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15/08/2016

Brexit – What's next?

The British voted by a  small majority to exit the European Union. That has consequences for the  wider economy and for the EU. The wholefood industry has so far shown itself to be not particularly worried. Can that be right? After the British decision to leave the EU companies in other industries set up crisis management teams or at least working groups to assess the impact, but in the  wholefood sector most firms are operating the principle of 'business as usual'.  In fact, there are many  questions to be addressed, and they affect the organic sector too.

By voting for Brexit the British forfeit all the advantages that accrue from membership of the EU, from farm subsidies, freedom to choose where to work to free trade. “At this point in time it's too early to say whether this will give rise to a change in the offer of goods or the price of organic products in Britain and the EU,“ says Elke Röder, the managing director of the Bundesverband Naturkost Naturwaren (BNN). It's important, because turnover falls if the end customer won't accept rising prices.

In Britain itself the organic sector sees hard times ahead. “All British producers and traders who want to do business with the EU will have to abide by EU organic legislation,“ explains IFOAM, the international association of organic farming movements. They already have to comply, but they do so under better conditions. Before the referendum, the licensing organisation OF&G was already warning the British that they would lose their right to participate in deciding issues of regulation. The head of OF&G, Roger Kerr, fears there will be economic impacts as well: “Organic is a strong and expanding sector in Europe and we're worried whether the opportunities this presents will be as freely available to British companies once the United Kingdom has left the EU.“

Few goods from the UK – but an important export market

It's true that the volume of goods from the UK to the Continent is comparatively small. “It is, however, an important export market for processed products. Nevertheless, I can't see any particular difficulties at the moment,“ maintains Peter Röhrig, the managing director of the Bund Ökologische Lebensmittelwirtschaft (German Organic Food Association BÖLW). Hardly anybody is concerned about the possibility of tariffs that, after exiting, the country could put on products from the EU. “That seems unlikely and tariffs would apply to competitors in other EU states as well,“ says Röhrig. At Weleda too they are taking it calmly. Britain accounts for around three percent of the natural cosmetics company's turnover. “So we're not anticipating Brexit will have any direct effect on our business,“ is the reassuring message from company spokesman Theo Stepp.

The manufacturer Rapunzel does hardly any business with the UK. “So Brexit won't affect us very much,“ is how Managing Director Andreas Wenning sees the situation. This also means that the UK leaving the EU will not lead to higher prices for the company's products. Other manufacturers with business relations with Britain, like Allos and Holle, had not responded to our enquiry by our deadline for publication. For Dennree it is too soon after Brexit and they need more time to respond.

Sales channels for organic products in Great Britain

“It has never been easier to lose pounds“

But it's not only direct trade relations that are impacted by Brexit. After the vote to leave the value of the pound sterling fell by more than ten percent and reached its lowest level since 1985. “It has  never been easier to lose pounds,“ somebody in the financial sector joked . However, at the same time the euro also came under pressure against the US dollar. Actors in the financial markets are assuming that Brexit will have a negative effect on the rest of the EU.

A lot of business is transacted in US dollars, including in the wholefood industry. Examples are imports of cocoa, groundnuts and tropical fruit, and coffee, coconuts and palm oil are, of course, not produced in the EU either. Importers still don't seem to be worried. The sometimes violent fluctuations on the money markets are dismissed as short-term reactions that balance out over a longer time-scale. But it could happen that in the medium term the price structure will adjust as the exchange rates settle down at new levels. If it get too expensive we could expect a fall in demand.

British “Limited“ still possible?

People clearly affected are workers and entrepreneurs who are British citizens and work in  Germany. According to the EU, after Brexit they are likely to need “a permit for residence in Germany for the purpose of gainful employment.“ Some entrepreneurs have chosen the “limited“company form in keeping with British law. A limited company is easier, quicker and less costly to set up than a GmbH, and it was possible only because Britain was a member of the EU. “Anyone who has opted for it may well have to convert the company after Brexit to a GbR or a GmbH, which would of course add to their costs,“ Röhrig explains.

Numerous representatives of industry also assume that Britain will leave but, like Norway or Switzerland, will still be closely linked to the Eu, so that there will not be any great change. That could be a dangerous conclusion to draw, because it's being said in the policitical world that they want to send a clear message and make the British feel the negative consequences of leaving. The thinking behind this is that it will prevent EU opponents in France, Austria, the Netherlands and other states from following suit and having the same success – so that “What's next?“ doesn't become “Who's next?“ This is why people in the wholefood industry should keep a close eye on what approach is being taken and prepare themselves well in advance for the consequences. “Basically, a similar situation applies to the organic industry as to other business sectors,“ Röder warns.

