Farm Week
Trading with Northern Ireland now a problem for companies in Britain
It’s hard to believe that this January will mark three years since Brexit was implemented, and six and a half since the referendum was held. Post referendum there was talk that it would ‘all be sorted’ in six months, wishful thinking. Of course, it was followed by the pandemic, which lasted almost two years, starting in March 2020 and ending in December 2021. Even now I still hear the mantra weekly, we are just getting back on our feet. Therefore, its timely to look at how food and drink businesses view the business landscape given the national and global disruption.
Almost two thirds (63 per cent) of food and drink companies in Britain are finding it hard to trade with Northern Ireland via the Trader Support Service, with a further 69 per cent struggling to use preferential origin under the UK’s Free Trade Agreements, a new survey by business consultants BDO has found.
Concerns about the new trading regime for companies dealing with Northern Ireland are highlighted in the latest annual Food and Drink Report by BDO, which has a significant presence in Belfast.
These are worrying findings about the impact particularly among companies in Great Britain, the biggest single marketplace for our food and drink producers.
Food NI is not politically partisan. Our role is to promote and support the local food and drink sector, especially in home markets and to encourage them to take first steps outside Northern Ireland into Great Britain. It is disturbing to read that 63 percent of food and drink companies are finding it difficult to trade with this part of the United Kingdom.
These findings clearly merit further investigation of the problems, real or perceived, as a matter of urgency. There’s clearly further work required to identify and remove any barriers than may to exist to trade within the United Kingdom.
BDO’s annual Food & Drink Report, which surveys manufacturers in the sector, shows a high degree of optimism among food and drink manufacturers. It’s a great source of information about the food and drink industry in general.
Encouragingly, the majority of leaders in the UK food and drink sector feel “positive about the prospects of the industry over the coming year”, according to new data, but mounting pressures will “continue to test” resilience. These mounting pressures stem especially from rising input costs including energy, ongoing staff shortages and the Ukraine war. The developing crisis in the Middle East is also now pushing up energy prices again.
BDO’s survey also highlights the “myriad of challenges” businesses in the sector are facing. Half of the companies responding reported difficulties in recruiting staff, with engineering and project management or production-related roles being the hardest to fill.
Almost two fifths (39 per cent) of those experiencing recruitment challenges believe skills shortages are worse now than before Brexit and Covid-19.
The long-term nature of many of the threats facing UK food and drink companies, the report says, suggests that leaders will need to stay flexible and think strategically about the future of their businesses.
A total of 70 per cent of food and drink companies are feeling positive about the future of their own business in the next 12 months, the report finds.
This is buoyed by the big jump in optimism for the sector overall, which has increased from 69 per cent in 2022 to 81 per cent.
More than a third (40 per cent) of companies say they expect an increase in their gross profit margins over the coming year and, as the buoyant mood continues, a further quarter (24 per cent) are planning acquisitive purchases.
Thirty per cent say new product development will be a key driver for growth across the next 12 months, whilst 29 per cent say expanding in non-European Union (EU) markets is an important focus.
There are certainly opportunities in these markets for our food processors, and we’ve seen some important successes in recent weeks, including Scott’s Crispy Onions in Aghadowey winning its first business in Denmark; Burren Balsamics and Broighter Rapeseed Oil both successful in the United Arab Emirates. Burren Balsamics has also just developed innovative tapas boxes for Aer Lingus international flights.
As the report is appropriate titled, the ingredients for success in the new normal are flexibility and a dash of experimentation.
