AIC Agribusiness conference: Cautious optimism that agri-food supply chain can manage disruptive shocks

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At a packed AIC Agribusiness conference 68% of delegates agreed or mildly agreed that the agri-supply sector was in a strong position to manage the key shocks and disruptions in the supply chain in the coming years.

Given the significant economic and practical shocks that have taken place since the pandemic this outcome was testament to the resilience of businesses across the supply chain.

But there was no doubt that the feeling amongst delegates is that there is room for significant improvement both in practical policy and political stability. Farming Minister Mark Spencer, in one of his first addresses to the sector, reiterated Defra’s commitment to rolling out ELMS, emphasising the opportunity that the government believes this transition represented but accepting that change always presents challenge for businesses.

AIC Chief Executive Robert Sheasby was quick to question the governments engagement with business. He suggested the need for an economy wide business task force that would look at the impact on business of proposed legislation and new trade deals and ensure joined up thinking between government departments “ we need DIT to get behind agriculture when it comes to competitiveness and to make sure that when entering into trade agreements that UK agriculture and what it can provide is not overlooked.  We should expect our negotiators led by their political leaders to find the opportunities that will assist growth in competitiveness”.

Tom Bradshaw, NFU Deputy President was pleased that the Minister recognised the need for a food strategy, but needed to see a plan of how to bring this to life.  Both AIC and the NFU called for clarity on carbon which is going to play such a significant role for productivity, competitiveness and the environment – never mind reputation.  Mr Sheasby announced that AIC have been working on a self-assessment criteria whereby businesses will be able to assess how they are progressing towards the statutory target of net zero.

However both organisations raised the challenge to the Minister of consistency of metrics for carbon measurement both in the UK and on a global scale.  Mr Bradshaw called upon the development of a carbon border mechanism, with an agreed suite of calculators and net zero embedded in ELMS.

The Minister confirmed that Defra was working on carbon credits, looking at the issue from a UK, EU and global perspective, recognising that any system had to work for global supply chains and must not deliver unintended consequences such as big polluters simply buying up land to plant trees.

Tom Bradshaw delivered an eloquent list of issues facing his members in particular the crippling impact of input inflation running at more than 30% in some sectors and the dire consequences for consumers of supply chains failing, as has been seen with egg availability.  Finance availability will consequently become an issue, skilled and unskilled workers remain a huge concern and Mr Bradshaw called upon an immigration policy that was fit for the economy.  He also challenged the farming sector to put the “sex” back in farming, to talk up the opportunities the sector provided and be on the front foot in the sustainability debate to better inform retailers and indeed consumers.

There is a huge requirement for practical knowledge transfer if the transition of UK agriculture is going to be successful.  The Minister recognised the crucial role that on farm advice provided in bringing to life best practice, new research and access to the support provided through ELMS.

Allan Wilkinson, Head of Agrifoods, HSBC also questioned the UK governments support of businesses seeking to export.  “Protein demand is still growing at an insatiable rate, along with the global population.  But the UK imports £58bn of food and has the 3rd largest food deficit in the world”. In his experience the UK government has not engaged, whilst in other export focussed countries there is a deep seated government involvement in trade.  This is particularly galling given that in many circumstances the margins on export are often greater than trading in the UK, a reflection on the hugely competitive nature of our retail sector.

There is no easy route forward and he emphasised that it will only be the very best businesses, focussed on customer needs and an understanding of the whole supply chain alongside relentless efficiency that will thrive.

Two year run for food inflation

Mr Wilkinson closed his presentation by warning the audience that food chain inflation had another two years to run, so businesses needed to be in good shape to be able to act quickly and repeat.

Judith Evans, Consumer Industries Correspondent for the Financial Times perhaps bluntly spelled out what many in the sector already suspect that agriculture only hits the headlines when something goes wrong.  Surprisingly she also said that in her experience farmers were “click bait”, not always in a positive way but there is a genuine interest from consumers on what they want their food sector to become.  In particular green technology such as vertical farming and regenerative agriculture features high in her feedback.

On closing the conference Chris Guest, AIC Chair was quick to pick up on the need to increase the profile of the sector, not only to be on the front foot with our messaging to build our reputation, but also to show the genuinely interesting and exciting sector agriculture represents, both to retain its workforce and attract new talent and investment.

“There are significant challenges ahead and there is a need for better planning, better policy and a focus on thriving not just surviving but there is much we can be optimistic about and we should grasp our future, it is in our hands”.

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