 Good morning, and a very warm welcome to the eighth meeting of the Constitutional Europe, external affairs and culture committee in 2024. Our first agenda item is the decision on taking business in private and can ask members of the committee that they are content to take items three and four in private. The second agenda item is to continue your evidence taking on the inquiry on the review of the EU-UK trade and cooperation agreement. We are delighted to be joined this morning by Gary Stevenson, Global Regulatory, Sustainability and External Affairs Director of DEVRO, Margaret Carlin, Executive Department Manager of Cefetra, Dario Ricomini, Managing Director of Aldomac, Paddy Jack, Business Manager of Scotland, DLF Seeds, Tony Drumdreck, Global Industrial Performance Director, Innovate Foods and James McSween, MD of McSween's of Edinburgh. I think that our clerks have been in touch to say that we've got three themes that we want to cover today, and we'll take each one in turn. The first being to gain an insight into your experience as Scottish businesses of trading conditions between the UK and the EU, as things currently stand for your businesses. If I can maybe go in reverse order and I'll invite Mr McSween to start. Challenging is probably a word I would use in a nutshell to explain trying to get product of animal origin into Europe. I wouldn't say that it's consistently the same. You have some peaks and troughs where product moves a bit more easily sometimes and then less easier other times. Since Brexit, we've had some significant delays and had to face some adverse costs in trying to recover product that got stuck in France, which was particularly challenging. It's not straightforward. The way product of animal origin has been considered as it is entering into Europe is significantly harder than exporting to other countries in the world. Europe is not my only export market. We have exported into Canada, the United States, UAE and Singapore, which are far more straightforward because it's a more settled passage of the product to move. Whereas I still think that our European cousins are still interpreting the laws and there's a difference of interpretation to end what day of the week it is and which vet it is, for example. Thank you very much. Can I move to Mr Dunbreak? To give a little context, Innovate Foods was formed in 1989 and at the beginning of 2020 we became part of the Frostcrown Food Group. We operate from Cercori but we're part of a business that has about 1,800 employees, with two factories in Germany, two in France, one in Wales, Cercori and one in Idaho, so we've got a very cross-border perspective. We joined the Frostcrown Group because in 2018, looking at Brexit and the potential consequences, I thought, well, I need a manufacturing partner so that I can continue to supply my European customers and if they make it in Germany, then maybe we make stuff in the UK for them, but we ended up joining. In 2020, it was relatively easy to manufacture in the UK and ship overseas. In 2021, the barrier came down pretty hard. We were still doing a bit of stuff because Germany was short of capacity, so we were manufacturing for them. The products we make are finger foods, things like bread and mozzarella sticks, chilli cheese nuggets, etc. Ordinarily, we might have considered them to be composite products, but when it comes to getting it through the EU border, they consider them to be dairy products. That creates a few problems. We stopped shipping to Europe in 2021. We had two trucks of chilli cheese nuggets. The first one went through the Dutch border, no problem. The second one got stopped while they disagreed with the binding tariff notice on the commodity code that had been issued by Germany. It went backwards and forwards for six weeks by which time it had melted and was written off. We haven't actually tried since, but we are about to start trying again because it feels as though the asymmetry in relations is starting to rectify itself. We export to China, Hong Kong, Japan, Korea and Malaysia, Singapore and the Gulf States, and that is far, far easier than our experience of shipping to the EU. There was one point that I was talking about with Gary. In order to have a health mark to ship products containing dairy, you have to be registered under Regulation 853 because that gets you on the Traces system so that people can look you up. If you are registered under 852, which is what we actually need because we are not processing, we are using dairy as an ingredient. If you are registered under 852, you are not on the Traces system so they cannot find you so they won't let anything in anywhere. We have had to revive a product that we used to make, which involves a heating and cooling process, in order to get on the 853 register that Gary will be on because they are meat businesses. It is part of the landscape that we have had to navigate. Is it getting easier? It has been relatively easy bringing things in, but it is horrible getting things out. For example, samples, sending samples to our German colleagues who want to sell them to their customers, which can be ladle international. Even to supply ladle in the UK, you send them to Germany to the ladle international headquarters. It costs between four and five times as much. It used to cost 250 quid. It is north of 1,200 quid now for the same sample. Even then, it might get left somewhere and defrost it on the way. I work for DLF Seeds, which is a company that breeds seeds in many countries of the world. We import what we have grown in Denmark or New Zealand into the UK. We make mixtures for the UK business, but also for Ireland. It is the supply to Ireland that has hit the buffers. In fact, so much so that in 2021, 2022, we have decided to build a new plant in Waterford to supply both the Republic of Ireland and Northern Ireland because it is so much easier to supply from the Republic of Ireland into Northern Ireland than it is growing it here. The biggest barriers that we are facing are importation of seed. Our customs agents had two people doing the work for us. They now have 14. The delays are huge. We have found that if we have a lorry that has a driver with it, we can normally get past the import problems. If we send a container without a lorry, it gets stuck in a dock for several weeks. When you are planning the new changes in grass—we used to sell perennial rye grasses, Timothy's white clovers—farmers now want really diverse mixtures with lots of legumes and herbs and so on in England that are getting paid to do this. There is a huge range of new species that are coming in that are not registered on the UK national list. When you go to Europe to buy something like a crimson clover or something like that, if there are five varieties and only one of them is on the UK national list, you can bet your bottom dollar that is the expensive one. Mr Darrym, I hope that I have pronounced that properly. That is absolutely fine. Thank you. I am Darrym recombining and managing director of Altamag Ltd. We are a confectionary manufacturer specialising in tablets, fudges and some baked goods. Exports are a pretty important part of our business, accounting for a large percentage. Since Brexit it has been challenging. We have got it down to around about 20 minutes a pallet now for all of the regulatory compliance that we need to do. That is okay. Pallet quantities going out are okay. Retail quantities going out, direct consumer, is impossible. Although you put exactly the same information on the retail pack as you do on the pallet consignment, for some reason it does not get through the postal network, we still do not know why. We have just stopped. For import, there is still some confusion even with large carriers. An example is that we brought in some freeze-dried raspberries from Poland and before we could take it off the truck we were required to give them a check for import duty and VAT, which were not due on the commodity. We gave them a check, cancelled the check and now we have debt collectors looking for the money that is not due even though TNT himself said, okay, it is not