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The Food and Drink Federation (FDF), like everyone else it seems, is concerned regarding a no-deal Brexit scenario. Over the summer we have witnessed the politics hotting up and constantly hitting the headlines but what are the practicalities of a no deal Brexit for the Food and Drink Industry? Will it realty have an impact or is this an example of scare mongering?
Is it time for a new deal re no deal?
Recently the FDF have been petitioning for a clearer picture of just what a No Deal situation will entail. What does it mean exactly? Will it be preferable to change some of our existing rules to make things run more smoothly?
Supply chains may well be disrupted in November 2019
Right now it is anticipated that supply problems may be worse than we experienced back in March, that was supposed to be the original Brexit date. In addition, there are a number of existing rules that make life more difficult. For example, normally, supply or pricing cannot be discussed between retailers and their suppliers to avoid price fixing.
Are you feeling anxious?
Therefore many in the business are feeling somewhat anxious and the FDF has been working hard to be able to give their members more crumbs of comfort. However, the government has kept them waiting for assistance and guidance since the end of 2018.
Competition laws and collaboration; is there a solution?
Competition laws are critical right now as it is obvious the whole food supply chain might well be compromised. Collaboration is likely going to be a key ingredient. Therefore normal competition laws are not going to make things easier when we are dealing with supply and even the logistics of which lorries might need to be where. Therefore discussion is going to be integral to a successful strategy.
Maybe it's time we all reassessed how we eat and shop?
For a country used to having almost every available foodstuff at our fingertips this impending deadline may well represent a significant challenge. As the FDF’s COF said in an interview ‘we may well experience selective food shortages’ and these may last for some time, possibly months.
This means that certain sectors of society could experience some hardship and this is exactly when the industry and government should work together to lessen the effect of any shortages.
Is 'anti competitive' behaviour appropriate here?
COF, Tim Rycroft, did say that the FDF would help but the CMA has the capacity to fine up to 10% of a companies turnover should they be found guilty of anti-competitive behaviour. That shows people are not likely to talk around a table. So, what the FDF wants from government are some cast iron reassurances that these fines would not happen if collaboration really was required. This is exactly what the government has kept everyone waiting for. Up to now only generic statements appear to have been forthcoming.
This is not ideal, as when we experience a similar type of situation back in 2001, companies within the dairy industry thought they could discuss dairy prices and ignore competition law with impunity. It did not prove to be the case. At that time the supermarkets were looking massive fines in the eye regarding potential price fixing.
Do we have the money, warehouse space or wherewithal to get through this unscathed?
Therefore this is serious stuff. Domino’s Pizza Group, as just one example, spent £7million on stockpiling back in March but now face an even more difficult scenario as shortages might prove more damaging come the end of October 2019. After adding warehouse space shortages and the time of year to the mix it could be an extremely testing time.
Perhaps higher prices and less choice will focus the mind
On the other hand the government seems less focused on the food industry and any inherent shortages, believing it will be price and choice rather than shortages that will affect the UK. But bearing in mind it would take 30 enormous and totally empty warehouses to store a week’s additional food supply when warehouse capacity is full for the run up until Christmas, watch this space. This is not going to be a simple fix.
What do you think?
Do you think the government should intervene to ensure schools, catering, hospitals and restaurants have priority or do you think this is just scaremongering and it will be panic buying that will ultimately cause a problem? I’d be interested to hear your views.