Bridge Cheese founder Michael Harte shares his experience of importing and exporting goods under the new EU trade agreement and examines how the industry needs to adapt to changing rules and regulations.
Michael Harte explains why smaller businesses need more support to cope with Brexit regulations
Bridge Cheese is a Telford-based company that supplies cheese for the food manufacturing and food service industry. We export to many countries in the EU and the rest of the world. Therefore, the free movement of goods in and out of the UK is central to how we do business.
Like many others, we welcomed the news that came on Christmas Eve that the government had managed to strike one deal with the EU about food imports / exports. However, the fact that it was officially announced when most companies split for the holidays meant we didn’t have time to digest the new rules or ask questions before they became law on January 1st.
We’d already spent months preparing for the unknown – preparing for every possible outcome – but imports and exports have been far from smooth since the turn of the year. In the first few weeks of 2021, the new regulations created chaos and confusion for many businesses, especially those moving foods with a short shelf life.
We heard stories of cheese products arriving at the depot and being rejected at the border due to confusion about the new rules. The same problems were frequently reported in the UK fishing industry, highlighting the fact that problems in the food supply chain were felt across the board.
It seems that many UK food companies were preparing for the end of the transition period that the inevitable impact of the introduction of a last minute deal and lack of government support or guidance, with little disruption to the supply chain and little to medium-sized businesses hardest of all.
We got lucky at Bridge Cheese; We anticipated that in and out of the country routes would be disrupted in January and had taken steps to ensure security of supply for our customers. This meant that our customer service and logistics teams had time to adjust our business processes to comply with the new EU regulations at the turn of the year without abandoning our existing customers.
But we know that not everyone is or can be so flexible and agile in their approach. Companies will go under unless support is provided.
Bridge Cheese was able to face the challenges of Brexit
Smaller businesses have been counting the cost
Yes, we all need to control the new processes and procedures – regardless of the size of our operations – but the resources and resilience to cope with the changes definitely make a difference, as does the ability to export larger quantities of product.
Currently, we all have to fill in the same amount of Perwork (at the same cost) for shipping a whole cheese as we would for a small pallet. The lengthy Perwork process involves going through a trade certificate from the Chamber of Commerce and hiring veterinary inspections to fill out an Export Health Certificate (EHC).
At Bridge Cheese, we are working to streamline the perwork process wherever possible to minimize the time between a customer placing an order and receiving their delivery. However, management is a tedious process. Currently, companies have to call a veterinarian to check every single shipment, even though they are often the same products as the same service must be provided for each shipment.
It’s just not a sustainable or efficient way to do business for smaller companies.
Combine the new export costs with rising logistics costs and it is clear that EU trade rules are already pushing low margins, especially for smaller food companies that find it difficult to pass costs on to the consumer while remaining competitive.
Now that we know the real cost of shipping and logistics to the EU, Bridge Cheese has been looking for ways to add value to other areas of our supply chain in order to minimize the import / export costs that affect our customers. For example, working with new suppliers and looking at new product developments that can optimize our customers’ profit margins. This is our new reality and we have to adjust to it.
New challenges ahead of us
I recently got a report from the Agriculture and Horticulture Development Committee (AHDB) This warned that increased friction at the border would lead to delays and soaring prices. That could be the tip of the iceberg.
If the emerging border problems are not reviewed, the UK food industry could potentially face food cost inflation, product shortages, reduced consumer choice and stagnation in new product development. The sector could also watch out for millions and millions of pounds worth of products to be wasted, with UK companies counting the cost.
There could also be more headaches for food export / import companies this year. The EU will graduate on July 1, 2021 Payment term for Member States and border controls, all products coming from Europe to the UK begin. Will the empty shelves in Northern Ireland’s stores be an indication of what’s to come for the rest of Britain?
Companies dealing in short shelf life goods such as seafood have found it difficult to deal with delays at the border
If European companies – especially in the food sector – are facing the same problems as our industry on this side of the channel, it would be clear for both parties to review the current trading rules and come back to the negotiating table to see a fairer system that works for all.
In our opinion, a good start would be to convert the export verification system to an annual certification, which can then be checked with spot checks during the 12 months to ensure continued compliance.
Since further disruptions appear on the horizon in spring, we are planning the “worst-case scenario” again. We are strengthening our supply chain in the UK and investing in inventory to make sure we don’t have to rely on our imports to get through. Our priority remains our customers and security of supply; Even if this means turning down new business in order to maintain the loyalty and trust of our existing customers.
Time to move forward
The time to argue about whether or not we should have left the EU is behind us and we need to move forward and play the hand we have been given. We need to adapt to the new reality as best we can and find ways to thrive in the conditions.
I believe we are at the bottom of the process and that with more guidance, things will get better. I would really like to see a thorough and comprehensive review of – and believe there is a minority to it – what works and what doesn’t for all UK businesses, especially the small and medium-sized businesses that are the backbone of the country’s economy.
In the meantime, we need to evolve. We are again preparing for the worst to protect the interests of our customers and optimistically hoping for the best.