due. Those are some of the practical challenges that we have as an importer and exporter. Have the debt collectors been instructed by someone? I think that it is just part of the machine. They were instructed by TNT as part of an automated system because we did not pay a fee that they thought was due when it was not. Can we move to Ms Carlin-Margart, please? Sifitra is one of the major raw material importers into the UK and Ireland and we supply the food industry, the animal feed industry, the brewing industry and the Scotch whisky industry with our raw material. As you can imagine, a lot of the raw material is quite varied so there are a lot of our grains that have preferential origin status because of the TECA agreement and where we can supply domestically UK wheat, molten barley, whatever, there are sometimes, depending on the UK harvest, that we obviously need to import from the EU. Grains all carry a preferential status and they potentially carry a £79 per ton duty import. If you do not claim preferential status, if we are buying from an EU supplier, then that EU supplier must be registered on the exporter system in the European Commission portal in order for you to be able to import into the United Kingdom tariff-free. However, that information is not just found at the click of a button, you actually need to go and hunt for it. Experience now a couple of years in, obviously tells you what to do but initially, if we were to buy from an EU supplier of wheat from Germany and they were not REX registered and we imported it into the UK, then we would have to pay full duties. On a vessel, a 4,300 ton vessel, that can be around £340,000 extra to our company. We also buy a by-product of the flour mill industry. We buy both in the UK, like from Hovis and Warbitons, but we also buy from the EU mills, where most of those flour mills are in Germany and Austria. The by-product of the flour mill industry is called wheat feed, which is a product that cattle apparently adore. It also carries a duty, so it is also a preferential tariff. When we buy from those manufacturers, they barge the product up the rhyme to the port of Rotterdam, where we then take over from a fob incotem basis and we then charter the vessel to bring it to the UK. However, EU is not a recognised origin of product and that, or those flour mills can, quite rightly so, economically viable. They amalgamate the origins coming out of their Austrian mill or their German mill. We have to give our UK customs an origin and we are unable to do that correctly. It is either German or Austrian and it cannot be both. There is only one place on that MRN imports ad for HMRC to confirm origin and we cannot do that. We can do it, but we are not being accurate at all. We also apply for TRQs. Sometimes TRQs trade tariff quotas. Unfortunately, Northern Ireland is neither an EU member state nor is it UK territory when it comes to bringing product into Belfast and we have a very large store in Belfast. However, ironically, we can apply for a TRQ in Southern Ireland and because there is no border on the island of Ireland, there is nothing to stop that product physically moving up and down, so it defies the reason why Northern Ireland is neither in the UK nor in the EU when it comes to TRQ quotas for businesses like ours. We have a dutyable product of non-EU origin, just trying to give you some examples because I feel that that is easier. We purchased some Brazilian broken rice from the European Union a few months ago, so it did have EU free circulation status. We bought it from our sister company in the Netherlands and we brought it into GB and it was stored in GB for GB customers. However, the current Red Sea issue with the hooties has meant that broken rice that we have purchased months ago from Myanmar is somewhere around the Cape of Good Hope. We are contractually obliged to give broken rice to our Irish customers, of which we cannot. We have already paid £54 due to buying from the European Union of Brazilian Origin broken rice into GB. We now need to move that from GB back into the European Union, which is the island of Ireland, and pay another £54 duty. Although a few months back, we could prove that it had EU free circulation status, but that does not matter. We still have to outlay that £54. That, to me, is a bit disjointed and messy. There should be a solution to something like that because we can easily prove EU free circulation a few months previous. We buy products from what we call generalised scheme of preference countries that are underdeveloped. Like Myanmar, like Angola, for example. The European Union has kept the GSP scheme, but we, as UKGov, on June last year, moved to a new trading scheme called the Developing Countries Trading Scheme. It essentially works exactly the same way as the GSP scheme. However, Northern Ireland is completely confused by the whole thing, because it is not aware of whether it is in DCTS or whether it is in GSP. Equally, our suppliers rightly assume that Northern Ireland is UK territory and they create all the incorrect paperwork. We have to go back to them and explain that it is actually an EU regime because it is a non-EU commodity that you are bringing in, and therefore you are in a different scheme. It is all of that mess sometimes that, if you are not aware of it, can cause a real headache for businesses. Thank you very much for that. Finally, I can invite Mr Stevenson from Devrelgarry. Hello, everyone. Thank you for inviting me to the committee. Any excuse to talk about the pain of Brexit over the past four years is always a pleasure for me to share the pain. What I am going to do is to talk about the trade and tell me if any of this fills into other areas of the discussion. I want to talk about general trade, research and development, regulatory compliance and solutions. If all those fit in the first part, then I will cover all of those topics. I want to start with a bit more of the basics as to the system that is involved. First of all, Devrelgarry is a Scottish-based business. We produce something like 800 million metres of sausage casing, sell it around the world. Half of it goes to the UK, 25% goes to the EU and 25% to the rest of the world. We are in a fortunate position in that I already understood the system before we left the EU in that we already brought product into the EU. Even as a business that understands what is required, we still had some problems. Just to run down what is required, you need to check that your product is permitted within the EU. That is not always the case. For example, sausages are not allowed in the EU to import from non-EU countries. You need not what is called a non-EU third country establishment registration, which means that you are on a list of businesses within Europe for your product category only, and you have to have that before you can import into the EU. You have to have an update export health certificate, which has to be signed by an official vet, so you need to find a vet that will sign those certificates, and then you need to do the customs declaration. This is all pre-trade. When it comes to the actual trade itself, it is costing us about £1,200 extra per container, which is about an 83 per cent increase in cost. That does not include the people resources, so we are probably talking about an extra full-time employee doing all of this work across various individuals. Within that cost is the pre-shipment registration. There is alignment with the scope of the border control point, so you can only ship through a border control point, which allows your type of product to be inspected. One thing that we did not know, and this is where we got tripped up in the first few weeks, was that for the Calais, you have to contract a border control point facilitator to take your lorry from the lorry park to the border control point. I think that there is another money-generating scheme in Calais. You have to have your export health certificate, which I think has been pointed out before. There is sometimes disagreement as to what should be on there and what should not. Those are, we consider, teething