Businesses told to form emergency plan for Brexit
With events over the past few days leaving a “Nodeal” Brexit looking much more likely than before, farmers and the agri-food industry have been warned to have an emergency contingency plan in place to help them survive the chaos such an outcome is likely to create across the sector.
Farm business consultants Andersons this week said that it was crucial that businesses addressed the possibility of a no-deal outcome and had something drawn together in advance of the UK crashing out of Europe in March next year:
“Effectively businesses need to have something drawn up which they can break the glass on and grab in a panic”, director Richard King told an on-line seminar this week.
Speaking before the Chequers deal was torpedoed in Salzburg, King said that the initial outcome of a no-deal Brexit on the agrifood sector was likely to be “absolute chaos” - with all prices subject to huge volatility - with the only cushioning factor likely to be a considerable fall in the value of sterling.
Predicting lower profitability in the majority of sectors he said that there could, however be opportunities for import substitution in some areas – although this was likely to be more complicated than many people thought.
He also warned that while the negative effects of barriers to trade – both in the form of financial tariffs, higher administrative burdens and border controls - on the different commodity sectors had been well rehearsed, the likely negative effect on the wider economy could also hit those who had moved into value-added sectors or who had diversified their businesses:
“Any major downturn in the overall economy would mean that fewer people would have the cash to spend on artisan or specialist foods and many individuals and organisations would have less to spend on the leisure-time activities which are the focus of many diversified enterprises.”
He said that many businesses in the agri-food supply chain would benefit from holding additional buffer stocks to help tide them over the initial chaos of a no-deal Brexit – and for some this might require additional storage as there was likely to be a severe disruption in the “just-intime” nature of the supply chain.
Considering entering into long-term supply contracts which would bridge the early post-brexit period could help share the risks in any enterprise – and he said it was imperative that those involved in importing and exporting had a good idea of the additional hoops they would need to jump through to cope with customs and other border controls.