Ragus take steps to combat continuing Brexit uncertainty
With yet another Brexit deadline approaching, businesses are unclear about almost all aspects of a post-EU future. For Ragus, this means taking measures to reassure our customers by replacing conjecture with clarity.
Has anything changed for the sugar industry since the last Brexit deadline?
We are still no nearer to a concrete plan for Britain’s future outside the European Union (EU). Plans made by Theresa May, such as the potentially damaging proposed sugar tariffs discussed in my earlier blog, have not been echoed by Boris Johnson. In fact, continuing with the sugar tariffs example, Johnson said following his election that he would prefer to scrap tariffs altogether.
This level of discontinuity is frustrating. Not only is the most recent Brexit deadline of 31st October fast approaching, the sugar industry is currently in the process of negotiating contracts for the new sugar marketing year, further compounding the situation. As a result, businesses across the country are making decisions on a day-by-day basis. We all hope for clarity as soon as possible so we can begin to properly plan for the future.
The situation, however, is by no means insurmountable. Ragus is always fully equipped to meet customer needs and guarantee supply chains continue to run smoothly. Brexit is no different, and we have already taken specific Brexit-induced steps over the past few years.
What steps have Ragus taken to ensure customer needs are met both pre and post-Brexit?
As was the case in March, the looming Brexit deadline has caused many of our customers to stockpile. Ragus always advise against this approach. Stockpiling goods is expensive and there often isn’t the room in warehouses to store all the necessary goods. More on the effect stockpiling has on the sugar supply chain can be found in the following blog.
To mitigate the need to stockpile, we have globally sourced sugars from countries that will be tariff-free. As a result, Ragus has several months’ worth of sugar in reserve that we can quickly call upon to help go towards meeting customer requirements. Having this amount of sugar contracted and agreed to also means our customers will to some extent be shielded from the potential price increases caused by a potential post-Brexit €150/tonne tariff on white refined sugar imported from the EU.
Having this reserve also means we can deal with the predicted three-year low in sugar production. Total global output is expected to fall 6.4 million tonnes to 180 million tonnes overall. This will put a tightness on the world supply that we can effectively manage.
Trying to make sense of conjecture: what does the future hold?
Planning for all possible outcomes is crucial to being suitably prepared for whatever Brexit we are dealt. Such is its importance to the country, one might expect that a specific food and agriculture deal is negotiated either prior or soon after 31st October, providing this ends up being the day Britain leaves the EU. As it currently stands, there appear to be three possible outcomes for the near future:
1. The EU grant a short extension to the current deadline in exchange for a sizeable divorce payment, meaning we leave without a deal and either tariff-free or on the terms outlined by May earlier in the year
2. The EU gives the UK extension until Christmas, resulting in a general election. If a Conservative-Brexit Party majority then wins, sugar could be subject to high import and export duties to and from the EU.
3. A remain-backing party or coalition wins the general election and calls another referendum.
It is entirely possible none of these happen. Such is the level of uncertainty surrounding Brexit, making solid predictions seems futile. That is why Ragus has ensured it is robustly equipped to deal with the situation and ensure all our customers, and in turn, their consumers, remain well stocked and satisfied.