problems. There is increased transport delays because you have to take your product through a border control point, which is not always open at the time you want it. Those are the types of problems and those are the types of additional costs that we have. As a business, we have some benefits in that we are an animal-based product, but we can ship container loads. That cost is for a container of one type of product. We are not like a container with lots of different products that require lots of different certificates. In a way, it is more simplified for us. I will go on to the problems, but they are more teething problems. Vet disagreements are problems that are sometimes both export and importing. We generally know the requirements better than the vet, which is a bit challenging at times trying to convince a vet that they are wrong when they are allowing your product in. We have had a few of those discussions. On a positive note, we have managed to supply and continue to supply all of our EU customers with the product that they wanted. We have got through it, but it is at cost. Some of the other areas—we are now at competitive disadvantage because we have got that additional cost. We compete with EU-based collagen casing manufacturers, so we have to compete with that added cost, which probably comes around the region of 7 per cent on the cost. We are already at disadvantage there. They do not have to go through any of this to come into the UK, so they have also got a competitive—there is a fair playing field here, but we are at competitive disadvantage over there. Those are the additional costs that are involved in trading with the EU. There is another really important one that has been little understood, which is about product development and research. It is very difficult to get samples into the UK or into the EU. When we are in the EU, you have got no problem because you can move samples around for you just in a free market. As soon as we came out, you have got two options to get a sample. We do a lot of market research. We need to take products off the market in Croatia or Germany. However, to do that—it is not the case now to bring it in, but it is sending it out, but it is going to bring it in. I will come to that in a minute. You have got two options. You either do it as a commercial shipment, which means that you have got to go through everything that we have just gone through with all the costs and the export health certificates, et cetera, and ship it as a commercial shipment, or you can do it what is called a permit. The permit system for the UK is under the UK's control. We are not tied by an EU process. However, we are adopting the same EU principles. It was almost a barrier to trade outside the EU, so we are now in a problem where the only way to get some samples is because you cannot get an export health certificate from a product from the market. If it is a competitor product, they are not going to give you an export health certificate, neither are the products on the market. You struggle to get the export health certificates. You have got to use the permit system. The permit system was designed for microbiological samples coming in, so things of high risk where you need biosecurity measures. I am not saying that meat products do not have some of those, but you have to go through this. It is about a 12-page document asking all sorts of questions about things that have no relevance to your product. The system is completely opaque. You have got no idea when you are going to get a decision, and you cannot challenge that decision. It comes to the end of it, and you are required to implement biosecurity measures that are disproportionate to what you are trying to do. We have tried the permit system twice, and that was enough. We have said that it is too difficult. We will try and bring everything in on the commercial. We are having to move product development to the Czech Republic, and that is not good for the UK development. The frustrating thing is that it is in our control. If we had a more risk-based approach to samples, rather than this standard process, you could facilitate that investment in research and development. As a global business, trying to convince the business to invest in Scotland for its product development is challenging because you cannot get samples in very easily. That is important to developing the future of our business. The next piece that I want to call is regulatory compliance. By definition, we are going to start diverging. We have not got a big problem with that. We have to comply with the South Korean regulations, with the Japanese regulations. We just comply with the EU regulations. However, there has been a consequence of the UK pulling out of Europe, and that is pragmatism. The EU commission has become much more precautionary. What it is doing is making decisions on the potential risk of a material, rather than the real risk. That is causing the regulations to diverge more. There is an example of mycotoxins in oats, for example, which is causing problems for the old manufacturers. What it is doing is developing a different system. Though we originally thought divergence was a bad thing, in actual fact it is probably a good thing because it means you can still ship to the UK certain products that the EU is prohibiting. I see that as a future issue. The last thing was really solutions. For me, the best solution for the commercial traders is to have mutual recognition or a veterinary agreement to remove all this unnecessary. It is not doing anything, apart from adding cost and complexity to the system. If there was mutual recognition of standards or a veterinary agreement, whereby you did not need to do any of this and just continue the free flow, that would really help the business. The second one is to look at our permit system for samples. It is not fit for purpose. I have raised it with DEFRA. I have raised it with certain MSPs. We always seem to get to the same standstill, which is, I will wait for the BTOM, the border trade operating model that we are introducing at the moment. I thought that could help. We are now in a ridiculous situation where we import treated hides to make collagen. If that treated hide is designed for non-human consumption, it is classed as low risk. If it is destined for human consumption, it is medium risk. They are exactly the same. The risk of bringing it in is exactly the same for both products. They have a different view. It is almost as if there needs to be a rethink about how we regulate within the country to ensure that we understand that the thriving business is critical to the economy, which means that it is critical to the finances of the Government. It has all been very helpful. Thank you so much. It is around table, so I want a free phone discussion about the issues that you have already raised. I will finally come to what you would like to say about the review of the TCA. You mentioned the border controls that are about to be implemented in the UK side. What are your worries about that? Do you foresee that some of the problems that you had in the other direction are going to happen again and impact the business? I do not know if anyone wants to. You mentioned it. There are two ways of looking at it. One is that it is going to create a fairer playing field for businesses, but that means that it is going to cost more to bring product in. If you are an importer, you are not going to like it. If you are an exporter, it is fair enough. I was a little bit disappointed. The initial proposal looked very positive. It was talking about a risk-based system, a world-leading system that will show the world how to do controls. It sort of drifted back into what it was, which is frustrating. I like the idea of the low, medium and high risk, but they have to be serious about what they mean by low risk, medium and high risk. They are putting too many things into medium risk than the low risk. Margaret Ewing, do you want to come in on that? Border control posts for us are probably more on the organic side from an import point of view. At the moment, we deal with organic