Could Brexit ignite real perishable supply chain innovation?

Posted On 25 Aug 2016
By :
Comment: Off

nieuw zeeland 2008 067LONDON, UK: A recent survey of the UK retail scene by Barclays bank finds that “the origin of the products on British shelves could change as retailers adjust their supply chains following the UK’s vote to leave the EU.” More domestically sourced goods and more imports from India, China and Africa are predicted, along with a heightened focus on supply chain efficiencies.

Critically, 81 per cent of respondents to the Barclays survey believe that the post-Brexit weakness of the pound will have an important impact on future sourcing strategies. “Getting … supply chain strategy right can be the key to success for retailers, [who are] thinking carefully about what they need to do now, in particular with regards to which regions they source from and their foreign exchange strategy,” said Ian Gilmartin, Barclay’s Head of Retail & Wholesale, commenting on the report.

What will this all mean for global sourcing of perishable products such as bananas, citrus, beef, flowers and seafood, just to mention the leading food commodities imported into this part of Europe? According to the Fresh Produce Consortium, 40 per cent of fresh fruit and vegetables sold in the UK are already imported. As a result, it is more than likely that some sort of “provenance substitution” is already underway.

Brexit is likely to exert considerable changes on traditional supply chains for fresh produce such as citrus, stone fruit and grapes from Spain and Italy. Prices will come under pressure in all traditional commodities, indirectly aided by the recent interest rate cut by the Bank of England. All foreign products are likely to bear the brunt, at least in the short term, while only marginally helping to boost ‘home grown’ produce.

Cool Logistics Resources also has some anecdotal evidence supporting the suggestion that food prices for products from non-EU countries will be negatively affected by Brexit. Countries traditionally exporting both fresh produce and protein to the EU and the UK — such as South Africa, Argentina, Chile, Ecuador and Brazil — are all likely to feel the heat from the shifts in sourcing and supply chain operations.

As other EU countries seek to shore up their likely revenue losses in the UK, and attempt to distribute any additional volumes elsewhere — perhaps to Russia for those counties exempt from the import ban — food prices all over Europe will come under pressure due to weakening purchasing power. Nevertheless, the storm clouds amassing over food imports in Europe in general may also have a silver lining. There is real hope that the global food logistics sector will finally awaken from its beauty sleep and embrace real change.

 

About the Author