More than half of small and medium-sized food and drink manufacturers exporting from the UK to the European Union (EU) have reported lower profitability due to post-Brexit trade barriers, according to a new government-backed survey published by the UK Department for Environment, Food & Rural Affairs (Defra).

The survey covered 600 food and drink manufacturing SMEs across England, Scotland and Wales. It found that 55% of exporters to the EU and 47% of importers experienced reduced profitability following the introduction of new trading requirements in January 2021.

Smaller businesses, particularly family-run manufacturers, have faced increased costs associated with complex documentation, border inspections and shipment delays. These additional requirements have placed pressure on businesses with limited financial and administrative resources.

Brexit Barriers Affect SME Trade Participation

The survey also revealed that Brexit was a major reason for stopping EU trade since 2021 for 69% of exporters and 55% of importers among the businesses that had discontinued trading with the EU.

However, businesses see opportunities for renewed trade through a proposed UK-EU food and drink agreement. Around 58% of manufacturing SMEs said such an agreement could help them increase, resume or begin exporting within a year. Half of the surveyed businesses also identified potential benefits for imports.

Reducing Paperwork and Trade Costs Remains a Priority

When asked about measures that would improve exports to the EU, SMEs identified three major priorities:

• Less paperwork: 79% of exporters.

• Lower trading costs: 78% of exporters.

• Fewer border delays: 71% of exporters.

Importers highlighted similar concerns, with 68% prioritising reduced paperwork, 65% seeking lower trading costs and 64% calling for fewer border delays.

The survey also found that clear government guidance would play an important role in helping businesses benefit from easier trade. Around 71% of exporters and 61% of importers considered clear guidance extremely or very influential.

UK-EU Agreement Could Create New Trade Opportunities

The UK government is negotiating a new food and drink agreement with the European Union to simplify trading procedures, reduce costs and improve market access ahead of the UK-EU summit scheduled for November 20.

The government is also working with trade associations and local business networks to provide practical support and guidance to smaller manufacturers.

The findings highlight how regulatory compliance, certification requirements and border procedures can affect SME competitiveness in international markets. Reducing these barriers could also offer lessons for other export-oriented industries, including textiles and apparel, where easier market access and lower compliance costs are important for international trade growth.