imports into various different ports throughout the UK. My concern is what you said. When you are coming into a certain port and you have to travel x-amount of miles to get to that BCP at an additional cost to you. That is probably the biggest concern for that. I am hugely frustrated that the model has taken so long to come to fruition. The playing fields, to an extent, have not been level and we have been penalised for Brexit. Not that hope is a strategy and we should not be relying on the model to level the playing fields. We have to sort our problems with importing and exporting with Europe on equal terms. I really hope that, in a way, the pain that the UK has been subjected to will feel the same frustrations shortly when we start enforcing the legislation. It has been ridiculous for every business. Samples are a great example of trying to get speculative samples out to customers and being an agile. We are a small and merging exporter. We are doing roughly £100,000, but you need to be able to get samples. I can get samples into other countries easier than I can get samples into Europe. It is preventing growth. Even if it is small, but bigger businesses have the same frustrations. Doing a commercial shipment is financially punitive. We stopped exporting to Europe three years ago because, once you have had a bad experience as cost you £60,000, you just simply do not do it and it colours your thinking even if the barriers are only in your mind. It is just that they were not only in our minds. The whole Brexit malarchy is regrettable, but once you have made the decision and once you have set on the path, we should have had symmetry to our inhibitions years ago because it was the only way that the EU was going to take a step back and go. At the moment, are we a third country or a third world country? Today, we are being treated like a third world country when it comes to trade on the way out rather than a third country who has the same standards. Our standards did not change overnight, but that is their prerogative. However, because the UK did not impose exactly the same symmetry, it has taken much, much longer and death by a thousand cuts. I put a note about origin. We only have origin problems in one country and it was China. When we came to export to China, nobody in our acquaintance had ever tried sending a mushroom and cheese and vegetable-based product to China, but we use UK-only ingredients for them. Everybody else does not seem to mind too much, but we buy mozzarella from Denmark. We buy mushrooms from Poland, Holland, Ireland and the UK. We process it in the UK. Sometimes we want to send it back to the country that it came from, but we cannot without jumping through all of those hoops. It is that asymmetry that one would hope that pragmatic heads might eventually come, but hope is not a strategy. Our choice was what we will export elsewhere in the world, so we probably generate 10 per cent of our revenues from exporting to the rest of the world. We have gone from doing about 5 to 7 per cent in the EU to doing zero, but we are, as part of a bigger group, about to have another go, just because we are cussed and bloody-minded and determined and we cannot see why it should not be sensible to do that. I was just going to say if Dario or Paddy wanted to comment on the border controls issue particularly. As one of the smaller businesses in the room, the easiest thing for me—I cannot be an expert or we cannot be experts in absolutely everything—so what we would really like to do is say, I want to export some orange-flavoured fudge to Poland with all of these ingredients. What do I need? Here it is. That is what I need to make it seemless. Paddy, do you want to comment? Gary, here. I will come on something that Tony has mentioned. To me, the whole debacle of Brexit is about leverage, so we went for a hard Brexit and therefore the EU wanted to punish us, and therefore it was not flexible. With the new border trade operating model, we are starting to put a little bit more pain on the importers. That has to happen. They have not got enough official vets to meet all the requirements. They do not understand what is going to be required when they ship into the UK. A lot of manufacturers in the UK did not know what to do. They are going to be in exactly the same position. There are going to be small manufacturers that will say, I did not know how to do that, and the product gets sent back. Being in the UK, we tend to be a little bit more softly and we will give you a warning and tell you what you need to do, which is really helpful. At the end of it, it should be a bit of pain for the EU that will help some leverage on the mutual recognition of any standards approach. The only way that we are going to do it is to share some of that pain. Thank you for your honesty this morning. It has been very good to get that flavour. You have all adapted, or even some of you have stopped doing things because of the pain that you have indicated, but also because of the loss that you would suffer. Trying to keep track of the EU legislation and changes, that will continue to adapt. You talked about bringing a new member of staff in to tackle that. Has that been the way that you have managed it as organisations by bringing an expert or someone in to try and manage that so that you are getting a much better free flow of what is actually happening, so that you understand the legislation? In the past, you have tried something and it has failed. You have to take that risk, but it is managing that risk for the future and seeing what you can achieve. It would be good to get a flavour of what you see coming in the future for what you have already seen coming in the past. Anyone wants to jump in? I will control that, because that is my role within DevRel. I was brought in 12 years ago as a regulatory expert. They did not have any regulatory expertise. I knew EU regulation, US, Australia and I was familiar with it. I understand how the systems work. How some of these other guys operate, I have no idea. I have tried to help through the Food and Drink Federation in Scotland, where I am willing to share what I think is relevant to them, but it is almost just an indicator as to what you are going to require in this area. FDF also has monitors EU regulations, which is quite helpful for the members to follow that. Again, it requires a resource within your business. In ours, it is me who can follow all the different committees within the Food and Drink Federation. There are probably 15 committees looking at different things happening in the UK and the EU being an important market. There is an additional resource. Could that be picked up within the civil service? Yes, it could be, but I think we run some of these problems, which is about thinking about those roles of supporting business. You get it within the Department of Business. Of course, it is now. Bays do that for the UK, but that sort of help will be so beneficial to businesses. The problem you have is that it is so specific. I was at the DG Santimeter, which is the director general in the EU for veterinary medicine residues, trying to get a change to the regulation for something that impacts us. It is not going to impact anyone else here. I think that is the problem. It is so specific to your product. You can give the generalities, but if you are going to trade in Europe, you are going to have to either find a consultant or a body that can provide that information for you, which is probably the solution for most. Or you recruit someone who has those skills or can build those skills. You said something about trying and filling. I do not think that any of us have ever tried to export and tried to fail, because prior to sending a consignment out, you want to make sure that you have got every I dotted and T crossed. The situation that I experienced was that the regulations changed while my product was sitting in La Havre waiting to be put into a container. We are, as an emerging exporter, we are not shipping containers. We are shipping pallets or boxes by air freight. We had a customer in Singapore. We used a less