The clock is ticking towards March 29, 2019 when – barring a political earthquake – Britain will leave the EU.
As uncertainty grows over what kind of deal – if any – will be forthcoming, leading figures in the co-op movement are taking steps to lessen the impact on the retail sector, where there is a fear profits will slump if supply chains dry up.
Since the Leave vote in 2016, the Co-operative Group has kept a close eye on developments and has lobbied for a ‘co-operative Brexit’ – making the best of the situation while taking steps to mitigate the consequences on the movement as a whole.
A spokesperson said: “We’re monitoring the progress of Brexit, as any responsible business would – but there is a lot of uncertainty in the market and it’s clearly in everyone’s interests for a deal to be agreed which is mutually agreeable to both the UK and the EU.
“That said we believe the Co-op has some degree of protection, even from a hard Brexit. Our fresh meat is 100% British. That flows across ingredients and in some of the core areas like ready meals and sandwiches.
“We are also working closely with suppliers on the contingency plans they have. This can give us assurance and also influence how we may adapt our promotions, offers and ensure that we can keep our shelves stocked as best we can in any degree of disruption that may emerge.”
The Co-operative Group is also seeking approval from the government as an Authorised Economic Operator, giving quicker access to customs procedures and the right to fast-track shipments through security both in and outside the EU, avoiding border delays in the event of a hard Brexit.
Jo Whitfield, CEO Co-op Food said: “Since the Leave vote was announced we’ve extolled the virtues of a co-operative Brexit, one which would provide clarity and fairness in terms of trade and labour movements between the UK and the EU. That view has strengthened over the subsequent months and our hope remains that a deal will still be reached.
“If a no-deal Brexit occurs, the view from many industry commentators is there may be impacts to food supply over the short-term. As such we, like the rest of the retail sector, are taking prudent steps to mitigate the impact for our customers and members, over and above the existing protection we have in place.”
Co-operatives UK secretary general Ed Mayo and his team have been lobbying government on behalf of members since the referendum, developing a positive scenario for how co-operatives can flourish in a post-Brexit UK and articulating a series of key forward-looking principles to be respected in negotiations.
He says: “Our analysis suggests the impact on co-ops of Brexit is not too different from the impact on business as a whole. But there are particular risks for key sectors in which co-operatives are strong, notably farming and retail, which does mean the challenge of Brexit is a challenge to the wider health of the
co-operative movement.
“The retail sector faces the challenge of securing supply chains in the absence of information on what will happen to produce at the border. As a nation, we eat around half of what we produce. If crisis hit, we could produce maybe 70% but not all we would need to get by. At present, 80% of fresh vegetables and 30% of fresh fruit is imported from the EU. That is an opportunity for UK farmer co-ops and retail co-ops to connect.”
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He added: “The decision by the Co-op CEO, Steve Murrells, early in his leadership to move to 100% British meat in own-brand products, is looking like an inspired move, giving the Co-op something of an advantage.”
Back in March, Co-operatives UK organised a roundtable so agri-co-ops could meet the farming minister, DEFRA and industry experts, and won the case for a new £10m fund for farmer co-operatives. According to Mr Mayo, the new Agriculture Bill mapping the future of farming outside the EU reflects both positive wins for the sector and continuing areas of risk.
With the possibility of a no-deal Brexit looming, last month, Co-operatives UK issued guidelines for all co-operatives, large or small, recommending boards consider the risk of a “disorderly” Brexit. These include looking at sales, marketing, logistics, legalities, tax, HR and the implications of recruiting or employing EU nationals, as well as cross-border trade with EU countries and the risk of obstacles to supply chains.
Official advice from the EU on Brexit and UK business echoes the call from Co-operatives UK for contingency plans and preparation for possible short or medium-term disruption to supply chains and revenues. Across the country that is now being taken on board by the co-operative movement with the focus on partnership working across the movement as key to survival in a post-Brexit world.
Mr Mayo said: “A no-deal is expected to have a dramatic instant impact on food supplies in the UK. The retail sector is one of those which will be impacted and knock-on implications in terms of food availability and consumer behaviour are ones that start to move into uncharted territory.
“There is no co-op crystal ball, and the effect Brexit negotiations seem to have had on experts is to leave them equally unsighted and uncertain on what will come next. At the same time, it is interesting and hopeful that a debate has started on the future of food and farming beyond Brexit – one we have contributed to on behalf of our members.
“We have to co-operate in our supply chains, we have to co-operate to compete, we have to co-operate to go sustainable, and we have to co-operate to survive.”
