Brexit Preparations

Update: Sunday 24th March 2019

Over the past year the directors have been assessing the potential impact of Brexit on Indigo Wholefoods.  We provided our original advice on 23rd January 2019 as it had come to the attention of the directors that a few customers were beginning to buy extra produce in preparation for Brexit on 29th March 2019.  Therefore, the time had come to let customers know what the directors anticipated would be the impact of Brexit on Indigo Wholefoods and how Indigo Wholefoods would respond to it.  On Thursday, 22nd March 2019 a delay to the original date of leaving the EU was agreed between the UK and the EU and this document updates our advice accordingly.

There are now four outcomes to the first stage of Brexit negotiations.  One of which will occur in the next few weeks or months.  Each will have a different impact on Indigo Wholefoods.

  1. UK leaves the EU without an agreed withdrawal arrangement on Friday 12th April 2019. This may result in interruption to supply.  There will be no interruption to supply of fully UK grown/produced and processed goods.  The possible interruption to supply of other goods will not be immediate as there will be some supply both in the shop and in the UK at our wholesalers.  The interruption may affect imported finished goods and imported ingredients to be made into finished goods in the UK.  This will be because of delays occurring at customs on arrival into the UK.  This will impact goods coming from the EU and outside of the EU due to delays in customs processing at ports.  There is also the potential for price rises as a result of tariffs being applied to these imported goods and ingredients.  The interim tariffs published by the government would seem to reduce the risk of tariffs being applied to the goods sold by Indigo Wholefoods.  However, the legality of the proposed interim tariffs has been called into question and may not be valid under World Trade Organisation rules.  The directors currently consider that leaving the EU without an agreed withdrawal arrangement is unlikely but may occur due to intransigent political positions.  On Wednesday, 13th March MP’s expressed their will that no deal Brexit should not occur under any circumstances.  This vote was non-binding, but it is hard to imagine a scenario where MP’s wont be given every opportunity to legislate for an alternative outcome.
  1. UK leaves the EU with an agreed withdrawal arrangement on 22nd May 2019. This will result in no interruption to supply.  The withdrawal agreement allows for a 21-month transition period which may be extended.  The directors currently consider that leaving with the currently proposed withdrawal arrangement is least likely to happen.  However, MP’s will have the opportunity to coalesce around other “deals” including staying in the Customs Union and Single Market.  Another “deal” is more likely than the current “deal” but any other “deal” would still require the disputed Irish Border Backstop and reduce the possibility of the UK adopting its own trade policy.  Any alternative must be agreed with the EU by 12th April 2019.  The directors feel that for various reasons it is still unlikely that the UK will leave the EU with an agreed withdrawal arrangement on 22nd May 2019.  If the UK enters a transition period on 22nd May the directors will update customers to the implications of leaving the transition period towards the end of the transition period.
  1. UK agrees an extended delay with the EU and may leave at an unspecified later date. This will result in no interruption to supply.  The directors currently consider and extended delay to be the most likely outcome.  Despite the fact that the UK will have to undertake European Parliamentary Elections on 23rd May 2019 and agree to either a new democratic process (new prime minister, new referendum, new general election) or at the very least a new “deal” that cannot be fully negotiated by 22nd May 2019, the UK needs the extended delay to fully come to terms with the implications of the result of the referendum on 23rd June 2016 and to decide the future path it wants to take.  This will have to be agreed between MP’s and accepted by the EU by 12th April 2019.  In the event that we enter an extended delay the directors will update customers as the outcome of that delay becomes clear.
  1. UK does not leave EU because Brexit is cancelled. This will result in no interruption to supply.  Unilaterally revoking the Article 50 notification (cancelling Brexit) has been largely ignored as an option but has become a significant possibility over the last week.  The directors currently consider cancellation to be unlikely but if a new “deal” or path to an extended delay has not been agreed by the start of April its chances will rise.

In preparation for the possibility of leaving the EU without an agreed withdrawal arrangement the directors will be increasing stockholding of the most popular impacted goods.  This action will begin at the start of April if it is still necessary.  Unfortunately, it will not be possible to increase stockholding or guarantee an uninterrupted supply of fresh organic fruit and vegetables

For customers who are considering buying extra produce in preparation for this outcome the directors make the following recommendations:

  1. Don’t panic – the chances of leaving without an agreed withdrawal arrangement in place are still unlikely.
  2. Plan – consider which products you would like to ensure you have extra supply of and when you want to start stocking up.
  3. Talk to us – we can let you know if the products you are concerned about are likely to be impacted by this scenario.
  4. Make a special order – our staff will be happy to place a special order for your chosen product or products and offer you our best price. If you make a special order it helps us to plan and ensure that we have enough stock for you and for the rest of our customers.

The directors will be continuing to assess the likely outcomes, the implications for Indigo Wholefoods and the supply of produce over the course of the next few months and longer if necessary.  Customers will be updated as the assessment changes, if it does.

George Howell