than a container load situation. At that time, there was no LCL. It is called LCL. You have a child or frozen container that will leave La Havre and it will have dozens of different pallets and dozens of different customers. We trucked the product to La Havre. It was waiting to be packed. I had pre-arranged a certificate of non-manipulation because it is going to get stuffed into a container. The SFA, which is the Singapore Food Agency, said that we need a certificate of non-manipulation. I had that in agreement with Seafreego. The pallets arrived. They were just about to get stuffed. That is the term used for putting the stuff in the container. They said, sorry, the vets overruled. We can no longer offer the certificate of non-manipulation. The customer said, without that, we are not going to get the product into Singapore because the SFA has said that we need that certificate. We are at a stalemate. Our pallets are now sitting on the dock, costing me £500 a day, because that is the demureage charge. We quickly ascertain that the Seafreego would take responsibility for holding the product to FOC until we found an alternative way to get it to Singapore. Ultimately, the product left on 3 September 2021. It then came back to the UK and was air freighted out on 5 January 2022, after four months of toing and froing versus emails. The legislation had changed that Cali had said that we cannot offer that certificate of non-manipulation unless the goods had been routed through Bordeaux or Guyana. Let us get the pallet to Bordeaux and bring it back to La Havre. No, that was not possible. It ended up coming back to the UK at a cost to the customer. The original transportation cost and vets cost would have been £793. The customer ended up paying £5,378 in transportation and vet charges. The cost of the goods was only £5,595. That put £6 a kilo of freight. That is a haggas that we are talking about. That would have been selling in Singapore for £3 or £4, costing the customer maybe £10. The customer just had to take that on the chin because, fortunately, incoterms saved the day, saved my skin because my terms were ex-works. It was the customer's responsibility to pay all the freight. That is where you really need to know your incoterms. To answer your question, we do the best job that we can by listening to the people at FDF, listening to webinars on the UK Government, reading documents, liaising with your vet, speaking to transport companies, and you set out with the ambition of doing it correctly, but you cannot help curveballs when they say that that is no longer legislation. You are going to feel some pain. It is not big enough to have somebody. I am in charge of exports, but I rely on Government bodies, especially the FDF and webinars that were quite prolific at the time pre-Brexit. We already knew what to experience because we were exporting outside Europe, which is what Europe now requires. For the companies that had never exported, because if they were sending it to Frankfurt or London pre-Brexit, it was exactly the same thing. It just went on a different lorry to a different country. It would leave on a Monday and arrive on a Wednesday. Post-Brexit is a completely different playing field. The first simple description of the increased costs on importing and exporting is our business, but not the customs agencies that we pay. Our own business, one lady, did all our imports and exports. We now have a Ukrainian lady sitting in Broxbury in West Lothian to help her, so we have doubled our costs. It is as simple as that. The second point was that plant breeders use genetics to improve plants, to make them root deeper, to improve the amount of carbon that they put in the soil, etc. Plant breeding is done pan the world. We use breeders' techniques from every country in the world. We are based in nearly all the countries. However, at the moment to get trial material, it is like sample packs from these other people. It is the same thing. We have something that is ticking a box in the Czech Republic, Denmark or Uruguay. It is not going to get planted out in the trial field in West Lothian, because we cannot get it in. We became exporters just because we thought we should. We learned how to ship to the Gulf some things required vet certificates, some things that are just RPI certificates. We learned how, when we came to China, we went, we had no idea how to do this, but we asked around and we found somebody who would sign off the vet certificate, because you have to be on the China panel, but we waited for our vet to get on the China panel, because it takes six months. We blundered along as accidental exporters. We now have the resources of Doris's group, but poor Doris, she stressed just dealing with stuff coming from Germany into the UK. Every now and again we want to move machinery, so we would move some machinery from Germany to Wales, because Germany had one and we needed to do a project in Wales. Now it needs to go back. It was easy to get it out, but getting it back in again is almost—and Cracoddy has got to ship a machine to Germany in the near future, even on loan. Those things muddle your way through, but in terms of resources, I think that you just have to get lucky. There are resources through FDF, there are lots of people who you can ask, but when it comes down to it, ultimately it depends upon who is on the border at the time and whether they agree with what somebody else has said. If I go back to 2021, we had a binding tariff notice saying that this is the commodity code from Germany. We presented that at the Dutch border and they said that we do not agree. Now, this is you, this is the EU, surely you agree, but no. That is why we used to ship to Turkey, but it went by road freight through the EU and we had to stop, because we couldn't find any way of getting it there. We used to ship to Russia. Even that was easier than going to the UK. It's a long, long time ago. There's always going to be a way through. In Wales, there are experts who are shipping to Japan and Australia. In Scotland, we've got a degree of experience in shipping to China, Korea, Malaysia. We sent something to Israel not that long ago. We build our expertise, but it is one tick and one box away from getting it wrong. It shouldn't have to be that way, because, as Gary said, the equivalents, our qualifications are just the same as our colleagues in Germany. There should be some recognition of the equivalents, because we didn't suddenly jump into a big black hole where we're suddenly doing things unhygienically, etc. In the past, we had a huge Ukrainian corn programme out of the port of Odesa. We would have about 33,000 tonnes of maize that we would ship from the Black Sea port, and obviously up the Bosphorus. Obviously, post-Russian invasion, especially in Odesa, that was no longer possible. We then have to rely on trading with European partners of Ukrainian corn that is coming in through the Polish border, or the Romanian border, mainly the Polish border. However, as soon as it's in Poland, then obviously it's in EU free circulation and those Polish customs officers can physically see the documentation being stamped by the Ukrainian customs. One of the import mandatory requirements is that we must provide proof or evidence of UK territory, i.e., our corn was not purchased from farms that are now under Russian control, which makes perfect sense. The only way that we can do that is to get a certificate of origin raised by a chamber of commerce in Ukraine or an EU R1 stamped by a Ukrainian customs officer at the border with Poland. Because that corn is coming into Poland, the vast majority of that corn is staying within the continent. However, it's very difficult to get a supplier, maybe by 100,000 ton. He's going to get paperwork for 100,000 ton. He's not going to give us an EU R1 stamped by a Ukrainian customs officer for 100,000 ton unless we absolutely demand it. We must prove territorial proof to HMRC, and sometimes that can prove to be a real headache. We've had to employ—luckily enough, we have an office in Gdynia and we've had to employ our colleagues in