Maintaining confidence in supply chains could become increasingly complex in the face of an uncertain Brexit with potential changes in the way Britain trades with other nations, says the Soil Association.
Failure to understand and face these challenges could have consequences for future growth, Britain’s lead organic body warned today at the launch of a detailed new report on organic supply chains.
‘Organic Supply Chain 2017: Challenges and Opportunities’ was developed with contributions from more than 100 organic businesses, gathering a consensus on the obstacles and prospects within the sector and noting key recommendations for building strength and integrity. The findings are supported by a range of case studies, showcasing brands and businesses who are already delivering inspiring solutions.
“Improving efficiency, cooperation and transparency in supply chains now is imperative if organic businesses are to become more resilient, inspire confidence and take advantage of growth in a broader range of channels”
Lee Holdstock, trade relations manager at the Soil Association, said: “Sustainable food and farming needs stable, sustainable supply chains and, although the organic market is flourishing now, future growth depends on resilience and an ability to plan and react to new tensions and challenges. Improving efficiency, cooperation and transparency in supply chains now is imperative if organic businesses are to become more resilient, inspire confidence and take advantage of growth in a broader range of channels. The report is a reflection of broader industry insight, which is intended to inspire and assist businesses with planning for a successful future as well as direct our own support for organic businesses.”
The report makes key recommendations for strengthening supply chains, including: making effective use of tech solutions that improve efficiency and confidence; increasing transparency and better collaboration along the supply chain to affirm trust and build market stability; reducing UK reliance on organic imports to support domestic production; and developing understanding of growth markets such as export and foodservice to maximise success.
Standout points and observations
Breaking the import reliance
The UK remains highly reliant on organic imports, creating a strong case for further supporting organic production in key areas to balance trade.
An uncertain Brexit
Whether it means more red tape, shipping delays or other unexpected costs, major unknowns continue to exist for importers and exporters.
A very different kind of organic?
The changing regulatory landscape post-Brexit could lead to a divergence of regulation and a two-tier market. There’s also the possibility of a future trade deal with the US that “might open the UK to a very different definition of ‘organic’”.
Natural and organic wholesale: ripe for modernisation
The UK natural and organic wholesale operations are a layer identified by the report as “ripe for modernisation compared to their forward-thinking counterparts in the Netherlands”.
With organic accounting for just 1.5% of all food sold the UK, many of the challenges faced by the UK organic food industry relate to its small relative size. Put simply, size matters.
A lesson from organic dairy
The dairy sector is shown as an example of “scale driving success”, with larger businesses credited with helping escalate growth through coordination of producers and effective marketing to make organic more competitive.
The cost of clarity
A lack of clarity around retail margins – a particular issue in the UK – makes it hard to determine what the organic cost differential should be. This lack of clarity on margin has made it easy for some suppliers to indulge in opportunistic pricing, restricting organic’s appeal and harming the sector’s prospects.
The full report can be downloaded at www.soilassociation.org/supplychain