The Big Read: Seafood sector tries to stay afloat amid post-Brexit 'nightmare'

"It has been a nightmare, an absolute nightmare," said James Withers, chief executive of Scotland Food and Drink.

"We've heard from world-class logistics operators who will say the last few weeks have been the worst weeks of their entire career."

Asked if he has lost money since the start of the year, Alasdair Hughson, the director of live shellfish supplier Keltic Seafare in Dingwall, laughed.

"Oh my God, have we lost money? Oh my goodness."

Mr Hughson said the changes following the end of the Brexit transition period have had a "catastrophic" impact.

He estimated he has lost six figures in sales since January 1, and raised concerns for jobs and businesses.

Mr Withers has similar fears. 

"The risk is, unless we start seeing meaningful progress, that we will see a fundamental restructuring of European supply chains," he said.

"And if that means away from the UK, we will count the cost of that in jobs, in reduced economic output and ultimately in communities – many of which in Scotland are reliant on the food industry."

Fishing loomed large in the Brexit debate. It might make up a small part of the UK's economy, but it has a symbolic value. 

It's also important to many fragile coastal communities. 

Businesses up and down the east and west coasts of Scotland pride themselves on getting fresh seafood to markets fast.

Leaving the EU, it was argued, would allow the UK to take back control of its waters.

But the fishing industry has been left bitterly disappointed with Mr Johnson's Christmas Eve Brexit deal.

The final Border Operating Model, a guide to importing and exporting goods, wasn't published until hours before the end of the Brexit transition period on December 31, leaving no time to test the new systems.

Mr Johnson argues the changes introduced from the start of this year will be "very beneficial for Scottish fishing" in the medium to long term.

His deal will see the EU hand over 25 per cent of its fishing rights in UK waters by 2026.

But the Scottish Fishermen's Federation said this arrangement means the EU fleet "will continue to have full and unfettered access to UK waters until the middle of 2026, and should the UK want to change these arrangements at that point, the EU can impose a suite of punitive sanctions on the UK".

The disruption of the last few weeks has centred on seafood exporters, who say they are now drowning in paperwork as they attempt to get products into the lucrative EU market.

Fish is a perishable product. Many exporters are working against the clock.

But system glitches and bureaucratic red tape have led to costly delays and losses are piling up.

William Calder, the director of Scrabster Seafoods, lost tens of thousands of pounds on an £80,000 shipment of white fish earlier this month after paperwork difficulties meant it couldn't leave the country in time.

"We can't as a business keep going on at the level that we are, in terms of staffing and everything else, with no export markets," he said.

"Everybody is still hoping that things are going to be resolved and things are going to get sorted out. 

"But if we're still sitting here in six months' time and it's no better then there's going to be a lot of businesses saying, 'Well, to hell with this.'"

Donna Fordyce, chief executive of Seafood Scotland, said exports have plummeted to around 20% of normal levels. 

She said langoustines and other shellfish are a premium product in Europe, but estimated around 90% of shellfish boats are currently tied up, alongside around a third of the white fish fleet.

"The impact is the hardest felt in the smaller fleet," she said.

Exporters protested in central London earlier this month and the UK Government later announced a £23 million fund "targeted at fishing export businesses who can evidence a genuine loss in exporting fish and shellfish to the EU".

But 11 days on from this announcement, industry figures are still waiting for the full details. Ms Fordyce said it was "frustrating". 

Mr Withers said the compensation scheme will be a "sticking plaster at best" unless issues are fixed.

He said January has been a "car crash". 

"There have been some suggestions over the last week that things are getting better, and there have been some improvements," he said.

"But the reality is we are a million miles from where we need to be, and it feels like doing business with the EU for a lot of companies is like playing the lottery.

"You hope you get the right result, but it's very difficult to guarantee that you will get your product to the customer when they need it.

"And the challenge has been that ultimately, we have a new multi-billion pound trading system which is being tested in real time.

"And despite all the warnings that that was going to cause massive problems, that IT systems and border inspection posts and companies and logistics people were not ready, the UK Government ignored those warnings and ploughed on and unfortunately we are having to mop up the mess as a result."

Mr Withers said sending Scottish shellfish to Madrid used to be a similar process to sending it to Manchester.

Now there are multiple different steps, reams of paperwork and glitches galore.

"The problem is that there are dozens and dozens of things that have been going wrong at multiple different points, and it has felt like whack-a-mole," he said.

Problems have ranged from the structural to the ridiculous, with a debate over whether forms should be filled out in red or blue ink.

Mr Withers said it has become clear that the EU's imports system was never built for a country as integrated into its supply chains as the UK.

He added: "It was certainly never built to deal with what's called groupage – the consolidation of different products from different companies into one lorry, which is a very common way that hundreds of exporters of Scotland send their product into the EU."

He said customers in Europe are already going to Denmark and Norway for seafood instead of the UK.

"The speed at which this needs fixed cannot be overstated," he said.

"Confidence and reputation takes longer to fix than an IT system, so we need this to move quickly.

"And the UK has to open up dialogue with the European Commission to see whether we can provide the assurances they need as a third country, but in a smarter, more streamlined, quicker and cheaper way."

Mr Withers said he has spoken to at least two businesses in the last couple of weeks which "think they are finished" if the current situation goes on much longer.

"We should not underestimate the financial impact of this. We sell £1.2 billion of Scottish food to the EU every year," he added. 

"That has fallen off a cliff already in January, compounding what was already a nightmare due to the hospitality market shutting down with Covid.

"And we're not even at the peak time of year for getting products out the country."

The red tape itself has a direct cost. Mr Withers mentions one business that sent a £2,000 consignment to the EU. The associated bureaucracy cost £700.

Mr Hughson said it is becoming obvious that for some, the costs of exporting are going to be "prohibitive". 

"Unless there's any changes, you're still looking at people bowing out of the business, I would say, in the short-term – not even in the long-term," he said.

Despite the impact of the coronavirus pandemic, industry figures insist there is still a market for Scottish seafood in Europe, not least from retail outlets.

Further changes coming down the line – such as the UK introducing its checks on food imports from the EU – have raised fears of yet more disruption. 

A UK Government spokeswoman said it recognises the "temporary issues the fishing industry is facing". 

She said: "That's why, following a constructive meeting of the Brexit Business Taskforce last week, we are working with the Scottish Government to set up a working group to understand and address any practical issues facing Scottish businesses, including the seafood sector.

"It's also why we have announced a £23m scheme which will provide crucial support for fishermen and seafood exporters, who have experienced delays and a lack of demand for fish from the restaurant industry in the UK and Europe.

"This is in addition to the £100m fund announced by the Prime Minister last month.”