 Now further ado I'm going to hand over to Hugh Thomas just to introduce the drive behind this. Hugh. Thank you John. Good morning everybody and welcome to the webinar. Just to explain my role I'm the Mungin director of Puffing Produce. It's my kind of day job but I also am on the Food and Drink Wales industry board that has been going you know perhaps what is it about half dozen years now. And one of the work streams we developed as a board is is a work stream that will help businesses in Wales develop their financial skills. That was kind of put into a block of what support was needed and that block of work is being delivered by BIC. So hence John kind of chairing this meeting today you know Linda and Alan who've been working on this program now for good few years. The program that they developed is called the Investor Ready program. Some of you probably heard of it before. There's a whole range of tools available within that program and what I would recommend is if anybody's got any kind of questions or feel they can improve their systems within their business then please contact one of the team from BIC. You know I think that's probably my opening statement. So I thought part of that program is you know is why we're here today doing a series of webinars to you know just talk about the various areas of concern within food businesses in Wales and what we can all do and you know just throw a few ideas about it. I think it is as well you know. I'm interested to hear what comes up today myself to be honest you know perhaps there's something there on risk mitigation that we haven't really thought about well enough in Puffin you know so I'm just going to sit and listen as well. So back to you John. Thank you Hugh. Thank you. So we have Rob from Capestone Organic, Alan Lewis the FD from BIC Innovation, Marlies from Capital Law and Pete from Food and Drink Federation in Wales and myself being I've got some previous in Food and Drink myself. I'm here to facilitate. So what are we here for? Well today we're discussing forecasting what do we think might happen and risk management? What do we think we can do about it? Strangely nobody's really managed to forecast this year so far and it's becoming increasingly difficult to forecast what might happen before the end of the year. The big variables for food and drink companies of course are things like currency, supply, demand and laterally consumer sentiment. For example does anybody know if we're going to do a hard Brexit? Are we going to have a second wave of COVID before the end of the year? Christmas will consumers come out and celebrate or will they stay at home and expect everything to be delivered? What can we do? Well we can forecast but we can ask our customers to forecast and we can ask our suppliers to forecast. Hedging always sounds like some mystical thing you do with somebody in the city in reality is that practice of breaking risks down and buying or selling forward and trying to mitigate some of the risks that comes from those things that we can't insure for. We can try and insure. Do we have alternatives? How we've got more than one supplier or more than one customer if things don't go the way we thought they might do? Do we understand our business cycle, seasonal sales after all we have Christmas coming and how do we plan for that and what might or might not happen? Because of course all of this relies on us having enough working capital if we don't forecast, we don't know how much working capital we might require or whether we need additional funding or some sort of contingency. So to help us discuss that we have a panel and I'm going to jump on Rob straight away because Rob has got some previous, as in the major multiple retailers both here and on Australia but of course at Cape Stone he's a very busy boy growing meat for major multiples who will be relying on it for Christmas. Rob, what's going to happen for the rest of the year and what are you doing about it? Morning everyone. I've been like you really, I was hoping for more answers that just in terms of I suppose from a Cape Stone perspective the way we're looking at it is there's the very sort of physical elements of how you're managing risk from a production perspective and starting with people really at the moment being the number one issue for us in terms of keeping our team and our people safe. So we've put a lot of time and effort into that we've put a lot of resources into doing it and you know we're fortunate that we're a medium-sized bigger business I suppose by Welsh food industry standards so we've actually been fortunate enough to be able to do it. It certainly hit the budget in terms of costs in the early part of the pandemic. So yeah part of it's been around physical in terms of how we manage people and the processes. The customer piece very difficult to predict and not getting caught with either too many or too few chicken when you grow all of them and the lead time is sort of six months is very tricky. I did you know predicting Christmas so we've probably got probably about 80% of our Christmas turkeys are now in sheds or just coming out of the hatchery so our Christmas is already done in one sense. The retail customers we supply having the size of turkey they've already ordered they ordered them in January but what's really interesting of course is everyone's double guessing what sort of Christmas we're going to have and the number of phone calls I've had saying can you make them bigger can you make them smaller can you change how many we've got the retail side actually don't know what Christmas is going to look like at the moment and the second wave is a big big issue for them so will people be at home I think food service we don't really supply into so in one sense I haven't got that headache of wondering whether it's going to restart in earnest but double guessing Christmas is a challenge we've I'll talk about sort of the other parts of the physical risk is making sure we've got enough processing capacity so we'll probably buy a new packing machine we don't need a new packing machine but we need the capacity if we lose people so if anybody has got any bright ideas out there in terms of we'll probably bring in to just short of 200 agency staff for five weeks this Christmas that's because you want the agency will also help take some of the risk for you in terms of ensuring you've got people yeah the you know if any year we could offer local employment this would be this would be it really in terms of applicants we've had for jobs recently but in terms of helping us manage the risk then using the professional agency for that short period is by far the easiest option and the lowest risk and we've worked for a couple of years Hugh is it much the same for you because you do you get a big season up list uplift at Puffin do you not yeah to a certain extent but the bit with the most uplift is is in the potato operation and we're relatively automated there now John but you know what we try and do then is spread what crops we grow you know we're doing more veg all the time cauliflower and leeks need something try and spread it evenly throughout the year so that we can take staff on permanently you know it's it's we've we've tended to kind of stay away from the the