5 of the biggest Brexit challenges for the food sector

Difficulties with importing and exporting and staff shortages were some of the most significant impacts of Brexit to businesses in grocery retail and hospitality, according to a recent report.

Lumina Intelligence’s Top of Mind Business Leaders Survey provides an overview of current trading conditions, opportunities for growth and the future outlook of the retail and eating out sectors from the perspective of industry professionals. According to the survey, more than half (54%) said both import and export administrative efforts as well as supply chain difficulties were having the biggest impacts on their business. These were followed by increased import and export costs (51%), staff shortages (49%) and a slower supply chain (47%).

However, staff shortages were felt more acutely by hospitality businesses, with almost two-thirds (63%) of those surveyed saying it was an issue post-Brexit. On the other hand, retailers were hit harder by import and export costs, with 63% saying this has impacted their business.

Three-quarters of UK food and drink leaders believe that the UK Government should be supporting businesses to overcome Brexit challenges. “Brexit, coupled with heavy restrictions on movement caused by the pandemic, has resulted in significant resource challenges for businesses across the UK food and drink industry,” said Katie Prowse, senior insight manager at Lumina Intelligence.

“Business leaders want to see the Government do more to support. Issues surrounding the UK’s departure from the EU including trade deals, processes around imports and exports and EU worker rights in the UK are all the remit of the UK Government, so it is vital that it plays a leading role in aiding, communicating and working alongside businesses through the transition,” she added.

Producers hit by labour shortages

Hospitality businesses have not been the only ones impacted by labour shortages, however. Alfred G Pearce, one of the country’s biggest vegetable producers, said earlier this month that it was losing thousands of pounds a week and throwing away food because its workforce was 20-30% down on previous years. The company told the BBC that Covid-19 and Brexit were both to blame. Freshlands Farm in Cambridgeshire also told the BBC it had lost tens of thousands of pumpkins due to worker shortages.

Indeed, while the Office for National Statistics said the number of people in employment rose to 28.9 million in July, it is still more than 200,000 lower than pre-pandemic. And in May to July, job vacancies rose to a record high of 953,000.

“Record vacancies confirm ongoing recruitment difficulties,” said Suren Thiru, head of economics for the British Chambers of Commerce. “Although the changes to self-isolation rules will help, with many firms facing a more deep-rooted squeeze on labour supply from the impact of Covid and Brexit, staff shortages may persistently weigh on economic activity.

“Alongside rapid retraining opportunities, Government should extend the Kickstart scheme into 2022 and expand it to enable older workers to gain new skills and experience. A more flexible immigration system is also needed to ensure that firms get access to the workers they need,” Suren added. The number of visas available for food producers has been temporarily increased from 10,000 to 30,000, but with Covid and Brexit’s combined impact, more may need to be done to help the industry recover.