Comment: "No time for tea"

Achtung, Achtung! The British want to leave the European Union. The warning lights are flashing in the world of politics and business. Everywhere the mood is one of crisis. Everywhere. Well, almost. For the wholefood industry Brexit is no reason to interrupt lecture tours or cancel company outings. “We'll wait and see what happens“ - this describes the mindset of the industry perfectly. Sit back, wait and drink tea. This is a dereliction of duty to customers, employees and your own company. The global economy is like a mobile that a breath of wind can set in motion but, if one weight is removed, the whole thing tilts and the balance is lost.

There's no need for a frenzy of activity, but the time has come to ask yourself a few questions.

For example: What precisely does the decision of the British mean for me? Have I got relevant products in my range? What trade relations are affected? Am I a customer of a British bank? And above all else: Where can I get information if I've got questions on precisely these issues and need answers quickly?

Many products on the shelves are not local or regional. We all know coconuts, groundnuts, cocoa, bananas and mangos aren't grown in the EU, but distortions in the market can arise in this segment because the wholefood industry is tied to world market prices. When the exchange rates for dollar, pound and euro, etc. settle down at new levels, products are going to get either more expensive or cheaper in the long term. If the economic fallout means that people have less money in their pockets, how much they will spend on (specialist trade) organics and what margins retailers will have are unknown quantities.

Nobody knows what will happen. All we can be sure about is that as soon as the British declare they are leaving the EU we've got precisely two years. Extending this deadline is possible only with the unanimous agreement of the European Council, which is unlikely. But will the British exit the EU rapidly? Will they take their time? Is it even possible they will back down and not exit the EU?

Whatever they decide, each of these possibilities will have economic repercussions and all traders ought to be well prepared. Once they are prepared there will still be time to sit back and drink tea.


Source: http://organic-market.info

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02/03/2018

Regarding online trade as an opportunity

What does increasing digitisation mean for the manufacturers of organic food? That was the topic discussed by the Assoziation ökologischer Lebensmittelhersteller (AöL) and its guests from business and research at Biofach

26/02/2018

Mediterranean countries with almost 7 million of organic area

The largest part of the Mediterranean organic area is in the Mediterranean countries of the European Union (EU) totalling 87 percent of the agricultural organic area

21/02/2018

Dutch pioneers Odin and De Nieuwe Band join forces

The Board and the board of directors the organic trade enterprises De Nieuwe Band and Estafette Odin agree to merge the trading and production activities after formal approval of the relevant bodies

19/02/2018

Italy: the organic farming and social network Humus introduced

At Biofach the Humus Network, the farming and social network for Italian organic agriculture, for quality, sustainability, and responsibility has been introduced

16/02/2018

Global organic data show resilient growth

A booming organic sector: more farmers, more land and a growing market. This is the résumé of the 19th edition of „The World of Organic Agriculture“

14/02/2018

Germany: sales in the specialised organic retail grows to 3.29 billion euros

According to the German organic trade association BNN sales in specialized organic food trade achieved sales of 3.29 billion euros in 2017, which corresponds to an increase of around 2.5 percent

12/02/2018

VIVANESS 2018: natural and organic cosmetics digitalized

The future is digital. Digitalization is having an impact in all areas of life and opening up new prospects in the natural and organic cosmetics industry too

06/02/2018

Organic farming boom in Bulgaria and Croatia

According to official statistcs Bulgaria and Croatia have seen the highest rate of expansion in their organic farming sectors in the whole of the EU in recent years

02/02/2018

42nd Innatex: focus on fair shoes

The 42nd Innatex in Hofheim-Wallau was focused on the shoe industry. The program of the green fashion fair was rounded by many lectures concerning the main topic as well as a blogger meeting

30/01/2018

Beyond Organic Skincare has just launched their latest face cream, “Organic Miracle Worker”

Beyond Organic Skincare have just launched their latest face cream, “Organic Miracle Worker.” It has already become a real hit with their staff and testers during pre-launch trials and has been promoted to ‘favourite’ by nearly everyone

29/01/2018

German organic market: sales barometer shows trend reversal

The development of sales in the German organic food specialist trade in the last four months shows a glimmer of hope for a turnaround: the specialist trade achieved for the year 2017 a modest increase of 1.4% in daily turnover

23/01/2018

EU lawyer: Genome Editing can be exempted from GMO directive

According to Advocate General Bobek, organisms obtained by mutagenesis are, in principle, exempted from the obligations in the Genetically Modified Organisms Directive

