Food and agribusinesses in the UK have faced growing uncertainty in recent years. Global crises and geopolitical conflicts have disrupted supply chains, while the political upheaval associated with Brexit has drastically altered the distribution and trade landscape, creating new challenges for farmers and agribusinesses across the country.
The once seamless flow of goods between the UK and its trading partners, particularly the European Union, has been disrupted, forcing businesses to navigate complex new regulations, increased costs, and logistical hurdles.
This article takes a closer look at some of these challenges and how they have impacted sales, distribution, and trade in the agrifood industry.
Increased red tape and bureaucracy
One of the most immediate and visible challenges for agribusinesses has been the dramatic increase in bureaucratic processes affecting UK distribution channels as a result of Brexit. New documentation requirements and approval processes have complicated what was once a relatively straightforward process. Food distribution now requires more paperwork, leading to delays and complications throughout the value chain.
This increase in red tape is particularly problematic for agricultural products, many of which are perishable. The time-sensitive nature of fresh produce, dairy, and meat products means that delays in distribution can result in spoilage and financial losses. Farmers and distributors are now forced to navigate a complex system of export health certificates, phytosanitary certifications, and customs declarations, all of which add time and cost to the distribution process and add strain to supply chains.
The new bureaucratic hurdles have led to alarming instances of food waste within the distribution system. Entire shipments of fresh produce have spoiled due to delays at borders and transportation holdups resulting from increased administrative procedures. These incidents not only represent significant financial losses for individual farmers and businesses but also highlight the inefficiencies in the current UK distribution system. The agriculture industry is calling for more streamlined processes and better coordination between UK authorities and international partners to prevent such waste and ensure smoother distribution channels.
Rising supply chain costs
The introduction of new quality controls, inspections, and bureaucratic processes has inevitably led to increased costs throughout the supply and distribution chain. These additional expenses make UK agricultural products less competitive in international markets. Farmers and distributors are grappling with how to absorb these costs without pricing themselves out of the market or compromising their distribution networks.
Moreover, the uncertainty surrounding trade regulations has led many businesses to invest in contingency planning and stockpiling, further driving up costs and complicating distribution strategies. Small and medium-sized agricultural enterprises are particularly vulnerable to these increased expenses, as they often lack the financial resources to absorb ensuing costs or invest in alternative distribution methods.
Workforce challenges
The UK agriculture sector has long relied on migrant workers, particularly for seasonal labour during harvest periods. The combination of Brexit and the Covid-19 pandemic quickly brought this into public consciousness, with widespread reports of labour shortages on farms, as well as for processors and, critically, HGV drivers.
While the impact of the pandemic is mostly behind us, there remains some uncertainty surrounding immigration policies and the potential for further decline in availability of migrant workers. Many businesses continue to report staff shortages, raising concerns about their ability to maintain production levels and meet distribution demands.
In the direct aftermath of Brexit, the UK government introduced temporary visa schemes for agricultural workers, but these were heavily criticised for being insufficient to meet the sector’s needs and for potentially exploiting workers. Although, there is some hope that automation and agri-tech solutions could reduce labour dependencies in the future.
Uncertainty around farm payments and distribution support
As UK farmers struggle to compete with their EU counterparts, the loss of support from the Common Agricultural Policy has contributed to a decrease in the value of agricultural exports from the UK, and highlighted a need for new domestic policies to support the agricultural value chain. While the UK government has promised to maintain overall funding levels, the long-term picture remains unclear. The development of a new UK-specific agricultural support system is complicated by competing priorities and budgetary pressures. Clarity on future support mechanisms is needed to allow for long-term planning and investment, particularly where UK distribution networks are concerned.
Adaptation and opportunities
Despite these challenges, the UK agriculture sector is actively seeking ways to adapt and identify new opportunities within the changed distribution landscape. There is a growing focus on restructuring supply chains to better suit the new trading realities. Some producers are exploring ways to expand their presence in the domestic market, potentially reducing reliance on exports and shortening distribution chains.
Investment in technology and innovation is also accelerating, with a particular focus on improving UK distribution efficiency. Precision farming techniques, vertical farming, and other agri-tech solutions are gaining traction as ways to improve production and distribution efficiency. These innovations may help the UK’s agriculture sector become more competitive in the long term and better equipped to handle distribution challenges.
Navigating UK distribution challenges
As the UK continues to adapt to its position outside the EU, continued support, innovation, and flexibility will be essential to ensure the prosperity of its food and agricultural sectors. UK food and agribusinesses must vigilantly monitor emerging challenges and be ready to seize on opportunities for growth.
At Farrelly Mitchell, we are acutely aware of the complex and challenging environment that increased bureaucracy, rising costs, and workforce shortages have created for the UK’s agrifood industry. Our highly experienced food and agribusiness consultants work closely with clients throughout the UK to build resilience and adaptability, incorporate new technologies, explore new markets, and find ways to operate more efficiently. To overcome your organisation’s challenges and build a more competitive and sustainable future for your business, contact us today.
