Written evidence submitted by Retail NI (NIP0020) Retail NI Submission to NI Affairs Select Committee Inquiry on Brexit and NI Protocol Introduction: Retail NI is Northern Ireland’s business organisation for local wholesalers and independent retailers. Our membership also includes a significant numbers of suppliers to our sector which enables us to give a unique perspective on the operation of the protocol. Our membership is varied and includes independent retailers of all kinds but also key wholesalers such as Henderson Group, Musgrave, NISA, Costcutter, Co-op, Savage and Whitten and companies such as Applegreen and Circle K. This submission includes a number of recommendations and three wholesaler case studies on the operation of the protocol. Retail NI Recommendations: The broader business community in Northern Ireland needs stability, certainty and simplicity with the operation of the Protocol. We need outcomes and solutions which work for hard-working families to ensure they have full choice of food and other products on an affordable basis. An extension of the Grace period, alongside renewed focus on a long-term solution to the Protocol problems, which ensures free and fettered trade between GB and NI. UK alignment with the EU’s agri-food sanitary and phytosanitary standards. European Commission reopen an office in Belfast to facilitate ongoing contacts, deal with protocol problems and assist Northern Ireland maintaining existing EU networks and to build new relationships. The Northern Ireland Executive enhance its Brussels Office and ensure it has a dynamic EU engagement program alongside Invest NI. Case study 1: Henderson Group Responses: What effect, if any, the Protocol has had on the availability of food products in Northern Ireland retailers? The main focus of businesses throughout the food supply chain is to create and implement systems and processes to ensure the most efficient and effective methods of continued food supply in NI, and as such the following issues have been seen in the run up to and since the implementation of the Protocol. The finalising of the “Deal” and implementation of the protocol so late in the day before the festive period has caused a number of issues within the supply chain especially for “fresh food product” suppliers. The reluctance of suppliers to adapt processes in readiness for the Protocol has led to a number of challenges within the industry, which are still being felt now some 4 weeks into the new process. Recent weeks have shown this to be the case with GB suppliers in particular. The uncertainty of what exactly was required by suppliers and the lack of guidance in time to implement required changes prior to the 1st January has meant that certain GB suppliers have stopped NI supply which in turn has caused availability issues within the NI markets as suitable product alternatives needed to be sourced from the Island of Ireland at relatively short notice. The industry has experienced delays in product deliveries due to paperwork checks at Ports, sometimes up to 2 -3 days product shelf-life loss – this in turn can cause further problems down the supply chain when product is despatched out of warehouse to retail shelves as consumers have come to expect longer shelf-life. Business systems which operate “Just in time” deliveries have experienced product shortages due to these delays. Another significant impact caused by the implementation of the protocol was that the availability of “Groupage Transport” effectively disappeared overnight due to implications caused by seals, sign off and additional paperwork requirements being too detailed for many smaller product suppliers to deal with. The costs associated with product supply via non- groupage methods have meant that smaller product suppliers have been priced out of the supply chain and in turn meant that there could have been product shortages on the shelves had wholesale businesses not stockpiled products prior to the Festive period. Businesses have experienced challenges to service levels, with an average of up to 12% decrease in service level when compared against the same period last year. This significant decrease of service level could have proved catastrophic to the Retail industry leaving empty shelves had businesses not stockpiled products before the implementation of the protocol, with ambient products being hit the hardest as priority at Ports is being given to fresh and frozen foods. Only due to diligent planning prior to and throughout the implementation of the protocol have businesses been able to maintain their outbound service levels at levels similar to that of the same time period last year. What impact, if any, the end of the ‘grace period’ for agri-food goods on 1 April may have on the food supply chain; The end of the “grace period” will no doubt cause further delays in the food supply chain with loads being held up at Ports due to paperwork issues and further, more in-depth product inspections being carried out at Point of entry to NI. Further delays in the supply chain process will not only result in more product wastage due to shortening of shelf-life due to processing issues and delivery vehicles being held up at ports, but it will also affect product pricing, as the cost of implementing the required changes and processing of certificates etc will need to be recouped by the supplier; therefore it will inevitably end up with the consumer footing the bill as per example below: “Ware potatoes from GB are subject to phytosanitary and plant health documentation. This is slowing down the supply chain considerably, loads are taking several days to receive the green light from TTS. Due to this delay, when moving potatoes, a much longer timescale must be factored in from ordering to arrival. Currently due to the 'Grace Period' there are no extra costs. From 1st April when this ends there will be an additional cost of £150 per load for this documentation which equates to approximately £5 per ton.” Another example of increasing costs now includes additional charges in relation to suppliers having to provide heat treated pallets and additional labelling to satisfy legislative requirements this can add up to an additional £40 per pallet of goods ordered. These additional charges are currently being described as transitional costs to cover the rework of current stocked items; therefore, it is likely that a deduction in additional charges will occur in the coming months when stocks deplete and are replaced with fresh stock. With the added tariffs now being applied to certain product ranges being imported from GB from alternative origins, NI consumers will see price rises on their everyday grocery items. Industry officials are currently looking at ways to ensure that additional costs passed on to end consumers are kept to a minimum to ensure competitive pricing within the retail environment, but ultimately the additional costs need to be recouped to ensure the supply chain is maintained at financially viable levels. As was evident in the first few days of the Protocol implementation, lack of training and awareness caused a number of teething problems, within an already fragile nervous industry, questions are being asked as to what plans government departments have in place to prevent such issues arising again when the “Grace Period” ends on the 1st April. As there has been a zero-tolerance approach to errors on critical paperwork – this has led to hold ups at Ports to allow the errors to be rectified. Those which have not been able to be rectified have seen loads rejected for sailing or held so long that the shelf-life reduction of products has deemed them unfit to delivery. Availability of resources could lead to further issues down the line – with limited numbers of trained professionals within the food industry, which could in turn see shortfalls in production with Technical Staff from the industry being recruited to facilitate checks at ports. This point also relates to Environmental Health Office staff and Veterinary Officers. In preparation of the supply chain facing more issues with delays at Ports due to paperwork checks, suppliers have already started to investigate and implement changes in their processes to enable them to streamline the overall flow of goods. One such change which has been felt by consumers in NI since 1st January is that product ranges in retail stores have reduced significantly, limiting customer choice. This reduction in product range has been implemented to limit the effect of product unavailability being passed on to the consumer and prevent chaos within the retail sector caused by consumer panic buying. How supply chains have adapted to the new arrangements, and how they might do so in the future; Supply chains are still adapting! Most of the adaptations come within the route to market. Supply chain models have had to change where possible from the “Just in Time” model to a more contingency method where product is sourced and stored weeks in advance to avoid disruption to supply. Obviously, this change in process can only be applied to certain sectors of the Food Supply Chain – such as Ambient and Frozen products. Fresh Food products which cannot be sourced and stored weeks in advance are a different matter and have meant that businesses have had to rethink their supply chain. Some businesses pre-empted the disruption which has ensued at the ports over the recent weeks and prior to the Protocol being implemented had switched the majority of their fresh product supplier to the Island of Ireland supply where possible, or at the very least, have a contingency supply agreement in place with ROI suppliers for products currently sourced from GB. Direct shipment of loads from the Continent to ROI on existing routes and through brand new routes have seen a significant increase in recent weeks as businesses are trying to redirect the supply chain to avoid travelling through GB where at all possible, as a method of stream-lining and simplifying the delivery process.