Cereals industry must take action to thrive post Brexit

AHDB is today issuing a bold message to the cereals industry not to sleepwalk into Brexit.

The scale of the potential challenge must be appreciated by businesses at every level of the supply chain and steps must be taken to improve competitiveness, according to chief strategy officer Tom Hind.

The statement will be made as AHDB launches its latest Horizon report, Post-Brexit prospects for UK grains, at Cereals 2017.

The report explores in detail the UK’s position in the global marketplace for wheat and barley, profiling the competitors the UK grain industry would face if seeking to access and exploit new market opportunities.

It concludes that as a small scale exporter and relatively high cost producer, opportunities to compete in global feed grain markets will be limited and highly dependent on market conditions.

With ongoing uncertainty about the economic sustainability of UK arable production, it concludes with five key recommendations for industry to prepare for and drive change.

  1. Improve competitiveness, which is the best form of protection
  2. Drive productivity
  3. Businesses in the same supply chain can’t exist in isolation
  4. Improve consistency of UK grain quality
  5. Get to grips with potential grain and product niches at home & abroad

Mr Hind said: “We started this piece of work with the intention of identifying where new market opportunities may lie but as we delved deeper, it became more and more apparent that while the demand is there, generally we are not in a situation to compete in global commodity grain markets. There are niches to exploit, but getting fit to compete in our own market has to be the priority.

“Uncertainty around the detail of Brexit is no excuse for inertia, we need to start discussing what the cereals supply chain will look like in the longer term, from what we put in the ground to what leaves the port and what people want on their plates.

“Ultimately, every individual business needs to ask these questions and adapt their business and investment strategies to the coming change.”

As part of AHDB’s programme at Cereals, lead analyst Jack Watts, who co-authored the report, is leading an ‘Are you ready for 2020?’ debate. He will look at some key resilience-building steps businesses can take ahead of the UK leaving the EU, as well as unveiling a ‘Brexit Bucket List’ of questions growers need to ask themselves.

Mr Watts said: “Competiveness and resulting financial resilience is a key theme when it comes to embracing the challenges Brexit poses for the industry, as this new Horizon report details.

“Relentless cost management is a key part of building competiveness – not simply cutting costs at all costs. AHDB can help farmers focus on competiveness through peer-to-peer discussion and learning, facilitated by the Monitor Farm network and FarmBench benchmarking tool.”

Allan Wilkinson, head of Agrifoods for HSBC, is supportive of the Horizon report’s recommendation for businesses across the supply chain to move to a more collaborative model.

He said: “Businesses can’t operate in isolation, especially now. Security of demand, supply, price and cost should be driving a collaborative approach. It is whole supply chains that compete for ultimate consumer demand rather than individuals looking to make a fast buck out of their customers or suppliers.

“Total chain competiveness, to provide the right product to the ultimate consumer at the right price, will involve building trust, sharing information, innovative pricing mechanisms and continuous improvement.”

AHDB’s suite of Horizon publications offer insight and analysis on a range of issues affecting agriculture as the UK prepares to leave the EU, as part of its commitment under the Inspiring Success strategy 2017–2020 to deliver thought leadership and horizon scanning for the industry.

To download Post-Brexit prospects for UK grains, visit www.ahdb.org.uk/Brexit, call 024 7647 8730 or visit Stand 919 at Cereals.

 

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About The Author

Deputy editor of Agronomist and Arable Farmer as well as responsibility for the Agronomist and Arable Farmer and Farm Business websites. After 17 years milking cows on the family farm John started writing about agriculture in 1998 and has since written for a variety of publications and has developed a wide circle of contacts within the industry. When not working John is a season ticket holder at Stoke City and also of late has become a fitness freak, listing cycling, swimming and walking as his exercises of choice.