seasonal work of it because it's so hard to do as you know but you know Robert's got no other choice I think you know is it in the turkeys for Christmas then you know it is it is a seasonal job isn't it so we've tried tended to stay the other end because it is so difficult especially our geographic location is very hard to get agency labor you know in this part of Wales was so remote from where these people live and how good are your customers at forecasting what they're going to require from you um well I think we're better than they are put it like that so um you know but we talked to them you know we our half dozen biggest retail customers you know we probably speak to them virtually every day John you know and it's this continual dialogue you know if you had you know what are you thinking about Christmas as they changed from last week you know these type things as an ongoing dialogue as well you know and then you know it's trying to get to some commitment from them as well of what you know if they're going to drive promotions you know they can control what volume that promotion is by the price point that they put on it so if they commit and they know they can they can help you mitigate risk and help you guarantee volumes as well and they give you sight of their maps and plan and their promotions and agree with you what they'll do and when yeah and that is you know some retailers do that almost nine months in advance now John you know some are more then more reactive to the market what the competitors do there's a whole range of stuff in there really so uh you know we have to keep up with that every day really but it's you know as you something like as Rob just said you know we we grow potatoes they come out of the ground now in September and October and that's it set you know can't we can't kind of miracle up any more potatoes in January you know because uh the harvest has been done and we've got to work with what we got you know so it's it's then balancing the demands of the different customers you know it's one of the things that we're concerned about going into the into the this coming season is retail sales are still very strong now in the red checker they're probably 20 up now you know that's the volume that's been taken out of the food service sector and it's in retail so you know how are we going to balance that going through the coming year is a is a again a kind of a factor that we're discussing with retailers and just on that one what are the key variables for them because I assume that you've got the price settled but will currency or packaging supply or other inputs be uh less manageable yeah well the packaging is interesting one because that was one of the probably the the area that became closest to falling over during the kind of panic buying period you know march and april it's uh you know we had enough potatoes here enough capacity here to kind of deal with the 100 percent extra volume that we had for three weeks but but the same demand came from everybody to the packaging manufacturer so we work with a company called Altamut that up in Doncaster that are the lead supplier for Tesco's and on a you know on a whole range of products you know and they will really struggle in so um you know that the retailers are and we as a business now we're looking at mitigating that risk more making sure that packaging supplies are more evenly spread so that means more suppliers rather than relying on on just getting the keenest price out of one big supplier yeah and it has to be and I think you know the supermarket will work with these packaging suppliers the retailers direct to the packaging suppliers uh suppliers to make sure there's capacity capacity in these suppliers because if you know obviously the most efficient business out there the ones who are running 100 percent you know they sweat in the assets and then there is no there is no room for uplift so what I mean from your point of view I mean hopefully nothing will go wrong but is it people or is it physical capacity uh and the logistics of getting stuff to market that's at risk for you yeah but you know as I think Rob Rob said people first and I think I would say people first as well you know we work hard every day here to try and get the team as good as we can and you know look after a team keep the people teams safe as well as if you you know we're we're looking at the biggest risk of a business like this is having an outbreak in the business you know so these things that we're doing every day of different canteens and different shifts and different teams everybody you know splitting everybody up so if one small group do get the virus then only kind of half doesn't people go off and it's not spread right through the factory because that's the biggest risk you know it's uninsurable it's uh you know and it closes you down so uh that's the one we spend most of our time on yeah in fact if we can come to you Pete you were relaying your story just before we started about being let down by a major supplier um I mean it does happen doesn't it I mean I know from my from my background in dairy when force majeure is is declared do you want to just just relay that story again for us because it's quite perhaps illustrative of what potentially can go wrong yeah I mean I think what's interesting about forecasting is obviously the the session is very much about following the cash but the reality is you also need to follow the flow of your materials and by materials it's not just about the materials that go in your products I think about spare parts for your equipment things of that nature the situation that happened for us when I was MDD side cereals was in the run up to brexit on march 2019 and we had a contract for one particular ingredient that out of the out of the 40 products that the business made went into 39 of those products and it was absolutely vital and it was a commodity so it was commodity imported and then around the middle of January I was serviced what's called a force majeure contract which basically said although we've got a contract until the end of June in the in the event of a no deal breakfast we are releasing ourselves from that contract and we will not be supplying you forthwith so that's I was quite a shock we were fortunate the commodity is found in the UK so we were able but if I give you a sense of scale the price went up by 25% on something that was hundreds of pounds of time to get its source from the UK so I think and Marley's is far greater expert than I in terms of contracts but for me what I would be doing is mapping the sources of all the materials that you have coming into your business yeah in fact we've had a question from Alison along the same subject of about you know when you produce a finite amount of products and a customer demands more where do you stand Marley's I mean we're into that lovely bit about when we're drawing up contracts and selling stuff everything's sweet and rosy until of course you know much later when we all fall out because that's not my understanding of what we said we could do absolutely I mean first of all it's quite often the case in the food and drink industry that people don't have contracts because their start off is small businesses you don't have the cash to spend on