The Co-op Group’s retail chief executive, Jo Whitfield, is among 12 signatories of a letter to MPs highlighting the dangers of leaving the EU without a deal.
“On behalf of our businesses and the wider food industry we want to highlight to you the challenges for retailers and the consequences for millions of UK consumers of leaving the European Union without a deal at the end of March,” reads the letter.
“While we have been working closely with our suppliers on contingency plans, it is not possible to mitigate all the risks to our supply chains and we fear significant disruption in the short term as a result if there is no Brexit deal.”
The letter has been signed by leading retailers and food businesses, including the Group’s former interim CEO, Richard Pennycook, who now chairs the British Retail Consortium, as well as representatives from Sainsbury’s, Asda, Marks & Spencer and Waitrose.
Delivered to MPs, the letter highlights some practical examples of the challenges facing retailers, such as the UK’s reliance on European supply chains.
“Nearly one third of the food we eat in the UK comes from the EU,” they write. “In March the situation is more acute as UK produce is out of season: 90% of our lettuces, 80% of our tomatoes and 70% of our soft fruit is sourced from the EU at that time of year. As this produce is fresh and perishable, it needs to be moved quickly from farms to our stores. This complex, ‘just in time’ supply chain will be significantly disrupted in the event of no deal.”
Part of this disruption will concern freight trade between Calais and Dover, which may decrease by 87% against current levels, reducing the availability and shelf life of many products.
The letter also highlights concerns around the impact of tariffs. The letter reads: “Only around 10% of our food imports, a fraction of the products we sell, is currently subject to tariffs, so if the UK were to revert to WTO Most Favoured Nation status, as currently envisaged in the no-deal scenario, it would greatly increase import costs, which could in turn put upward pressure on food prices.”
While the UK could in theory set import tariffs at zero, “that would have a devastating impact on our own farmers, a key part of our supply chains”.
The signatories acknowledge that retailers are stockpiling where possible. “But,” they add, “all frozen and chilled storage is already being used and there is very little general warehousing space available in the UK. Even if there were more space it is impossible to stockpile fresh produce, such as salad leaves and fresh fruit. Retailers typically store no more than two weeks’ inventory and it becomes difficult to restock stores if the supply chain is disrupted.”
The signatories express concern that their customers will be “among the first to experience the realities of a no-deal Brexit”.
They add: “We anticipate significant risks to maintaining the choice, quality and durability of food that our customers have come to expect in our stores, and there will be inevitable pressure on food prices from higher transport costs, currency devaluation and tariffs.
“We are therefore asking you to work with your colleagues in Parliament urgently to find a solution that avoids the shock of a no-deal Brexit on 29 March and removes these risks for UK consumers.”
The 12 signatories are: Mike Coupe (chief executive, J Sainsbury plc); Roger Burnley (chief executive, Asda (Stores) Ltd); Steve Rowe (chief executive, Marks & Spencer plc); Jo Whitfield (retail chief executive, The Co-op); Rob Collins (managing director; Waitrose); Darcy Willson-Rymer (chief executive, Costcutter Supermarkets); Paula MacKenzie (CEO KFC UK&I); Clive Schlee (chief executive, Pret A Manger); Christian Härtnagel (chief executive, Lidl); Richard Pennycook (chair, British Retail Consortium); Helen Dickinson (chief executive, British Retail Consortium) and Paul Pomroy (chief executive, McDonald’s Restaurants Ltd).