The Commons Environment, Food and Rural Affairs (EFRA) Select Committee has taken evidence on the impact of the Covid-19 crisis on the agriculture and horticulture sectors.
The hearing featured speakers from the British Retail Consortium (BRC), National Farmers Union (NFU) and the Food and Drink Federation (FDF), among other industry bodies, to discuss the key challenges facing the industry during the prolonged Covid-19 crisis, including sourcing operations and the long term implications to the nations supply chain.
When asked what the most surprising outcome of the virus had been, Ian Wright, chief executive of the FDF, said: “The good surprise has been that the system stood up. But I think we have to accept—probably none of us would have thought this, but it is blindingly obvious now—that the algorithms and the systems that managed supply were all based on previous behaviour, and, if previous behaviour is capable of being so changed overnight, of course things will change. Of course, people have preparations for pandemics, but maybe this is a lesson for that kind of ‘think the unthinkable.’
“I think the biggest challenge for us, though, was the speed at which things changed and the influence of that on consumers—particularly, for example, key announcements such as school closures and when we went into the lockdown. That had a real, immediate impact on consumers, which no supermarket really could stockpile enough in advance for, and the notice period was so short that we were not told.”
“The second big thought I have is that, until about the beginning of March, nobody would have actually realised that out-of-home and hospitality was essentially a discretionary purchase. We would have assumed that we would always go to coffee shops, go to restaurants and go down the pub. The fact that it could be turned off, and retail would have to be left on, may have been obvious to some, but it certainly was not obvious to me or a whole lot of the industry.
“The third thing, which is probably less well observed, is that, at least in the initial part of the crisis, we focused on supermarkets and failed a bit to properly serve convenience stores and local stores. That is a lesson that we should learn, because convenience stores and local stores represent 25% of consumption in this country.”
Responding to the same point, Andrew Opie, director of food and sustainability at British Retail Consortium added: “I think the biggest challenge for us, though, was the speed at which things changed and the influence of that on consumers—particularly, for example, key announcements such as school closures and when we went into the lockdown. That had a real, immediate impact on consumers, which no supermarket really could stockpile enough in advance for, and the notice period was so short that we were not told.
“Similarly, and again, where we really rose to the challenge in the retail sector—it was an enormous challenge—was on the evening when the Government announced that we were going into lockdown and social distancing was going to be required for those who shop in supermarkets.
“We convened a very quick conference call with our members that evening, quite late at night, to agree things that supermarkets would put in place quickly, such as plexiglass screens, two-metre distancing and the management of queues, to get that going. But again, the notice for that was so short that it was a fantastic reaction from retailers to be able to do it. Many of the lessons are now going to be used, hopefully, for non-food shops, which hopefully will be opening sometime in the future. Trying to manage through and react to these very quick changes was very, very difficult.”
Supply chain
Opie was also asked about the effect of the pandemic on the sourcing operations of food retailers in respect of overseas supply.
“It has definitely given some headaches. If nothing else, the technologists who generally work for the supermarkets and fly out to countries and look at the quality and the production of those items have not been able to do that, obviously, and nor has auditing gone on in those areas, so there are definitely some technical issues. However, the sourcing itself held up relatively well. We import about 80% of our goods and food for supermarkets from the EU.
“Only the remaining 20% comes from the rest of the world, and within that, probably less than 10% is from developing countries, so it is relatively small in terms of the food you would see in a supermarket, particularly as we are probably about 70% or 75% UK-sourcing here. It is not a major issue for us. The major challenge is really Spain and Italy. Those were the two key countries for exports into the UK and two key countries that were affected by the virus. Provided that those countries stood up well, which they did—we were getting daily updates from the suppliers in those countries—we knew that we were reasonably comfortable, in terms of food on the shelves.”
Ian Wright CBE added: “There will be some big changes, but they will be partly driven by what the market looks like over here. I think the speed with which out-of-home comes back— I am very much of the view that out-of-home will come back differentially. If it is food to go—I know that is not the right technical expression—that will come back moderately fast as workplaces open up. If it is sitting-down food, to be eaten in pubs or restaurants, that will take longer.
“The trade that supports those two different options will be differentially affected. Andrew is much better placed to answer this, but there will be some impacts in terms of shoppers, initially at least, looking at products from nearer to home. That is a natural reaction in a crisis. I know we are going to get on to the whole question of self-sufficiency, but I think that the UK shopper does not necessarily always immediately think of the origin of the product.
“When they realise that their product comes at least partially from abroad—40% of the food we eat is imported, and most of that is in ingredients rather than in ready food—they will start to think about that. I am not sure there will be quite as much enthusiasm for a protectionist agenda as might have been alluded to in the earlier session.”
View the full transcript for the committee hearing by clicking this link.
