Tuesday June 2, 2020

Taking steps now to Brexit-proof your business

The nationwide Prepare for Brexit Roadshow, hosted by Bank of Ireland, will pair experts with Irish businesses to put strategies in place now for Britain's EU exit

9th October, 2017
Michael Hoey, managing director of Country Crest in North County Dublin
Michael Hoey, managing director of Country Crest in North County Dublin

Like all Irish companies buying and selling in Britain, Michael Hoey, managing director of Country Crest in North County Dublin, has many as yet unanswered questions about what Brexit will mean for his business.

"We source some ingredients in the UK and also move products through the UK. Our main concern would be about the implications Brexit could have from the customs point-of-view and the sanitary rules, for example, governing the movement of products like ours from one jurisdiction to another," said Hoey.

“We are working very closely with the Department of Agriculture to help prepare for Brexit. As the process moves on, they have been very good about relaying information to us. As a company, we are doing what we can now to get ready for Brexit.”

Hoey was speaking last Friday at the Bank of Ireland Prepare for Brexit Roadshow event held at his company's Lusk premises.

The event is one of the five that have been hosted by Bank of Ireland this week, following the launch of the initiative last month, in locations including Tullamore, Co. Offaly, Drogheda, Co. Louth, Athlone, Co. Westmeath, and Bray, Co. Wicklow.

Hoey established Country Crest in 1993 with his brother Gabriel. The company sells potatoes, beef and onions and operates alongside sister company Ballymaguire Foods, which sells prepared meals, soups and vegetables to the retail and foodservice sectors.

Together, Country Crest and Ballymaguire Foods employ more than 300 people in Lusk, generating 15 per cent of turnover from British exports.

"We’ve been selling to Britain since 2008 and we were nervous about Brexit initially, because like everybody else, we didn't understand the implications and what it would mean for free trade," said Hoey.

"As the process has gone on, we feel more comfortable with it and the feeling is that it may even enhance our business in Ireland because it may not be as easy in the future to import products like ours, creating opportunities for import substitutes.”

While it will be some time yet before agricultural producers like Country Crest have clear sight of the Brexit roadmap, Sean Farrell, Head of Agriculture at Bank of Ireland, believes they can start to take valuable steps now to future-proof their export prospects.

"The point of the Prepare for Brexit Roadshow is to encourage customers countrywide to consider what they should be doing to prepare now for what may happen down the road," said Farrell, who spoke at the Country Crest event in Lusk last Friday.

"Britain is undoubtedly very important for Ireland's agricultural producers, but there is growing demand for food globally and we believe our customers are well-placed to take advantage of that. We are saying 'now is the time to put a strategy in place’."

The outlook for Ireland’s agricultural sector as a whole remains positive, bolstered by the rapid growth of the dairy sector in recent years, Hoey added.

“The Brexit deliberations are ongoing, but we are continuing to see the rapid growth of the Irish dairy sector and the associated investment, both at farm and dairy processor level, that has been required to support continued growth in milk production across the country in the years since milk quotas were abolished,” said Farrell.

He continued: “Annual year-on-year production has grown by more than seven per cent. The short-term outlook for milk prices remains positive and, while we expect price volatility to remain an ongoing feature of this market, we anticipate the continued expansion of the Irish dairy sector in the coming years in response to growing global demand, beyond just the UK.”

Bank of Ireland's Prepare for Brexit Roadshow will see experts travel the length and breadth of the country helping Irish businesses to prepare now for continued growth in the aftermath of Britain's exit from the EU.

At upcoming Bank of Ireland Prepare for Brexit Roadshow events taking place around the country this month and next, business owners like Michael Hoey will discuss how they have assessed the impact Brexit could have on their business, the actions they are taking now to mitigate them and the benefits of preparation in an uncertain environment.

Bank of Ireland representatives will highlight relevant data and sectoral insights from internal research. They will discuss how businesses can manage the challenges presented by Brexit and explore potential business opportunities.

“The key issue for us at Bank of Ireland is that we want to support customers the same way we support them through other challenges in their business,” said Sean Farrell.

“The food and drink sector has become increasingly volatile over the past decade or so. Volatility is a key challenge, Brexit is a new challenge, but as a bank we've got to find ways to support our customers through these challenges.”

Farrell urged companies in the agricultural and other sectors to adopt a proactive approach to preparing for Brexit, taking advantage of initiatives like Bank of Ireland’s Prepare for Brexit Roadshow to counter the uncertainty that might otherwise stifle strategic growth.

Bank of Ireland has agricultural customers across the beef, tillage, sheep, dairy, pig meat and poultry sectors as well as associated food and drink businesses.

“The export markets differs across these categories, so how best to strategise ahead of Brexit depends on what you are exporting and where you are exporting it to,” said Farrell.

“At this stage, uncertainty is the main issue but, while the UK is a very important part of the overall picture, there is growing demand for food globally and we believe our customers are well-placed to take advantage of that. Strategy is key.”

“The UK is a key market for our food and drink exports so the key risk is the potential for a hard Brexit down the road.

“We have seen the ‘Brexit effect’ on currency fluctuation in recent months. Companies can manage that risk by having a policy in place like hedging, but long term, the question for companies is ‘do they need to find new markets?’

He continued: “What we have found is that, while a lot of our customers have a diverse range of potential markets for their product, a high proportion opt for the UK because of the returns they can extract there.

“A Hard Brexit would force companies to establish a presence in new markets, or divert a greater proportion to markets that are providing a lower level of return currently.

“Thinking ahead strategically means asking what impact that would have on the primary producer if reduced income is passed back through the chain to processors.”

Bank of Ireland is partnering with a number of industry bodies and advisory firms for the Prepare for Brexit Roadshow, including Enterprise Ireland, Bord Bia, IBEC and the British Irish Chamber of Commerce.

They will provide attendees with an overview of a range of potential Brexit outcomes and the issues they and their members are facing.

Accounting and advisory firms KPMG, Deloitte, EY, PWC, Grant Thornton, BDO and Mazars will also participate, outlining best practice for the implementation of a “Brexit Diagnostic” tool and customer experience to date.

Bank of Ireland Prepare for Brexit Roadshow events will take place this week at Dublin's RDS, Cork's Clayton Hotel, Woodford Dolmen Hotel in Carlow and Breaffy House Hotel in Castlebar, Co. Mayo. For more information, log on to: bankofireland.com/brexitevents

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