Brexit undoubtedly creates a surge of uncertainty in the food industry. How will food businesses be affected by a no-deal scenario? What is going to happen to the farmers, the fishermen? Will food costs increase? The food industry has all its tissues intermingled between the UK and EU supply chains. Meanwhile, British MPs have voted by a majority to request an extension of the whole process in an attempt not to leave with a no-deal scenario. The impact of Brexit on the food supply chain has different scenarios, which is reflected here, to gain insight into the right decisions that food businesses must take in these risky times.
The biggest losses
The biggest Brexit losses will be taken by food companies with complex supply chains. Manufacturers and food businesses will have to be better prepared for what is going to happen, be it a hard or soft Brexit. Will we see a shift towards more local products?
This will probably not have much effect either, as the government or suppliers are probably not so short-sighted that they are making it disproportionately expensive to do business with Europe after Brexit. Exchange rate fluctuations will be the biggest impact on this and the cost of doing business. Tariffs will be cut to zero at 87% of imports into the UK as part of a temporary no-deal plan. Fresh produce is likely to be the most effective due to restrictions on local supply, for example, Oranges and delays in the port. Although deadlines may suffer after Brexit if no agreement has been reached. Again it will work quite quickly as it is not in any interest to do this worse than it should be.
How does the risk assessment and planning of uncertainties assess how this shift affects food business operators strategically and contingency planning?
Most food businesses, whenever possible, will be able to manage risks by offsetting suppliers in Europe against local people where possible. As mentioned above, this is likely to represent a very small change. Food businesses cannot buy much extra stock, as maturity will be a bigger problem than supply problems.
It is expected that the UK agricultural industry will be affected by a loss of revenue of 60% and that competition with EU farmers will largely disappear. How will this affect the agricultural industry?
This will only lead to a change in the focus of farmers from a potential loss of market products to local sales products.
To move on to another challenging subject, the fishing industry. Fish is one of the most regulated and protected industries within the EU. When Britain leaves the EU, they take their waters and the exclusive rights to sell in the UK. How should fisheries deal with these changes?
Most products that are shipped to Europe at the moment will continue as these are premium products. The UK market is open to diversity and these products can be sold on domestic markets.
In an attempt to close the trade, foreign countries are acting faster. Weakened food safety standards are often spoken of after Brexit. Food is regulated for most of the major EU food safety boards.
Can the UK control all procurement rules? Will imports of cheaper raw materials in the UK remove food safety standards?
Probably not. Food security is the key to Britain and in no way would they let it slip. All EU rules will be British law after Brexit.
Food costs are pushing food suppliers, who then transfer these costs to their customer base. In that case, exports can become a viable option. The results can already be obtained with many companies leaving Britain for the EU or reducing production.
How will these costs affect food businesses?
Initially, the costs would increase for the consumer. It was a similar case when the euro was introduced years back. At some point, the markets would settle and there will even be an increase in exports from Britain to non-EU countries, or the EU would negotiate trade agreements.