The Policy Group

Specialists in policy and economic impacts of change in the agricultural and food industries

We help you to assess the investment risk and opportunities created by policy change

Challenges for processors, retailers, producers and investors

Policy changes brings threats and opportunities as shown in the following table for Brexit

Higher prices imposition of tariffs on beef imports could raise UK price by over 50%	New suppliers Irish butter may be subject to high tariffs so new sources of supply may be needed	Opportunities Changes in trade terms and expected relaxation of GMO and pesticide legislation creates new opportunities
Different markets wheat exports to the EU may no longer be competitive so new destinations will need to be found	Lower prices removal of preferential tariffs on imported sugar could reduce price by 30% making UK sugar less competitive	Currency volatility where outputs are valued in dollars or inputs are imported when sterling weakens the price rises
Lower UK supply vegetable processors and growers may struggle to find low cost full time labour	Higher UK supply sheep may be replaced by cattle	A new investment risk returns in most sectors will change - up or down

Calculate the Brexit risk for your business

Analysing your exposure to risk can be complicated and the assessment below is intended to show some of the areas to consider for your business. The relative significance of each component varies with each business.

Trade policy – sector

Risk factors: commodity, source of supply and market destination

Financial

Risk factors: gearing and finance origin

Employment

Risk factors: source of labour and length of contracts

Supply chain relationships

Risk factors: customer and supplier exposure to other risks listed

Foreign exchange rate

Risk factors: proportion of non-sterling priced inputs and outputs

Regulation

Risk factors: flexibility of supply and exposure to major regulation change such as potential use of new genetically modified raw materials

Farm subsidy

Risk factors: supplier reliance on subsidy and ability to adjust

Assessment of risk is a useful place to start and needs to be thorough. The Policy Group is equipped to help quantify your particular risk creating a risk score specific to your business.

What we do

The Policy Group helps the food and agricultural supply chain to:

Assess and reduce risk
Identify and exploit opportunities
Keep you up to date with current thinking

We provide quantified financial assessments covering all aspects but with particular emphasis on trade impacts.

What can be done?

Much of the impact of Brexit surrounds new tariff arrangements and customs control on trade. But changes are also expected in farm subsidies, availability of labour, pesticide legislation, introduction of genetically modified crops and environmental protection.

While it is not possible to foresee the conclusions to UK negotiations, it is possible to identify the impact of the available options on price and source of supply. This in turn, helps to identify financial risk and opportunities.

As negotiations progress the range of options will narrow, allowing conclusions to be refined.

Where new suppliers are needed there is no point waiting until your competitors have secured all sources of supply.

Our research team has a deep understanding of the supply chain from input suppliers through producers to retailers. Agricultural policy and particularly trade policy is complex. While this is a new subject for many in the food chain it is not new territory for The Policy Group.

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