Leaving the EU is an enormous risk for the food sector – but also an unprecedented chance to rethink the way we do business. By David Read.
The farming minister George Eustice said on BBC radio this week: “The food and farming sector will be OK if there is no trade deal with the EU and we revert to WTO [World Trade Organization] rules on trade with them.” It would be a gross understatement to say that this contradicts the opinions being expressed by most business leaders in foodservice and hospitality whom we have talked to – particularly those actively involved in supply chains. And talking widely is exactly what we have been doing, on all matters Brexit.
During this summer we have been helping the Royal Society of Arts’ food, farming and countryside commission access our sector to consult in advance of its recent announcement of the commission’s launch. Five big issues emerged from these discussions:
1. Speed of change
This is the greatest cause of concern throughout the supply chain. What businesses need are stability and continuity of product, quality and price. Commercial agreements and logistics activities all require time to be rebuilt following any agreed change. Growers can need years to adjust to a new environment. All of our meetings urged the government to consider the consequences of change extremely carefully, and build in transitional periods to accommodate them.
There is a rapidly emerging crisis throughout the whole food and drink supply chain, with farmers, manufacturers, suppliers and operators all experiencing severe challenges in securing suitable economic labour – and the position is deteriorating. Attendees urged the commission to treat this as a “leading edge” issue, urging ministers to clear up the extensive uncertainty that still prevails in this area.
3. Trade with the EU
There was significant anxiety about the consequences of a Brexit without an EU trade deal. With no agreement with the EU, the WTO rules will apply. Tariffs will be imposed on goods that the UK sends to the EU, and on goods the EU sends to the UK – and on many agricultural products these are expected to be between 20% and 40%. The impact on the flow of goods was also a cause of concern, with fears that Revenue and Customs and ports would become chaotic, particularly if the UK were to “crash out”.
4. Food standards
There was considerable debate about the effect of new trade agreements on UK food standards. There is little doubt that UK farming will struggle to compete on cost if we agree to trade with countries that produce more and have lower food standards. The consensus of operators was that they want to be able to access imported products, particularly to resolve seasonality challenges, and that access to lower-cost products would be welcome. However, there was a clear call for food standards not to be dropped – many called for further improvements, particularly in relation to animal welfare and soil/biodiversity protection.
5. Trade or grow
There was a strong consensus that the UK should maintain and strengthen its farming sector. The route to doing this will probably be via several paths:
- Creating products that are different and better than imported ones (successful examples include Scottish salmon, Welsh lamb and Scotch whisky).
- Government support and incentives to invest and innovate (instead of offering subsidies), particularly on efficiency and automation.
- A joined-up supply chain with much greater sales and marketing connectivity to the foodservice world. Ireland’s Bord Bia was cited as an example of this happening very effectively.
- Initiatives to stem the drift away from farming among young people, including creating technology-based innovation.
This is a critical moment in the history of our sector. The time has come for us all to be much more united, with farmers, manufacturers, suppliers and operators coming together to actively influence our government – both alongside the Royal Society of Arts, and independently of it.
Brexit gives us business risk in spades. But it also gives us an unprecedented opportunity to create the kind of healthy and sustainable supply chains that will benefit our businesses, and our customers, for decades. We all need to grasp that opportunity right now – before Brexit becomes something that just rolled over us.
David Read is chairman of Prestige Purchasing