Brexit threat to produce supply lines

The international marketing magazine for fresh produce buyers in Europe
Mike Knowles

BY MIKE KNOWLES

@mikefruitnet

Brexit threat to produce supply lines

Suppliers and customers likely to face cost increases linked to change in currency rates following UK's vote to leave EU

Brexit threat to produce supply lines

Related Articles

Companies in the European fresh produce business are waiting to see what the potential impact of the UK’s vote to leave the European Union will be, but already the general feeling appears to be that there will be a number of big challenges for suppliers in other countries as well as British importers.

For some, the now very real possibility of a so-called Brexit poses a considerable threat to the profitability of supply lines into the UK from EU member states.

Steve Sandford, director at UK firm Freshpro Imports, described the referendum result as “just another hurdle to overcome” and argued that it was still “too early to fully understand the implications”.

His company trades fruit, vegetables and salads worldwide, managing both imports into and exports from the UK.

“The obvious thing is that produce automatically becomes more expensive, as will all related costs – freight costs, etc – as even though oil is at historically low levels the new exchange rates will mean an automatic spike of 5-6 per cent?”

He added: “Any supermarket with fixed prices with suppliers in sterling will have unhappy suppliers. Or alternatively the supermarket will have to take the hit if they haven't covered the position; although you would hope any retailer would be prudent enough to cover currency.

"If supermarkets have foreign currencies with suppliers, and they haven't covered their positions, they will probably be taking losses on the chin."

Taking care

Nic Jooste, marketing director of Dutch group Cool Fresh International, suggested that Dutch businesses with a presence in the UK fresh produce market would act carefully and sensibly to mitigate the effects of Brexit, especially in terms of currency fluctuations.

“The Dutch will respond in the normal way, by taking care of their clients and making sure that they receive what they are supposed to receive,” he said.

“There could be a problem with documentation, but this would only be a minor issue that Dutch suppliers are used to dealing with.”

Jooste pointed to the possibility of currency rates and the resulting effect on profitability in certain supply chains as a bigger cause for concern.

“Personally, I don’t see a lot happening in terms of trade restrictions. Where I’m not so sure what happens is with the British pound and where it stabilises.

“Take South Africa, for example, which traditionally sells a lot to the UK. If the value [of the pound] drops by, say, 30 or 40 per cent, then maybe they will have to decide if the deals they get in Europe are just as good or even better.

He continued: “I imagine they will have some loyalty to their existing clients, but ultimately money is what matters and growers always look for the best deal for their products.”

comments powered by Disqus

Keep informed...

Google+