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Are you ready for Brexit? Prestige Purchasing can help your business through Brexit, regardless of what is in store for supply chain

Countdown to Brexit. Based on data from Sky news.

Current goings on in Brexit

Brexit – the politics and economics – update 12th September

On September 9th , MPs backed a motion calling for the disclosure of all documents relating to Operation Yellowhammer, the government’s contingency plan for a no-deal Brexit. These documents had previously been leaked by the Sunday Times and are identical except for a difference in headline from “base case,” to “reasonable worst-case scenario,” suggesting perhaps that the whole thing got a hasty rebrand prior to publication.

HMG are insisting that risk assessments are a constant process and will be publishing a revised version within the next few days.

What is important for business owners is to separate the risks from the politics, and every foodservice operator should be taking some simple steps to minimise the risks to their operations. But let’s start with the facts. The Yellowhammer documents contain some stark statements:

  • For the purposes of freight flow and traffic management as 31 October is a Thursday day 1 of exit is now on a Friday rather than the weekend which is not to our advantage.
  • France will impose EU mandatory controls on goods on Day 1 No Deal (D1ND) and have built infrastructure and IT systems to manage and process customs declarations and support a risk-based control regime.
  • On D1ND, between 50-85% of HGVs travelling via the short Channel Straits may not be ready for French customs.
  • The lack of trader readiness combined with limited space in French ports to hold “unready” HGVs could reduce the flow rate to 40-60% of current levels within one day, as unready HGVs will fill the ports and block flow.
  • The worst disruption to the short Channel Straits might last for up to three months before it improves, though disruption could continue for significantly longer.

The key area of concern for HMG appears therefore to be the flow of imported goods, for which in our world read short-shelf life products such as fruit, vegetables, salads and chilled products.

Later in the documents it turns more specifically to the impacts upon food supplies:

  • Certain types of fresh food supply will decrease. Critical dependencies for the food supply chain such as ingredients, chemicals and packaging may be in shorter supply.
  • In combination these factors will not cause a shortage of food within the UK, but will reduce availability and choice of products, and increase price.
  • The UK growing season will have come to an end, and the supply chain will be under increased pressure at this time of year, due to preparations for Christmas.
  • Government will not be able to fully anticipate all potential impacts on the Agri-Food supply chain. There is a risk that panic buying will exacerbate food supply disruption.

So, a shortage of food is not expected, but availability of specific products and specification is to be expected. But take note, the paper specifically excludes the impact of consumer behaviour. Given the huge level of publicity that a no-deal Brexit will receive, it’s not unreasonable to assume that consumers will stock up on products that they feel will be in short supply, and the impact could be significant.

For foodservice operators, it is this last point that causes me the greatest anxiety. Larger wholesalers will be buying product from contracted supply chains, which even in the event of transport disruption will provide a degree of protection from short supply. But suppliers buying from the UK primary wholesale markets may find it much more difficult to obtain product. When this occurs, many small foodservice operators will be forced to revert to Cash & Carry or even the Supermarkets for supply, which will further exacerbate any retail supply issues.

And finally, the government is recognising the risks of raising its own barriers at port of entry:

  • On D1ND HMG will commence the “no new checks with limited exceptions” model announced March 13. The model is likely to prove unsustainable due to significant economic, legal, and biosecurity risks.
  • There will be significant pressure to agree new arrangements that supersede the day one model within days or weeks.
  • The Agri-Food sector will be hardest hit, given its reliance on highly integrated cross border supply chains, and high tariff and non-tariff barriers to trade.

It seems unlikely that HMG will introduce new checks until imported supplies have reached some level of stability, but this suggests that there could then be a second layer of disruption when UK checks are introduced.

What Yellowhammer does not refer to is the impact upon UK food and drink exports from new EU tariffs. This will certainly cause some market disruption in areas such as Meat, Poultry and Seafood. Indeed, from a price perspective this may be good news for foodservice operators as there will likely be surpluses of supply, which could well drive prices downwards.

Contingency planning for foodservice operators should be simple and straightforward. The key is good planning alongside suppliers, as follows:

1. Discuss ALL products (particularly critical ones) with all key suppliers as soon as possible
2. Agree, where feasible, what ingredient changes can be made to eliminate high risk products from your menus
3. Once complete, review the specification of every product with them and agree the level of flexibility you have, and what substitutes would be preferable in the event of non-availability
4. For long shelf-life product agree higher stock levels in order to ensure continuity of supply
5. Question your suppliers to find out what you can do to make sure that you are high up on the priority list for product
6. And if not present already agree a process for regular contact and review

Acting now could make a huge difference to your business later this year. Good luck.

Full details of the Yellowhammer documentation can be seen here.

In other Brexit news...

Preparing for Brexit


Watch our video on how Brexit will affect the Foodservice and Hospitality sector, or “8 things to do before Brexit” list below.

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