Brexit is going to mean change for the agrifoods business. It is a daunting prospect for many, as for any business, in any sector, clarity over market conditions is vital.
Despite the uncertainty, I believe the UK’s agricultural and food sector should view this period of change as an opportunity to take stock - particularly of strategy and supply chains.
A post-Brexit relationship between the UK and EU will only become a reality in March 2019, so there is still time for businesses to prepare. Planning for different outcomes will help businesses understand how changes will affect their customers in different ways. In my view, there are certain things the sector can and should be doing to prepare.
Firstly, the time should be used to review operations. Thoughts should turn to how close the business is to currently meeting preferred operational efficiencies, whether it is the supply chain, geographical locations or customer communications. Are there opportunities to strengthen business contingencies and to discover cost-saving measures? Are there opportunities to speak with banks, customers, stakeholders and suppliers to foster stronger collaboration and to improve the speed and efficiency of communications with them?
Secondly, we should think about logistics and supply chains. Perishable foods with critical shelf lives are perhaps more sensitive to logistical delays and failures than any other commodity. If Brexit means additional checks and processes to get goods in and out of the country, this will undoubtedly eat into working capital. Businesses should think about what the cost of this might be to them and how they can plan to mitigate delays.
When changes come in, you want to make sure you have done all you can to make the business as resilient as possible. It is also important to make sure there are no weaknesses across the whole chain, so it doesn’t break because one supplier has not prepared.
Thirdly, we should consider strategic options. The UK’s decision to leave the EU, and the subsequent softness of sterling, has put the rest of the world on alert and put the British food industry under a spotlight. This market is seen as affluent, growing, and a source of high-quality produce, making it an attractive place to buy from as well as sell to. Some overseas partners will want to capitalise through new commercial contracts, others through acquisitions and joint ventures. UK companies should be alert to these opportunities.
They should also be alert to competitive threats. Agrifoods businesses should be reviewing their competitors’ customer positioning, what investments are being made, what changes they are making to their communications channels and outputs, and be aware of significant changes to staff and other resources.
Over the next nine months, the focus should be on resilience. Making sure the business can stand firm in the face of any Brexit eventuality.
It is time to ensure we, as an industry, remain vigilant and focused on quality. We should seek to build on the UK’s stellar reputation throughout this period of change.
Allan Wilkinson is head of agrifoods at HSBC