We are on the virtual eve of the decision for the UK to leave the EU. Even at this relatively late stage, it is not fully clear as to what sort of Brexit we might end up with. In these circumstances, it can be difficult for U.S. fruit export businesses to know what to do. Preparing for a situation of “what might be the worst thing that can happen” seems sensible.
A “check list” of some areas that U.S. and, indeed, other international fresh produce firms should be taking into consideration should probably include as follows:
- Lobby government — The situation regarding market access to the UK could well change post-March. The fact the UK will, in time, be able to negotiate its own trade deals, might mean there is an opportunity for U.S. to gain better access than it now has.
- Think about currency — It is quite likely that in the build-up to March 29 and afterward, the pound could fluctuate against key currencies such as the U.S. dollar. Thinking about hedging funds over the short and medium term to protect these would seem sensible.
- Talk to customers — They will probably be thinking about the same sort of things and might also be able to share what is emerging as best practise from other supply chains.
- Understand tariffs and customs clearance procedures — These could all easily change after March 29. Lots of information is being produced by the UK government on this. Not least, in a very worst-case scenario, produce being shipped via other EU markets might attract a tariff. U.S. exporters should be checking on logistics to supply the UK market on a direct basis.
- Understand consumer and customer behavior — Even aside from the Brexit process, the UK market has gone through a fundamental change in the past 5-8 years. U.S. exporters should make the upmost effort to understand what is happening in the UK market on a regular basis.
- Consider other markets — While there are still many factors that will make the UK an attractive market for U.S.-based exporters, this might be also an opportunity to assess where the UK fits into an overall export portfolio. Building new markets takes time and effort, and as a result, this sort of review should be carried out on a regular basis.
- Benchmark — Regardless of what sort of Brexit prevails, U.S. exporters are competing against many other suppliers from the likes of Chile, Peru, India, Argentina and Mexico, to name a few. Engaging in benchmarking against other countries in terms of varietal mix, costs of production, export logistics and marketing and promotional activity should be carried out on a regular basis against other suppliers.
There is a need to be better informed about the threats that the UK market might well bring, as well as, in many cases, the opportunities, too. Where will we be by the end of 2019? In some cases, it is difficult to tell, but in other areas, the evidence for the direction of change is compelling.
John Giles is a divisional director with Promar International, the value chain consulting arm of Genus PLC. E-mail him at [email protected].
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