Cod’s walloped: UK’s chip shops under strain amid Ukraine fallout

LONDON — Brits beware: the economic fallout of the Ukraine crisis is coming for your traditional fish and chip supper.

Already pummelled by soaring bills, staff shortages and rising commodity prices — with a looming tax hike to boot — Britain’s struggling fish and chip shops fear they’ll be pushed over the edge by the latest round of global unrest. Fans of the country’s iconic battered fish, thick-cut fries and peas combo might want to look away now.

Disruptions to the supply of fish and other key ingredients used in Britain’s chip shops are expected to drive up prices, with popular supermarket products also in the firing line.

Andrew Crook, president of the National Federation of Fish Friers, had estimated before the Ukraine crisis that more than a third of Britain’s fish and chip shops could go out of business over the next 12 months. “We’re probably looking higher now,” he said.

Russia’s invasion of Ukraine has already affected the supply of whitefish — think cod and haddock, staples of the chip shop menu — with banking sanctions and paperwork adding friction and causing delays. Roughly 30 percent of the U.K.’s whitefish originates from Russia, which controls nearly 45 percent of the global supply.

Disruption to the flow of Ukrainian and Russian wheat looks set to also affect the batter and breadcrumbs used not only in chip shops but in frozen fish products such as fish fingers.

And with Ukraine standing as the largest global producer of sunflower oil, experts warn of severe disruption to market supply, price increases and challenges for businesses as they seek vegetable oil alternatives. This will impact everything from fish and chips to fish fingers and tinned mackerel and tuna.

While expressing caution about the difficulty of predicting the impact of the war, the seafood industry believes supply prices could rise by 20-30 percent, with costs likely to be passed onto consumers.

Fishy business

The latest unrest could hardly come at a worse time for Britain’s beleaguered chip shops. Notwithstanding the impact of COVID-19 and last year’s haddock shortages, shops’ already tight margins have been further squeezed by surging energy costs. Chippies also face a 7.5 percent rise in value-added tax from April “which will put a lot of businesses under,” said Crook.

If sanctions are placed on Russian fish by London or Moscow, Crook predicts even more shops will fail. “If things go worst-case scenario, it’s a terrifying situation,” he said.

Untangling the industry’s dependency on Russia can’t be done overnight, experts say, with much of the whitefish supply due to arrive in the U.K. this year already ordered and paid for.

“This isn’t the sort of thing that you can pivot [away from] quickly,” said Aoife Martin, director of operations at Seafish, a public body that supports the U.K.’s seafood industry.

Companies are reviewing supply chains with more focus expected on existing fishing waters around Norway, Iceland and the Faroe Islands, though there are quotas in place on wild-caught whitefish.

“There is very little large-scale whitefish supply that isn’t already under contract,” Martin said. “So, it’s not the case that businesses just can go in and suddenly mop up excess whitefish supply that hasn’t been purchased.”

Crook said the U.K. could consider alternative products like Alaskan pollock and locally-sourced hake — although he noted there is not enough of the latter to solve the problem. In 2020, the U.K. landed around 47,000 metric tons of cod and haddock but imported more than 430,000 tonnes of whitefish, so is heavily dependent on other sources to meet demand.

Russian whitefish is either processed in China or eastern European countries before reaching Britain or comes directly through the likes of Rotterdam, meaning it’s not subject to the U.K.’s new ban on Russian vessels docking in Britain.

While whitefish is still moving — albeit with delays — speculation and volatility in the market have already led to price increases, though experts say this also reflects the disruption to U.K. and global supply chains following the pandemic and Brexit. “Then you put in the horrific events in Ukraine, and things suddenly become very difficult,” said Seafish’s Martin.

Martyn Boyers of Grimsby Fish Market said the supply of fresh fish has not yet been impacted, as much of it is sourced from Iceland and Norway. “[The war] has however caused increases in the add-on costs of processing such as packaging and transport,” he said.

A U.K. government spokesperson said: “We recognise hardworking businesses in the U.K. seafood industry will be thinking about the effects of rising costs and impacts of sanctions, and are working with the sector to understand the challenges they may face.”

This article is part of POLITICO Pro