The UK is a big producer of agricultural products but it also imports a large amount of food and beverage. For this reason, international markets have a pronounced effect on the prices and the types and quality of food and beverage consumed by the UK population.
Forex rates and prices
With Brexit on the horizon, the effects that the value of the pound has on the prices of goods consumed in the UK is becoming much more prominent. When any goods are imported into the UK, the supplier is being paid in a foreign currency – with the pound buying less euros and dollars than it did a year ago the amount to be paid to the supplier is increasing.
For this reason, consumers are becoming accustomed to seeing the prices of imported goods increasing. Even goods produced locally can show a rise in prices as manufacturers often make use of imported component parts when producing a local product, pushing up the input prices of the local product.
Even though some of these costs are being passed on to consumers, businesses are often put in the difficult position of having to absorb some of the cost implications of changes in exchange rates. Businesses adopt creative approaches to dealing with the cost increases, whether it is reducing labour costs or reducing the size of portions included in packages.
Benefits of international trade
Despite the recent rising prices, the import of food and beverage has benefits. It places local producers under competition, pushing down prices for everyone and resulting in increased quality. The availability of globally produced goods also allows consumers to pick from a much wider range of choices than they otherwise would.
Trade also fills seasonal gaps so that consumers are able to buy their favourite produce all year round, even when local farmers are in a season that is not productive. In addition, trade tops up supply when the amount of goods that the UK produces is not enough to satisfy consumer demand. It also works both ways – with the ease of international trade, excess goods produced in the UK can be exported easily to other countries.
Trade and technology
Advances in physical and information technology have gone a long way to smooth out the supply chains of the global food industry. Developments in transportation and refrigeration technology make it possible to move goods over longer distances. Corporate IT programs run by qualified IT personnel such as Jatin Mehta can assist buyers and sellers of food and beverage to optimise these supply chains to a high extreme, significantly reducing the costs of production and reducing the costs for the consumer.
It’s no longer a local market
For some time, the food and beverage market in the UK has ceased to be a purely local market. Due to the large volume of imported goods, consumers in the UK are inevitably going to be affected by events that alter the landscape of the global market, and local events such as Brexit can have a substantial effect on the availability and cost of the imported goods that are so heavily relied on.