Co-ops respond to uncertainty over Brexit process

‘We are concerned at this late stage in the process that there is still uncertainty as to what the Brexit deal will actually look like’

With the Brexit deadline looming and huge uncertainty over the prospect of a deal with Europe, UK businesses – already reeling from the Covid-19 crisis – have been calling for more clarity from the government.

Last week the government launched a publicity campaign urging businesses to get ready for the UK’s departure from the EU. Prime minister Boris Johnson and cabinet office minister Michael Gove held a much-criticised conference call with business leaders who say they are still waiting for basic information on issues such as the new IT system for pre-declaring goods exports and rules over VAT and data.

Here, Co-op News speaks with organisations in the co-op sector for their view.

Pete Westall, chief values officer at independent retail society Midcounties Co-op, said that while Midcounties operates in a number of sectors, the uncertainty around the effect of Brexit on its Food business is “perhaps the biggest concern we have”.

“We, alongside other consumer co-operatives, are heavily reliant on FRTS (Federal Retail and Trading Services), the central buying group for UK co-operative retail societies. They continue to be a huge support in both their work on post-Brexit scenario planning as well as leading on representation to the government with other food retailers,” he said.

“It’s right to thank all the team there for the work they’ve undertaken in both those areas – and the way they have shared that knowledge with us to enable us to plan effectively. That co-operation amongst co-ops continues to be exceptionally helpful and will help all of us to ensure we continue to serve members and customers within our communities who are dependent on us.”

He added: “Obviously we have some areas where we are the only or the main co-op presence in the UK, and we are dealing with issues in those sectors more independently. In childcare, for example, we have been working with the CBI to challenge the Home Office to include early year practitioners on the Shortage Occupation List, to help us, and indeed all within the sector, to continue to recruit EU nationals into these positions post Brexit.”

Mr Westall highlighted how Midcounties and other providers believed that without the ability to cost-effectively recruit from the EU, both the quality and quantity of childcare in key UK regions will be adversely affected in the short to medium term. “That’s a real concern given it’s well established that skilled and well-qualified practitioners are a key element of high-quality early education and care and make a proven difference to early childhood learning and development, particularly for children from low income and at-risk families,” he said.

“That work to influence and challenge is time-consuming, but we believe our members would expect us, as the leading Co-operative Childcare provider, to campaign to change the government position where we believe it is justified to do so.”   

Richard Kaye, head of brand and communications at farmer-owned grain co-op Openfield, said:  “It’s very complicated for us to give a position on Brexit as our business relies on: global markets; global stocks of the commodities our farmers grow and that we supply; and any trade deals that are in place. We can prepare for anything, but as we still don’t have any clarity on any deal, we continue to prepare for the unknown as things will change up until the last moment.” 

Openfield believes that some kind of deal is likely, but believes its business will be more affected by the weather and what its farmers can drill (plant) for next year’s crops. “We had a very bad harvest in 2020 due to the weather between November 2019 and March 2020,” said Mr Kaye. “We are still assessing this year’s crop size, but it could be anything up to 40% down on 2019 Harvest, although grain from 2019 has been carried over to 2020 to help UK supplies continue and balance out this year’s low yield.

“It would be great if we could be a major exporter of cereals, but that would only be possible if our farmers produce more grain that we need to supply the British food and drink industry. So much is in the hands of the weather not just here, but globally.

“We think that free trade is the way forward and we hope that the UK government and EU understand this. If crops fail or bloom, the global grain supply chain needs to be able to actively trade surpluses or deficits and full transparency adds clarity to markets and prices. If you allow free trade of basic raw commodities – i.e. cereals and oilseeds – the whole world functions, allowing competitiveness through the ability to grow, quality and logistics, not paperwork or politics, so we can feed our nations and livestock.”

Alan Stevenson, supply chain development director at the Scottish Agricultural Organisation Society – the umbrella body for Scotland’s agri-co-op sector – said: “We are concerned at this late stage in the process that there is still uncertainty as to what the Brexit deal will actually look like, and it is not made any easier with the challenges co-ops face and the impact coronavirus has had on Brexit preparations.  

“We appreciate there has been a huge amount of information made available, but it does take time to pick through. Given the scale of this task and the current situation, co-ops do not want to be making preparations only to find later down the line, the requirements have changed.”

The uncertainty is also causing anxiety for co-ops in Ireland – the Republic and the North. Alison Graham, European affairs executive at the Irish Co-operative Organisation Society, said: “We have a similar issue with a lack of clarity from the UK side on the exact requirements and processes for import and export to and from the UK. 

“Updated guidance on the UK border plan was published two weeks ago – however, key details are still missing on exactly what controls will be required on the border. This, we fear, will contribute to another big unknown – the degree of delay at the border inspection posts from 1 January 2021. 

“With just weeks to go before the transition period ends, this uncertainty is beginning to impact commercial negotiations for contracts extending into January and onwards. This too applies for trade between Northern Ireland and GB, with the exact arrangements still under discussion and tied up in the details of the trade negotiations.”