.
  • In Wales, two packages of support were announced. The first was for fishermen to help with ongoing Covid-19 impacts as well as the impacts of the end of the transition period on the shellfish sector. A second dedicated package of support was announced for large scale LBM exporters.
  • In Scotland, a £7.75m fund was allocated to help the sector deal with the impact of Covid-19 and the end of the transition period. The fund provided support to fishermen, seafood businesses and harbours. £6.45m of this fund was dedicated to the Seafood Producers Resilience Fund to support trout farmers and the shellfish sector. £1m was made available to support investment plans for ports and harbours faced with a loss of income from landing fees.

Further support for businesses in the retail, hospitality and leisure sectors was also announced.

Read more about Covid-19 impacts from January to March 2021

Individual business impacts within each area of the supply chain are explained in more detail in the following webpages:

Contacts

For further information on our review of Covid-19 impacts on the seafood industry contact:

Ana Witteveen
Economist
t:
0131 524 8659
m:
07815 428 554