Meat sector ‘faces uncertain future’ over supply chain
Sion Roberts, chief executive of the English Food and Farming Partnerships, has warned that supplier and processor relations need to improve to prevent severe loss of business.
Speaking at the Eblex/Bpex 2010 Outlook Conference, Roberts said: “The last 20 years has been about developing brands. The future will be about developing the supply chain.”
Factors such as price volatility and the security of supply are increasingly influential, and that is leading retailers and manufacturers into long term contracts,” Roberts added.
Roberts pointed to how Hovis had tied in British wheat farmers, and Sainsbury’s own-label and in-store bread was using all-British supplies as evidence that, in other sectors, supply chain security was being taken seriously.
“There will be greater in-built costs to cover future uncertainty and volatility of supplies, but it will be worth it to guarantee business,” Roberts added. “It won’t like the current situation where you can constantly switch between suppliers.”
Roberts warned that “a lot of people in this room will have to change radically to accommodate the new trading environment. The past 20 years have seen consumer expenditure steadily rise, while prices have remained flat.
"That has been a boon for industry, and many have based their business plan on constantly increasing demand. But these factors are no longer in play.
“The Age of Prosperity is over. We are currently in the ‘Age of Certainty’, and the ‘New Normal’ will be radically reduced expenditure by consumers coupled with rising prices.”
Roberts added that “companies would have to seek profitability from greater efficiencies in the supply chain, rather than putting so much expenditure into marketing products to consumers.”
The English Food and Farming Partnerships is an agrifood business consultancy working across the entire supply chain.