UK cheese company says help needed on supply chain issues
That’s the message from Bridge Cheese managing director Michael Harte, who says the Government is “passing the buck” and needs to do more to support food and drink producers and processors.
In last week's budget announcement, chancellor Rishi Sunak mentioned the supply chain crisis in his opening address and warned of months of disruption as the problem would take months to ease.
Yet, according to Harte, the budget statement made no real commitments to resolving the crisis in the short term.
Harte says his Telford-based business, which supplies cheese and dairy products to food manufacturers and the food service sector, is facing yet more upheaval in the weeks and months ahead as supply chain challenges begin to bite.
“A huge amount of work goes into plugging the dam in the food industry before shortages and price increases impact consumers,” Harte said.
“But the challenges are becoming so big now that consumers are being impacted, and we are seeing this reflected in the rising cost of food, reduced menu choices and even limited opening times for some eateries.
“With energy prices on the up and the availability of goods and labour proving problematic and adding yet more fuel to the fire, it means that in the short term we as consumers will have to get accustomed to the empty shelves and reduced choice.”
At the Conservative party conference earlier this month, the Prime Minister suggested the blame for supply chain issues should be laid at the feet of UK industry – comments Harte said are unfounded.
“The Government is saying it’s not their job to fix the issues, but when they have played a part in creating the issues then it is frustrating for the buck to be passed back to businesses who are already embattled by the problems caused by Covid and Brexit.
“We need a more robust food chain strategy and we need to see the Government and British industry working together in partnership to solve the supply chain problems – not being at odds with each other. But this appears to be the position we find ourselves in today.”
Harte said he also believes the Government’s narrative around low pay and low skills being to blame is also misleading.
“SMEs are often lauded as being the backbone of Britain’s economy, but in today’s world big businesses are offering signing on payments and lucrative bonuses which attract more staff from smaller employers, thereby moving the labour shortage to another part of the supply chain. The labour pool is simply not there to meet the demand across all levels.”
Bridge Cheese said it is working to reduce the impact to the company of the kind of labor shortages seen in other sectors. The cheese company has a full-time team working solely on recruitment, retention and development to ensure it attracts and retains good people at all levels, from apprentices and students to graduates and those looking to make a career for themselves in the food industry.
“We are investing in everything from improved staff facilities to a new travel support payment scheme to help employees with the cost of getting to and from work,” Harte said.
“We couldn’t run our business without them, so unlike many of the challenges we are facing at the moment, strengthening our workforce and ensuring they feel valued is one thing that is in our hands.
“It has been a challenging few months, and I wish we were coming to the end of it, but I fear we aren’t. The focus now has to be on creating a resilient and robust food supply chain which meets demand in the short term and long term, in a sustainable way that works for all parties.”
MarketFinance SME survey on costs
Fintech business lender MarketFinance asked 1,000 SME owners across the UK how they are managing rising supplier prices, what measures they have put in place and sought their long-term outlook on the increasing costs of doing business.
The findings were based on a survey of 1,000 UK companies (who are employers with a minimum turnover of £100,000/$136,000), conducted for MarketFinance in October 2021 by LMRMC Research.
The survey showed 79% of SMEs have faced increased prices from suppliers over the past six months. An increase of raw material costs was the top-ranked rationale for price increases by suppliers, most keenly felt by businesses in the north west of England (85%).
This was followed by staff shortages, the ongoing impact of the pandemic slowdown and supply chain disruptions owing to a shortage of truck drivers. Across the UK, a quarter of SMEs reported supplier prices have almost doubled over the past six months.
It also said 32% have been able to absorb the increased costs without passing them on to customers, suggesting these businesses have the necessary cash reserves to handle the impact. Only 21% are passing a portion of the increased costs onto customers. Businesses in the south west of England and Northern Ireland are least likely to absorb the costs while businesses in the north west and Yorkshire are the most likely to do so, MarketFinance said.
The survey said companies’ customers are proving to be equally understanding of the wider supply chain situation with only a fifth challenging business owners about the price rises.
Looking ahead to the festive season, SMEs feel they will be able to manage the situation but some could increase prices if the pressure gets too much, MarketFinance said, with two fifths reporting they could increase their prices by as much as 10% in the run up to Christmas. Longer term, 73% of SMEs are already preparing for the current higher prices to be the norm until at least the end of 2022. And 34% have taken out loans or are using other finance facilities to manage the increased cost of doing business.
Anil Stocker, CEO at MarketFinance, said, “The current economic environment with rising costs is presenting some headwinds and headaches for SME owners but they are proving to be as resilient as ever. The vast majority have been thinking ahead and accounted for the longer term scenario, which will hold them in good stead to do business. It’s great to see that SME owners are taking the long view and preserving their customer relationships and managing suppliers by having a finance facility in place to deal with the overhead for now.
“The British Business Bank announced last week that it will extend its Recovery Loan Scheme to June 2022. This extension will give SMEs easier access to more affordable finance they need to continue running and growing operations in the face of ongoing challenges such as staff shortages and supplier price increases.”
