This is the biggest change facing the UK economy overall, let alone just the produce sector. At the time of writing, no one is still sure what sort of Brexit we will end up with, but many are now planning for a no-deal scenario or a situation of “what is the worst that can happen?” Either of these are bound to lead to a change in the structure of the supply chain. The best prepared will be able to survive, having taken into account potential impacts on supply, labour and customers. Those that have not will be in for a hard time of it. Exporters in the rest of Europe will carry on doing business in the UK and might well look to set up more joint ventures and/or programmes of inward investment to access the UK market. At the same time, they will be tempted to look at other international opportunities to compensate for any downturn in business they experience in the UK.
The issue of labour availability in the UK has been building for some time. This is not just an issue in the UK, though, but seems to be impacting on many other areas of the world too. Looking at the opportunities that can be achieved by the use of robotics in areas such as planting, picking, packing and distribution of fruit and vegetables must surely be essential if this problem is to be tackled meaningfully. In the UK, the issue will come into sharper focus if labour supply from other European countries becomes restricted in the future. In many cases, the technology already exists to do this, but the cost of uptake has often proved to be a barrier. This likely to change in the future.
SUPPLY CHAIN CONSOLIDATION
It looks as if the merger of Sainsbury’s and Asda might well go ahead at some stage in 2019.This will create a situation whereby the two largest retail chains (Tesco and the Sainsbury’s/Asda merger) will have a combined market share of around 60 per cent. There will inevitably be a knock-on impact for the supply base both for UK and international suppliers.
FURTHER DISCOUNT GROWTH
Over the last five years, the German discounters have shaken the UK market up beyond all recognition. Both Aldi and Lidl still have ambitious plans for more store openings over the next few years. This will only add to the level of competition in the retail market generally. The Co-operative has also announced a programme of new store renovations.
Pressure from a combination of customers, NGOs and government will see additional demands made on companies at all stages of the supply chain to demonstrate good practice in areas such as the use of water, reducing the use of plastics, mitigating the impact of climate change and reducing carbon footprint levels. This has been building for some time now and shows no signs of diminishing in the next 12 months
BIG DATA & BLOCKCHAIN
These developments have been building in the supply chain for some time now, but have yet to see widescale uptake in the produce sector. The use of blockchain technology has seen uptake in other sectors of the economy, such as financial services, but some retailers in the US are starting to experiment with this in the agri-food sector as an alternative to existing traceability systems. Big data projects have so far focused on production-based issues, linking together information on soils, water, climate and yields with relatively little development of models in the post-harvest sector. This still presents a big opportunity to add value to products and services for produce companies both internally and to customers.
THE ASIAN BOOM
No one needs reminding of the fact that there will be nine billion consumers in the world within a generation and much of this growth will be in Asia. Population growth in the mega countries such as India and China has probably peaked, but in these countries, there will be hundreds of millions of consumers entering the middle classes in the next 10 years. This will continue to drive demand for high-quality imported fruits and vegetables. Suppliers such as Chile, Peru, South Africa, New Zealand, the US and some EU countries will continue to make inroads into Asian markets. They will also need to balance the effort needed to build new business with maintaining hard-won markets over many years in the likes of Europe and North America. Asian markets are just not all about India and China though – Indonesia, the Philippines, Malaysia and a host of other countries will all offer opportunities for well-informed and export-savvy produce companies.