Cyfetropolska and pay them a commission in order to liaise with Polish customs and explain exactly what it is that we need for UK customs in order to bring that in. There's another one point that I'd like to make on sanction controls. On sanction controls for Belarus and for Russia, there are vast differences between EU sanction rules and our retaliatory rules, and it causes mass confusion again in Northern Ireland, because they obviously have to rely on the EU ruling for the sanction controls. Obviously, for the UK, we are different in some instances, and that again can cause mass frustration for us. Tario, do you want to say anything on that point? No, not at the moment. Are you okay, Alexander? Thank you very much. I'll bring in Ms Forbes if any other members want to come in. Thank you so much. I can't answer or ask my question without just acknowledging how horrendous it's been over the last few years for you. I wanted to ask a question that was a bit more macro in nature about how you see markets changing if nothing improves with the barriers or the tariffs to import-export. By which, I mean, James, I was struck by your story in terms of exporting to Singapore. Presumably, if, for example, prices continue to be passed on to customers, it becomes a more unaffordable product. I also assume that in order to get your product in that market, you'll have had to invest significantly in marketing and so on to get to that point. If that trajectory continues, presumably that will have a more lasting impact on customers' tastes or producers' incentives. From each of your perspective, I wondered how you see that panning out, particularly in terms of the impact on the Scottish economy. Ultimately, if your products become less profitable, that has an impact on Scottish workers, et cetera. I was just taking a step back from your immediate business and how you see in 10 years' time, if there's no change, what do you see as the most lasting impact to the Scottish economy? That could probably take the rest of the week. Does anyone want to go personally? From our perspective, I had this discussion last week, which was about how we resource the regulatory support for the changing dynamics in the global market. What we're seeing is significant increases in Southeast Asia, for example, as they move towards a more animal-based protein diet, from a very low base level, from where they were. We're seeing significant growth in Thailand, Vietnam, already supporting supply in Japan, South Korea. We have a plan in China, which we built a few years ago to supply the Chinese market. Latin America is another growth area where we're seeing expansion. From a Scottish perspective, I can see the barriers we've got in getting products into the EU. We can overcome them, but I think it comes back to that product development research investment. As a business, why would we invest in Scotland with product development if we can't get samples easily into Scotland to do that research, to be able to then send products out? We do have an R&D centre in Scotland, which is a global research centre, but it almost comes that question of if it becomes more difficult, the argument to supply in Scotland gets more difficult. The other big challenge we're having is automation and labour skills shortage, because if you can't automate, you're going to move it somewhere else. If you can automate, you can keep it in Scotland. We've got a big automation programme on at the moment to try and reduce our labour costs to make Scotland more competitive. The future for Scotland is positive as a centre, but it needs to be focused on innovation and development. It can't be on doing what everybody else does. You made a good point. Ultimately, if nothing changes, exports will dwindle. Customers in foreign parts of the world will not have the debt to pocket required to pay the additional on-cost of exporting. It's also important to recognise that my product is a composite product among lots of other composite products, which are essential for the meat industry, because utilising the carcass to its fullest extent financially is absolutely critical and maximising that price per kilo that the farmer has spent so much time and energy bringing an animal to market. Utilising that animal 100% and getting every pound of flesh, whether it's the height that's getting processed into sausage casing or the fifth quarter getting turned into haggis, is essential to keep the primary producers, which Scotland has a great reputation for. We're very proud of our Scotch lamb, Scotch beef, speciality pork, so that must be looked after and preserved as best as possible. We are bringing the raw material in to feed the animals and if that continues to be, if those costs continue to rise, then obviously that has that effect on that too. I think that critical mass, I wouldn't have even approached the German-based business if it hadn't been for Brexit and therefore probably we'd still be an independent owned business, family business. The advantages of critical mass are we have the potential to reach much further. The disadvantages are that we've ceded control to somebody based in Germany, so if we want capex, we've got a fight for it amongst the overall group. In recent times, partly for various reasons, in recent times, we've actually been going through a process of repatriation, so stuff that is made in Germany supplied to UK customers, we're now making incercody, so we've probably added 20 per cent annual output in the stuff that we've adopted from being, but I desperately need capex in order to make it efficiently, otherwise it's short term thing and I'm fighting with the larger group, but I can see the more regulation, the more inhibition on trade that comes and exists, the more likely that businesses will have to become bigger for that to be afforded and critical mass and therefore the more likelihood that bigger businesses will swallow up smaller businesses and smaller businesses are the engine of enterprise, the engine of localism and from my perspective we would have invested in capex here but we've got a group envelope and I have to fight for every single penny in order to invest to be more efficient because there are fewer people available to us for working etc etc and so the landscape is we actually have a bigger marketplace to play in but we're not as directed at Scotland as we used to be and I can't see how that changes because the more regulation and more inhibition the only way you can overcome it is either by being really nimble and really quick but more likely by being part of a bigger enterprise or grouping. Do you know it, Patty? Yes, briefly yes, being a business that mixes for the whole of the United Kingdom based in Broxburn, we made that hugely automated move to Broxburn on the basis of supplying United Kingdom and Ireland. We have found it impossible to supply Ireland north and south from Broxburn so that a huge capital investment in automation has not been spread over that number of tonnes. Luckily our business has been able to take on additional tonnes to do that but at less margin than had it been our own in-house so it has had an impact. Going forward I think though we're very fortunate that in agricultural terms seeds are very much a growth industry. We grow the grass to feed the beasts that are fed by margrits that go into James's. Genethics and plants, plants doing more is what it's about and Scotland is very lucky to have that plant in West Lothian. Thank you. Dario, do you want to say a bit about? Sure, I think we'll stifle innovation entirely because you have to be of a size to have the resource to put in to work through all of the regulatory compliance so I think that once a company is sub £1 million it'll almost be impossible for them to export. Gary, did you want to come in again? I just wanted to pick something off related to your question and it's about the future and what we're investing in looking forward for Scotland and it's around the environment so there's like a tidal wave of environmental regulations which is a nightmare to look at from the standpoint some of the deforestation risk