Brexit and COVID-19 hindering green projects

By Rod Addy contact

- Last updated on GMT

Businesses said the climate of uncertainty was hampering investment to tackle climate change
Businesses said the climate of uncertainty was hampering investment to tackle climate change

Related tags: Supply chain, Finance

Food industry environmental initiatives are being hampered by the financial impact of COVID-19 and uncertainties surrounding the UK's relationship with the EU after the Brexit transition period, according to an industry survey.

More than 20 prominent food and drink processors and trade bodies in the Sentiment of the Sector​ Report ​gave feedback on the big issues facing the industry. The report, which was put together by sustainable energy management specialists Businesswise Solutions and trade body the Food and Drink Federation (FDF) states: "One of the key challenges to delivering on sustainability pledges is the availability of capex for large scale projects such as switching in more efficient plant machinery, investing in on-site renewable generation, or battery storage to help take the strain off the national grid during peak times.

"With the current economic uncertainty caused by both COVID-19 and Brexit, this has caused many businesses to hold off on signing up to significant investment, but they haven’t stopped spending altogether."

Three quarters of those surveyed for the report said they felt uncertain about the current state of the industry, with only a quarter feeling positive.

CO​emissions

While the report acknowledges the majority of FDF members have cut CO2​ emissions from energy use since 2018 against a 1990 baseline, it states there was 'a consensus that it should be a priority, but one that has a longer term horizon'. "The focus right now, is business survival."

One of the simplest ways that food and drink manufacturers could move towards net zero carbon emissions by 2050 - one of the Government's key targets for the whole of the UK - would be to pledge to buy only 100% renewable energy, the whitepaper argues. Premiums on 100% renewable energy are currently very low and interest in the area has grown significantly over the past five years, it maintains.

A quarter of those surveyed for the report thought the sector was on course to miss environmental and sustainability targets.

The industry remained dogged by broader political and economic uncertainties, according to the feedback. No respondents were positive about Brexit, with 65% saying they were not feeling confident about its impact on their business, while 35% were 'unsure, but hoping for the best'. The industry is 'crying out for clarity' from Government, the research states.

Labour availability

Concerns were raised about labour availability, selling products into Ireland and delays at ports after the transition period ends on 31 December.

Feedback includes: "Northern Ireland was effectively getting EU status so we thought that would be a massive plus for us; most of our imports into Ireland come from the EU. Our concerns are not the tariffs or the paperwork, but delays at the ports or where our goods are coming on a vehicle wherein someone else’s business has not filled their paperwork in time, causing delays."

Another interviewee commented: "A major concern for us is a physical border between Northern Ireland and the Republic of Ireland. The extra paperwork we can handle, but delays caused by a physical border would present a major challenge."

COVID-19

Offering feedback on the impact of COVID-19 on the industry, 60% of businesses witnessed a considerable impact on sales and forecasts during the first six months of 2020. A total of 85% claimed an impact on their cashflow availability and budgets, although the general belief was that the sector had remained resilient and would continue to do so.

One respondent said: "Last year, our turnover was £55m, but this year it’ll be down on that which is unfortunate given we had a fantastic first three months to the year. When the initial lockdown happened we probably lost 80-90% of our sales overnight." Another comments: "We decided to go into hibernation and send 100 people home because it wasn’t safe. Although we’re back up and running now, we’re trading at 74% of our normal business, so we’re missing 26% of business."

That said, retail suppliers reflected the general perception that demand and sales had rocketed.

Campbells Meat; Kendal Nutricare and Synergy Flavours were among the companies to take part in the survey and roundtables associated with it.

Comments: 'we need to up our game'

Commenting on the perfect storm of Brexit and the pandemic, Steve Morgan, managing director of Synergy Flavours, said: “We have the capacity to come through this crisis well enough but if we’re serious about being a globally facing trading nation we really need to up our game. Other national governments have significantly more effective support in place than is currently the case in the UK.”

Richard Hampton, director of OMSCO, the UK’s largest, farmer-owned and run, organic dairy cooperative, said: “If you take a long view, big challenges will always arise and COVID is one of the most serious threats of the modern era - but we will recover from it, some sectors better than others.
“The frustration for me is the continued uncertainty on key issues such as Brexit. Give us certainty, give us line of sight and we’ll do the rest.”

Related topics: Brexit, Environment

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