22/01/2018

Ecovia Intelligence: new growth phase for sustainable foods and cosmetics

A new growth phase for the organic and sustainable products market has been initiated according to Ecovia Intelligence; it predicts the market’s distribution developing towards online retailing and home delivery schemes mainly implemented by mobile apps

16/01/2018

GOTS: Christopher Stopes appointed as Representative to the EU

According to the Global Organic Textile Standard (GOTS) newsletter the organisation has placed an increasing focus on European regulatory and policy issues

08/01/2018

Indian Food Security Authority released unified regulation on organic foods

During the 19th Organic World Congress the Minister for Agriculture & Farmers’ Welfare, Shri Radha Mohan Singh formally launched the Food Safety and Standards

05/01/2018

GOTS: GMO testing method project conceptualised

According to the GOTS newsletter the Global Organic Textile Standad organisation determined through a limited round-robin exercise that test results for GMO presence showed inconsistency and were unreliable in cotton fibre In 2016

30/12/2017

Apparel: sustainability by circularity

Whilst there are many publications on circular business models and commitments to circular economy, few brands/retailers or upstream suppliers are re-designing their business towards circularity

28/12/2017

Denmark: Coop launches organic agriculture fund

According to a press release the Danish retailer Coop Denmark together with environmental associations will raise funds to support organic farming in Denmark.

18/12/2017

Organic competence for smallholders in Africa and India

Improved access to knowledge and innovations in organic agriculture holds great potential for improving food security and raising the productivity of smallholders’ farms in Africa and India economically, ecologically and socially...

14/12/2017

EU: dramatic insect decrease requires a complete and comprehensive ban

This Tuesday, the competent expert committee of the EU member states in Brussels voted on proposals of the European Commission for the ban on the three neonicotinoids imidacloprid, clothianidin and thiamethoxam.

11/12/2017

Biobased food packaging through the eyes of the consumer

What do consumers think of biobased food packaging? And can manufacturers and retailers strengthen the brand position of their food products by choosing biobased food packaging?

27/11/2017

Amazon: more sale at Whole Foods Stores

Amazon has started to sell tech products and gifts at selected Whole Foods Market stores

23/11/2017

Strong institutional commitment needed to ensure a good legislative transition

Brussels, 22 November 2017 – The trilogue agreement for a new organic regulation reached last June was adopted by the Special Committee on Agriculture on Monday and by the Parliamentary Committee on Agriculture today

20/11/2017

Denmark: catering and off-trade sales at least 30% organic

At a dialogue event in Hamburg, about 60 participants learned that in Denmark, the off-trade catering market has become the most important grow engine for organic food.

13/11/2017

USA: prohibition of aquaponics in organic food production rejected by NOSB

At a meeting on the 1st November 2017, the National Organic Standards Board (NOSB) rejected the proposal to ban hydroponic and aquaponic production methods under the United States Department of Agriculture’s (USDA) National Organic Program

07/11/2017

Scandinavia is gaining strength in natural personal care

"The Nordic region continues to ‘set the trends’ in health and wellness for the rest of the world“, say the organisers ot the event.

30/10/2017

ISO 16128 guidelines for cosmetics

The ISO guidelines for natural and organic cosmetics donot take consumers interests at heart, states the association NATRUE

27/10/2017

Monsanto in trouble

The US seed-& pesticide corporation Monsanto is in trouble. There are many reasons. Among others, the authorization of Monsanto’s flagship the weedkiller Roundup and its ingredient glyphosate is expiring in the EU by the end of this year

26/10/2017

Growing number of EU governments oppose re-approval of glyphosate

The political and public opposition to glyphosate is growing in Europe

17/10/2017

Study Failed promises - the rise and fall of GM cotton in India

Failed Promises: the rise and fall of GM cotton in India", is a well-documented report about the collapse of GM cotton in the world.

09/10/2017

IFOAM launches its new strategic plan

After two years of discussion internally and with stakeholders, IFOAM - Organics International launches its new strategic plan

04/10/2017

Germany: 9.3 million vegetarians and vegans

8 million people in Germany, more than 10 percent of the population, eat a vegetarian diet.

03/10/2017

USA: Organic Agriculture Research Act gained support

The Organic Farming Research Foundation (OFRF), a non-profit foundation, reports a big success. The Organic Agriculture Research Act (H.R. 2436) gained crucial bipartisan support in the U.S. Congress recently.

08/01/2016

Organic groceries discount at Walmart Canada

Walmart Canada has quietly launched a new lineup of organic products under its Great Value store brand

26/06/2014

Tips on how to use Connature

Connature is a Contact and Trade online and global platform for the organic market.