regulations some of the packaging regulations that are coming out of the EU and in the UK which is not really thinking I have this phrase which is called science evidence-based policy so it's about making sure the policy delivers what you want it to deliver and quite often you get the opposite you get policy-based evidence so the evidence is there to support the policy rather than the other way around. I think if there's an issue particularly on the environment it's important to engage with the industry to say look this is what we're trying to do so for deforestation say right we've got this problem with deforestation how would you go about doing it and getting that expertise in first before issuing the policy however to a separate point we've invested quite heavily in our Scottish plan on energy efficiency we think that the Scottish plan will be the first one to be net zero we see that as a as an advantage as a unique selling point within our business of being able to sell a net zero sausage case it's a long way off but we're far further ahead in Scotland than we are at any of our other plants apart from the Chinese plant is also heading in a similar direction so I think meeting that carbon neutral goal is one that I think Scotland does have an advantage particularly in regard to how it generates its electricity but there's some challenges there on connectivity the electricity supply funding to help people to decarbonise we found Scottish enterprise have been really good the industrial energy transformation fund is a bit of a disaster it's very difficult to understand and get hold of whereas south of the border they've released their third tranche you know in Scotland we're still looking at the second one so there's some challenges there for businesses but I think I think seed funding those initiatives to be able to decarbonise is going to be important as well. Thank you I think I'll move on to questions from Mr Bivvy and then Mr Brown. Thank you convener and good morning to everyone thank you for your testimony this morning I think we've heard loud and clear that this is costing you money and time and as I've heard from many businesses before time is also money so there's a double a double hit there. I just wanted to get thoughts on and pick up what Mr Stevenson was saying earlier about I think he said the best thing that could happen would be a mutual agreement or mutual recognition in a veterinary agreement and we've obviously heard testimony from Quality Meet Scotland about the 15% of shipments have to be checked on to the EU and that is coming on 2% for example to to New Zealand. I'd just be interested to get wider thoughts on what if there was agreement on that that would be the best thing that could happen also is there a trade-off here between easier exports and imports in terms of that mutual recognition and veterinary agreement but also that's going to involve greater alignment and actually you know some of the you know the costs and and associated with that greater alignment are going to be there if there is that veterinary agreement to mutual recognition I just wanted to kind of ask a bit further about that and affecting the ability to diverge as well. From my perspective that's why I use the term mutual recognition in a way that's the best option apparently there's some issues with that so we might have to be alignment which does mean we would align with the EU requirements for us it's not a big issue because we've got to align with them anyway because we shipped to the EU so we're not too worried about that we could accept that one as the cost of reduced friction of animal product trade. I do think we need to be mindful of that that as difficult as Europe is we need to sort the problems into Europe and not look at new trade agreements outside Europe for cheaper imports because it'll just undermine everything that we're trying to achieve in Scotland as being a producer and a recognised nation of food manufacturers you know livestock husbandry etc etc and it would be very easy just to oh New Zealand yeah we'll have some more real lamb please because we've got perfectly good lamb here we just need to solve our problems and continue to grow and export into Europe and the rest of the world. Talked about recognition equivalence alignment as I understand it in Germany it's not a vet who signs off the veterinary certificate because I'm not sure how a vet is qualified to go oh yeah you brought cheese from here and there and stuck breadcrumbs on it and I'm not sure where their training brought them to that point in Germany I believe they have appropriately trained officials who are allowed to sign the paperwork that says this is fit to be traded and I think just bringing level that back because I think that lies within UK government competency to say these are the people who are qualified to do this and the point I made before about to appear on traces and therefore get a health mark that can be read you have to be any 853 registered under you have to be a company recognised under 853 which the meat businesses already have but we as a processor of dairy don't therefore we have to become a processor of dairy to get on the thing to have our number recognised well please just put 852s on the lemon traces system as well surely that lies within something we might be able to negotiate or or put forward so those would be my two thoughts that why is it a vet because today it's a cat and tomorrow it's a shipment of bread and mushroom bread and mozzarella sticks and if there's a set of regulations and we're all registered somewhere then please just join up your thinking export system as well it should be automatic if you're buying a preferential tariff from a company in the EU it should be automatic recs registration at the moment itself certification they have to approach the ec to do that that shouldn't and then we're penalised by it if we you know buy from someone who is not and and we shouldn't be doing that more comments no mr baby any more questions mr brown thanks very much this is we've had quite a number of these roundtables and I found this to be the most interesting one that we've had because of some of the contributions that have been made there's a kind of false kind of debate going on outside about how good or bad Brexit might be and stuff but I think here in the practical examples of additional cost markets being closed off stopping doing things that you were doing before or doing things in Ireland rather than Scotland additional costs and all the confusion is pretty horrendous and I'm assuming and happy to be corrected if anyone wants to come back to all the examples given really are how things have changed from the base which was pretty much seamless the samples that you mentioned it was all done pretty easy so this is all new cost and loss and loss of either control or innovative capacity in scotland director in scotland and it's really worrying however I just wonder on the how you actually deal with it I remember I was saying before you came in that I went to Canada a few years back to ensure Haggis was able to go and sail there we couldn't do it in the US they wouldn't accept it but I remember the US authorities in New Jersey and New York saying they were fed up to the back teeth of people trying to import into the or export to the US that did not have regard for what their certification their standards were they kept on coming and saying well look we've got the certification whether it's the EU or back in Italy for cheese or whatever we're not interested we just want you to comply with what we've got so I wonder if in that context if it would be helpful to industry to have whether Scottish and UK government are both together somebody that was able this may be a gross oversimplification of what's required but somebody that can just say to you this page here if you do all these things you can export this or that to this country that covers all the way I know it's got to be dynamic dynamic it changes over time even though your product's sitting on the key side I wonder if something like that a very simplified this