Looking forward to 2021 and beyond for the food and agri sector: What will be the main issues? *Survey Results*

An impromptu straw-poll on the main issues for the food and agri sector for 2021 and beyond, carried out amongst food producers, businesses and associated professionals yielded some interesting responses.

A summary review is set out below:

‘Logistics Logistics Logistics’ *

The main thrust of feedback was the importance of logistics for the supply chain.

This encompasses all the additional delays, paperwork, conformity assessments and checks of Brexit, the reduction in availability of seasonal workers/employees generally, the restrictions within supply imposed by Coronavirus legislation and the pinch point in the supply chain itself to customers.

Climate change may also emerge as the next main threat to food supply chains and availability.

Shorter supply chains will help to support UK producers and processors. An additional benefactor to this may be more sustainability and country of origin claims.

Where international supply chains are in operation it will be important to manage these proactively with appropriate shortfall provisions and where possible alternative routes and sources of supply. Where any supply chain suffers a restriction in supply adequate measures to protect against food fraud and ensure quality should be implemented.

Additionally, and vitally, is there any impact on working capital as a result of any changes in the supply chain? If this creates a funding need it is crucial this is addressed sooner rather than later. Are finance and liabilities structured in a way that is sustainable?

Online ordering and facilitating deliveries for the final stage of the supply chain will continue to gain prominence. The logistics concerning this will involve online platforms, technology and marketing, picking joint ventures and suppliers who have the expertise and scope to deliver and the logistics underpinning this such as warehousing for just in time delivery to consumers. Suppliers and producers looking for opportunities for vertical integration of supply chains as a way to manage risk will add to an increasingly crowded market place.    

There is an underlying host of specialist experts depending on your issue and location. However some references are as follows:

For the international side Mills & Reeve have a close network of allies we can refer issues to, headed up by Tom Pickthorn, with Craig Hodgson and Jessica Burt.  We can provide a ‘one stop shop’ handling multiple jurisdictions on your behalf or refer businesses directly to the relevant expert.

Concerning warehouses and property the expert will be Nick Finlayson-Brown.

Litigation disputes it is Richard Dawson-Gerrard and employment issues, James Kidd.

Commercial terms is Greg Gibson.

Procurement

An associated element of the first point will be procurement.

It will be ever more important that commercial terms appropriately designate the risk, that liability is insured against where possible, who will bear the brunt of any additional costs in transport and tariffs? Force Majeure terms have moved from ‘Cinderella’ to pivotal status.

Please refer to Jayne Hussey & Ruth Andrew for queries here.

Trade

The Trade & Cooperation Agreement is due to be considered by the EU Parliament shortly. Rules of Origin definitions will be crucial to certain sectors of the food industry in whether products may retain zero tariff entry into the EU.

Further, quantitative tariff free allowances, alongside the potential for further trade agreements and any removal of anti-dumping provisions, will deeply affect certain industries.

It will be interesting to see if the Trade and Agriculture Commission (TAC) instituted by the Agriculture Act will have real teeth in a post-Covid and Brexit environment in holding the government to account in reinforcing standards for any trade agreements.

Please refer queries to Simon Elsegood.

Regulation

The Agriculture Act 2020 represents a seismic change in how payments may be made to farmers and landowners with the implementation of ‘public goods’. The evolution of how these are interpreted and future guidance is expected this year.  A summary webinar on the Agriculture Act hosted by Mills & Reeve is available online, please refer to  Nichola Ross and Michael Aubrey.

There is now the potential for the UK to implement ever more stringent requirements on food producers alternatively to reduce red tape.

It is likely that with a strong market with the EU, the UK will remain wedded to the black letter legislation of the EU practically for some time to come. However, already there is some practical divergence on packaging between EU and the UK in relation to listing the producer and source of food, different compliance codes and certifications is only likely to exacerbate this. Any additional UK ‘guidance’ on packaging will only make this more pronounced, and costly.

The other side of the coin, may be that outside the EU there may be more opportunity for innovation and novel foods for the UK. The potential for GMOs may to a certain extent depend on consumer appetites and adherence to EU’s restrictions for exports but this is an likely debate in the future.

Please refer food labelling queries to Jessica Burt.

Marketing

Indications with a raft of consultations are that there will be an anti-obesity push and restrictions on the marketing and advertising of so-called High in Fat, Salt and Sugar foods (HFSS.)  Although the UK nutrient profile model for this was only developed by the Food Standards Agency (FSA) to help Ofcom differentiate foods in limited circumstances back in 2004/5 and has never been specifically agreed. These developments if implemented will have far reaching consequences for a range of foods and online advertising.

Online advertising and unique selling points concerning sustainability, plant-based, nutrition and health claims alongside country of origin will remain key well into the next decade.

For food regulatory queries please contact Jessica Burt. For intellectual property and trademark issues please contact Richard Plaistowe

M&A Activity

M&A activity has been one way that businesses have sought to ensure they have relevant presence in global market places and currency fluctuations have meant opportunities for some.  It is predicted that M&A interest will increase.  The economy of scale will ensure some protection against market fluctuations but nimble and flexible companies that can innovate and ensure good control of their supply chain will still prosper.   

Please contact Craig Hodgson with any queries.

With thanks to all who took part.

* Direct quote from a food business client.

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