The Food and Drink Supply Chain APPG recently held a panel event to hear from experts about the impact of the tragic Ukraine conflict on the food and drink supply chain, the challenges the conflict poses for the sector, and what steps the Government can take to support the industry at this time.
Here are five key points that were learnt from the FWD-organised session:
1. The four horsemen. There are four main cost drivers resulting from the conflict which are impacting on food production. The significant price rise in energy, limited raw materials such as those used in packaging, fertilizers and feed, a reduction in available labour, and a new 35% tariff announced on products from Russia. Ultimately this means increased costs, and it will be consumers who shoulder this burden.
2. Price increases but not shortages. The supply chain is incredibly resilient and over the last two years has weathered some mighty storms. The Ukraine conflict will drive up prices of products in the UK, but it shouldn’t result in shortages. Producers will source products and materials from alternative locations. These may be more expensive, but there are alternatives to Ukrainian and Russian goods.
3. Chippy Teas will be hit. The price of a fish and chips in a pub could rise by as much as £1.20. The increased costs of cooking oils, cod and other input materials such as energy and fuel costs may well culminate in a hefty price rise. And with wheat prices increasing 60% since September, there will be pain for chip butty lovers too.
4. Short terms steps the government can take. The panellists proposed several short term policies such as:
– A moratorium on all policies which are likely to add burden to the food and drink sector such as HFSS and packaging legislation
– An extension in the 12.5% VAT rate for hospitality
– The introduction of a temporary 12 month workers visa for food processors with 60 of the required 70 points under the skilled visa criteria. Those workers could then learn English in the UK and apply for a skilled worker visa if they can pass their language test which would take them to 70 points.
5. Longer term steps the government can take. Panellists agreed that government needed to take a holistic view of food and drink policy tying together everything from farming to trade to education. A long term solution needs to found on CO2 production rather than jumping from crisis to crisis, and to support the future of the sector, panellists proposed the introduction of a T level specifically for food production.
Organised by the FWD, the members of the group heard from:
Jayne Almond – Director of Policy at the Food and Drink Federation
David Exwood – Vice-President of the National Farmers Union
Emma McClarkin – Chief Executive of the British Beer and Pub Association
Andrew Kuyk CBE – Director General of the Provision Trade Federation
Alex Waugh – Director General of the UK Flour Millers
Tony Goodger – Head of Marketing & Communications, Association of Independent Meat Suppliers
Dick Searle – Chief Executive of The Packaging Federation