FDF calls on support for squeezed supply chain

By Lisa Riley

Published: 17 June, 2020

The Food and Drink Federation (FDF) has warned that the ‘squeezed middle’ [supply chain] needs support if the hospitality restart is to succeed.

In a new report released today, more than 20 organisations from across the ‘farm-to-fork’ supply chain warn that food and drink suppliers to the hospitality and food service sector risk being overlooked as government considers how to re-open the industry.

It highlighted that those businesses in the ‘squeezed middle’ had not been given the same level of government assistance as the businesses they supply, despite being as hard hit by the overnight on-trade closure.

“Throughout the pandemic, the food and drink industry’s hidden heroes have been working hard to keep the country fed. But those companies who supply the food service and hospitality sectors have seen their business disappear overnight, and yet have not been afforded the same government assistance,” said Ian Wright CBE, CEO of the FDF.

“The hospitality and food service sectors will play a vital role in contributing to the UK’s economic recovery, but any restart will be stymied without further support for those food and drink manufacturers operating in the ‘squeezed middle’,” he added.

The report says the level of support available to the ‘squeezed middle’ is “poorly focused and will not deliver the recovery plan the UK government is working towards”.

In addition, it states that maintaining business liquidity remains a “huge concern” for the ‘squeezed middle’, with research undertaken for the report showing that fewer than half of food and drink manufacturers have applied for Coronavirus Business Interruption Loan Scheme (CBILS) or Bounce Back Loan Scheme (BBLS) support.

Concerns over incurring additional debt and associated interest payments were cited as the main reason. At the same time, many companies are facing up to 50% of their customer base delaying payment or not paying outstanding invoices, said the FDF.

While the UK government’s furloughing scheme had been “popular and effective”, there were concerns about whether the hospitality and food service markets would have recovered to viable levels when it ends in October, with fears that removing the support too early would pose “serious risks to businesses and slow the UK’s economic recovery”.

The report also said that while the government’s decision to underwrite Trade Credit Insurance had been “widely welcomed”, many businesses continued to report concerns that trade credit insurers were not adjusting their criteria to take into account the pandemic, “making unrealistic demands on businesses and their debt management”.

A series of practical steps government can introduce to ensure the squeezed middle are able to play their role in a post-virus recovery forms part of the report.

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