However much costs are cut or production improved, no-one can fund currency losses from margins, says Henry Amar
It was in 1879 that audiences of Gilbert and Sullivan's The Pirates of Penzance first heard that "the policeman's lot is not a happy one". In 2009, it is the food importer's turn to make a similar claim as the sector looks to address some serious issues that are arising in the supply chain.
I've been a food importer for over 48 years, working in the family firm my father started in 1945. Because of the length of my career, many competitors and colleagues have asked whether I have ever known conditions as difficult as those our industry faces today. I certainly have not, but experience tells me it is vital that suppliers and their customers now work together more closely than ever so we can find a resolution to a range of issues.
Not least of these is that sterling, watched by a dispassionate Government and the Bank of England, is going to hell in a handcart. The banks are denying credit to their customers, credit insurance limits are being cancelled on a daily basis, and commodity prices are unstable. The effects of recession and rocketing unemployment mean that the trading climate will be challenging for some time to come.
None of these problems is good for food importers, and by far the most serious is the devaluation of sterling. At the time of writing, the pound has lost more than 25% of its value against the euro in just one year, and almost 40% of its value against the US dollar. The speed and scale of this devaluation have been devastating.
However drastically we cut costs, however hard we focus on improved productivity, none of us can remotely hope to fund these currency losses out of margins. The only possible outcome is that prices of imported food will rise sharply.
If this issue is serious for food importers, it is equally serious for their customers, but we will only find good solutions to our problems if we work together.
There will always be a healthy tension between buyer and seller, and I don't expect that to disappear. Indeed, I welcome it. But these alarming pricing issues won't be resolved by ignoring them. The buyer who switches on voicemail and puts his or her head in the sand could soon find some costly gaps in his warehouse and on her shelves.
However, by discussing the issues and confronting the problems, buyer and seller will find solutions. These may involve radical changes to the ranges we carry, but we are a resilient industry, capable of adapting quickly. The problems I mention are beyond the control of suppliers and their customers, and can be damaging to both. That is why, more than ever, dialogue is essential.
I am naturally somewhat miffed that, in the autumn of my career, this tidal wave of problems should have come at me over the horizon. And I am fully reconciled to the fact that there will be a sharp contraction in margins throughout 2009 and very probably beyond. However, I am thankful for one great stroke of fortune. When my father died in 1983, he left me a business that did not owe anyone a penny. Thanks to the support of my family shareholders and my colleagues, we remain today a fully funded company - a huge relief in these times of credit squeeze. This single advantage will enable us to weather the present recession, seize our opportunities, and come out safely the other side. It's a case of "here today, here tomorrow".
Henry Amar is chairman of RH Amar & Co.
It was in 1879 that audiences of Gilbert and Sullivan's The Pirates of Penzance first heard that "the policeman's lot is not a happy one". In 2009, it is the food importer's turn to make a similar claim as the sector looks to address some serious issues that are arising in the supply chain.
I've been a food importer for over 48 years, working in the family firm my father started in 1945. Because of the length of my career, many competitors and colleagues have asked whether I have ever known conditions as difficult as those our industry faces today. I certainly have not, but experience tells me it is vital that suppliers and their customers now work together more closely than ever so we can find a resolution to a range of issues.
Not least of these is that sterling, watched by a dispassionate Government and the Bank of England, is going to hell in a handcart. The banks are denying credit to their customers, credit insurance limits are being cancelled on a daily basis, and commodity prices are unstable. The effects of recession and rocketing unemployment mean that the trading climate will be challenging for some time to come.
None of these problems is good for food importers, and by far the most serious is the devaluation of sterling. At the time of writing, the pound has lost more than 25% of its value against the euro in just one year, and almost 40% of its value against the US dollar. The speed and scale of this devaluation have been devastating.
However drastically we cut costs, however hard we focus on improved productivity, none of us can remotely hope to fund these currency losses out of margins. The only possible outcome is that prices of imported food will rise sharply.
If this issue is serious for food importers, it is equally serious for their customers, but we will only find good solutions to our problems if we work together.
There will always be a healthy tension between buyer and seller, and I don't expect that to disappear. Indeed, I welcome it. But these alarming pricing issues won't be resolved by ignoring them. The buyer who switches on voicemail and puts his or her head in the sand could soon find some costly gaps in his warehouse and on her shelves.
However, by discussing the issues and confronting the problems, buyer and seller will find solutions. These may involve radical changes to the ranges we carry, but we are a resilient industry, capable of adapting quickly. The problems I mention are beyond the control of suppliers and their customers, and can be damaging to both. That is why, more than ever, dialogue is essential.
I am naturally somewhat miffed that, in the autumn of my career, this tidal wave of problems should have come at me over the horizon. And I am fully reconciled to the fact that there will be a sharp contraction in margins throughout 2009 and very probably beyond. However, I am thankful for one great stroke of fortune. When my father died in 1983, he left me a business that did not owe anyone a penny. Thanks to the support of my family shareholders and my colleagues, we remain today a fully funded company - a huge relief in these times of credit squeeze. This single advantage will enable us to weather the present recession, seize our opportunities, and come out safely the other side. It's a case of "here today, here tomorrow".
Henry Amar is chairman of RH Amar & Co.
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