Brexit and the UK Food and Drink sector
19th July 2017
On 5 July 2017 Eversheds Sutherland hosted the Whitehall & Industry Group’s (WIG) first food and drink sector specific event focussing on Brexit. The event was introduced by David Young, Head of Food and Beverage at Eversheds Sutherland, and chaired by Peter Unwin, Chief Executive of WIG.
Attendees heard from Tim Render, Head of Policy at DEFRA’s Great British Food Unit, and Pippa Greenslade, Group Human Resources Director of Bakkavor, for an interesting and lively presentation and discussion about where both government and business see the challenges and opportunities in the period of change as we exit the EU.
Tim set the scene by looking at the current scale and depth of integration between the UK and EU in the food and drink sector. The close trade and economic relationship with the EU is set out in over 300 pieces of legislation and 60% of the UK’s fresh food is exported to the EU, with an even greater 70% imported from the EU. Tim emphasised that a key aim would be to enable both the EU and UK to continue to enjoy this mutually beneficial relationship.
The Future Landscape
The relationship between the UK and the EU is a special one in terms of its history and scale. As a result the nature of the negotiations and resulting arrangements are likely to be fundamentally different to those where there is not such a history and mutual benefit built over decades.
A foreseeable challenge for the sector is the highly political issue of the movement of labour. The EU provides a critical supply of people to the UK food and drink sector and a large proportion on a seasonal basis, from supply, to distribution, warehousing and logistics.
Work to withdraw and de-harmonise the UK from the EU legislative framework has already begun. However, negotiations on what the future arrangements will look like are not likely to commence until later this year or early 2018. Nevertheless, it is likely that government negotiations would centre around the following key priorities:
- continuing to protect the public, animal and plant health
- maintaining the economic strength of the sector
- maintaining consumer confidence in terms of both supply, quality and price
- maintaining productive farming as a strong sector in the UK
The nature of the relationship between the UK and Ireland is particularly important - food and drink imports and exports are responsible for 55% of movements across the border. An early resolution cannot be reached without first determining sensitive issues fundamental to the relationship between the UK and EU, such as movement of labour and customs processes.
A People Business
Brexit is the UK plc’s biggest change project since World War 2. As a result it has cast uncertainty on both businesses and their employees and as a result, their respective abilities to plan and develop. We have already seen an increase in food prices to customers and businesses need to respond with alternative innovative and creative approaches.
Despite this uncertain backdrop, businesses can use Brexit as an opportunity to re-engage and refocus their workforce on its core values and to revisit what it could do as an employer to enhance employee experience. Key elements, include work around diversity and inclusion, and work to strengthen relationships with unions and employee groups.
From a business perspective there are a number of key challenges ahead in the following areas:
- Labour supply – the food and drink sector is 24/7, price sensitive and competitive. Businesses need to respond to changing work demands through their people. The challenge is to keep the food industry an attractive place to work.
- Skills and capability – the need for the right skills for the sector. Businesses need to presenting an attractive package to school leavers; be part of the conversation around sufficient university places for technical and food skills disciplines to serve the sector in years to come; and the importance of science graduates who will innovate and develop the technology as the future of the sector.
- Workforce engagement – the increased importance to engage with the workforce and to focus on a shared set of core values.
Revisiting the Supply Chain
Another key theme was what effect Brexit would have on the supply chain and whether it could encourage the increased use of home grown and produced products. Currently, the UK consumer expects to have a diverse range of food available all year round. Put simply, the UK climate, land and other factors limit what the UK can supply. This means that we have to look beyond the UK for some products. Moreover, some changes in supply chain are not achievable in the short term and require a longer lead in time, for example, the supply of meat through livestock rearing.
While it was clear that there are challenges ahead for the sector in negotiating the UK’s exit from the EU, there also emerged areas of opportunity. The key will be the negotiations with the EU on the future arrangements and only time will tell whether the strength of relations will hold and the UK can preserve the very many positives and benefits it currently enjoys with its EU neighbours.