is all the things that you have to do to satisfy the EU and by the way I don't think I must say I don't share the optimism that the EU being subject to some of these constraints is going to change their attitude they made it plain right through the debate you're not going to feel as comfortable in Brexit as you were before I hope it is the case but I wonder if that simplified kind of support from government might be something that's worth doing or is it too complex or is it something that the industry requires to do itself because only it knows all that it has to has to do interesting any James this one because we actually do ship to the US excuse me and it's it's a lot easier to understand actually than other countries because because they publish what's required so there is a document where you identify your type of product and it tells you what certificates you need so it's all available excuse me for the smaller businesses it may need somebody to guide them as to where to find it you could do that you know from from the scottish government side the other thing you need is you need to be on registered on the foreign supply a verification programme it's called which says you are a legitimate business that certifies that your product is safe for use you've got to apply for a permit for your product and then you need to get a certificate from from the from defra and that's that's basically it so it is more straightforward all the information is there but you know it's finding it it's interesting point because for us to get haggis to Canada we had to go through haggis to Canada was a bit more straightforward because Canada recognises at the time recognises the European food regulation programme so whatever we were doing in Europe was good enough for Canada the states has its own methodology and as a part of the the journey I took out with the scottish government in Richard Lockhead to understand if we could get scotch lamb beef haggis and composite products was a part of that because of the the carcass utilisation and the mass balance of the of the animal and the equivalence programme then delivered you know what what are the the regulations that I need to abide by and one of the things that they said is was going to be off the list was was lung meat they do not consider lung meat suitable for human consumption which is fine we just make a haggis without lung meat and that's what we've done to get around the regulations into Canada a bit more complicated for the states because you need to buy from approved facilities in the UK and then you have to be registered with APHA and the USDA but there are just hurdles you have to jump over but it is it is a bit more straightforward certainly any more contributions on but yeah I was just like the word contributions in that area yeah just story and then up again potentially it's a source of competitive advantage when you get it right so once you've found your way through the minefield it's a source of competitive advantage I've never had a problem with sharing our knowledge as we've gone along with anybody who's gone I'm trying to do this could you tell me but there's nothing wrong with there being a competitive advantage for a change and if I go to Holland and the speed limit is 100 kilometers an hour then that's what I've got to do if I go to Germany and it's unrestricted then that's what I'm allowed to do you comply with where you're going you don't you don't go oh no wait I can do more than 100 kilometers an hour where I come from therefore it's okay so you've got to do what the country needs it's just the lack of pragmatism and the imbalance with the you mark do you want to come in with your question yeah thanks for the evidence this morning um just to get a couple of quick questions I mean previous panels we've discussed the restrictions on you know freedom of movement and I was interested to hear what you're saying Paddy you know you've taken on a Ukrainian staff member who's obviously in the UK under you know very very challenging circumstances but I wanted to extend freedom of movement has been an issue for your businesses and then lastly I'm just picking up what Gary was saying you know he's talking earlier about you know sharing the pain a bit and it's only when the pain gets shared kind of between businesses on you know both UK and EU sides that you think there'll be a more meaningful discussion about how we remove some of the bureaucratic kind of you know barriers and friction to trade um but I'm just wondering kind of what what role then and what sort of contact you have with colleagues and trade associations in Brussels and the EU because presumably at one point you know you've been making all the points you've made here today about testing and regulatory standards in Brussels because you'd be part of you know the system where rules are being made, stakeholders are able to input into that, you're not part of that anymore so I'm just wondering if the the kind of solidarity between businesses in certain sectors is still there between the UK and the EU or you know very much seen as kind of over there and therefore your ability to actually lobby for the interests of industry across Europe has been reduced anyway hope that's clear the it's more difficult you know there's no doubt about that I think the food and drink federation does have good relationships with food and drink Europe but it's a slightly different organisation and it's it's very broad scale um if you look at the meat manufacturer as the British Meat Process Association has got good relationships with what they call EU, BCV which is the European Meat Association however and I've been working with these organisations for decades you always found the UK was more pragmatic about things more on up to speed with what's happening we've lost some of that it was also the one that would bring more um it understood what was what the regulations were asking for better than most of the rest and therefore I was thinking about how do we change it that's gone a bit so there's a little doubt that that the influence has weakened significantly and it depends on what sector you're in how influential you are I mean I mentioned earlier I managed to get ourselves into the DD Santy meeting on veterinary medicines it's not an easy thing to do and we were the only business there everybody else was a european industry association so we did look a little bit strange however we could use the fact we've got a check facility which is you know so I'm not answering your question really from the standpoint of it if you're just a UK business I think you're going to struggle point so freedom of movement you know we're double doing every company is doing exactly the same thing and I just think about the wasted resource of doing that throughout we've seen a reduction in the number of EU workers at our facilities a few of them have ended up going home because the economy in Poland was stronger and therefore we lost some of them so that has reduced apart from that we don't see a huge challenge there we are still able to bring people in but we're a more technical product I think certainly I know for the meat producers there's a big challenge of bringing people in with butchery skills under them you know the allowance that's allowed for bringing you know but butches into the UK I'm not that familiar with it but I know there are some issues in other parts of the business very conscious of time so I think we're going to have to wrap things up if everybody's okay with that I want to thank you very much for the evidence this morning we're not a subject committee as such of the parliament so this type of evidence has been a bit unusual in our inquiry because it's mainly usually academics and people who are actually working at government levels that have been giving that evidence or trade bodies but to have that open discussion and hear the challenges so so expertly expressed by all has been really helpful this morning and I do wish you all the very best for your businesses going forward and thank you for attending this morning now move into private session thanks