expensive lawyers you trust the people you're dealing with and then things go wrong and then you grow bigger you might import export you deal as we said maybe with one major supplier and then you have this issue with bargaining power you know if you're a small supplier and you're dealing with one of the big supermarkets of course you know they have got the resources and to come down on your heavy with contracts and lawyers and so on and but really when it comes down to it very often if you have a well-drawn up contract you can actually protect yourself and I think one of the most important things is actually now as we faced with the double whammy of of COVID and Brexit and it looks you know as we said earlier increasingly like a hard Brexit and have a look at the contracts you've got in place because there may be force measure contracts closes in there but they don't always work they don't always bite you know sometimes they are drafted in such a woolly way that you can get out of it sometimes they are too narrow so there may be a contract that just lists four or five things but it doesn't have sort of like a sweeper clause like you know anything beyond the control of the third parties but even if you've got one of those contracts and they are drafted quite soundly you still have to sort of like look at what what did the parties actually know did they mitigate so you know we said earlier I think you mentioned about making sure the workforce is safe if the government gives guidelines on how to keep your workforce safe and you ignore them and then you hit with a second wave of coronavirus can't supply and say to your customer that you know force measure can't supply because of second wave they could come back to you and say well hang on have you actually followed guidelines no you haven't so therefore you know for your force measure is pretty valueless so you know there's lots of things that you have to sort of like consider yeah I mean that reminds me Marley's that a lot of these companies particularly the smaller food and drink companies may not be limited companies is it important to have a structure that gives you some final legal protection yeah I think if you if you can incorporate that would definitely be be helpful because if you are hit with sort of like a big liability and you just can't get out of it then you know you would not be personally liable unless of course you give personal guarantees but that's a separate session but generally yes that would that would protect you so I mean puts the right structure in place for your own enterprise also very very important know who you're dealing with I say that quite often for people who start exporting you know you start exporting it's so exciting and common sense goes out of the window and you don't actually know who you're dealing with and you know I've had a number of of contracts that people have given to me and said oh can you just have a last check everything's fine but I just want you to look at it and said I looked at it and especially like African countries or South American ones and these so-called companies don't even exist so be very very careful be very careful how you protect your cash flow if you are dealing with somebody you don't know don't give them credit to him straight away make make sure that you have got proper procedures in place and most importantly also put put contracts in place you know in some countries especially if you want to export you have to have contracts in writing in the food and drink industry but as an absolute minimum you've got to regulate things like payment delivery delivery terms and you know these these kind of things so so you've mentioned that in amongst all that the bargaining power and a lot of the food and drink companies aren't that as big as their customers I know Hugh and Rob have seen both sides of this Rob could you just that bargaining power I mean you're a decent-sized company but you still I suspect fill the pressure from from the marketplace what what what do you do in terms of just making sure that you have got something to stand on um I think it comes back to getting the day job right as well you know the basics yeah there's contract there's leverage in the negotiation and all of those bits and pieces but I think the first thing to do is make sure you give your customer what they want and don't give them too many reasons to come back and beat you up yeah there's always going to be a bit of a negotiation around price but at the end of the day if you've got something that they really want and it's differentiated to a point then they actually don't have as many options as you'd think that might be do you have more options though yourself as you've got bigger have you diversified your supply base in terms of feed and packaging and the like yeah you know I think you've always got to have a plan you've always got to have this is all about forecasting and risk you always got to plan B but plan C plan D especially if you go into a negotiation and the potential is you might lose a chunk of business or you might not be able to source the inputs that you need you always need to have those backup plans so putting all your eggs and the pun from a poultry business but all the eggs in your basket it's never been a good idea so certainly from our perspective we've looked over the last couple of years to grow customer base certainly you know I know something that Puffin have done really well over the last sort of four or five years so we're looking to grow our customer base grow the type of customers you know at the moment we're not rushing towards food service but we're doing a lot more B2B manufacturing product we have that's more about getting out to the seasonal capacity constraints if you like doing more at the other times of the year yeah so when we look for the risk for our business just generally isn't before pandemic we quite fortunate in one sense that we we think pandemic on a daily basis as a poultry business anyway it always affects the birds and not people so in terms of our biosecurity avian influenza and as a disease in turkeys called blackhead which could effectively wipe out our turkey christmas turkey business so we we're growing 25 percent less turkey this year than we did last year we're still predicting the same outturn for the whole of the year we're growing more chicken more customers so yeah we're looking to really balance up the business and the risk that's interesting because one of the questions we've had we had prior to this was from Craddock's asking about how people can diversify and where they find the time to work on the capacity or just the headspace perhaps to think about new products in new markets and I think you've alluded to the fact that you've put extra manufacturing capacity in but I know Alan it's one of the things that Welsh government programs offer through smart isn't it in terms of helping people review how they can get more capacity and therefore space to do more or do different yes certainly just going back to the initial query of how much time should one spend on new product development what tends to happen with certainly with smaller companies is the time spent on new product development is that time you've got left over after you've done absolutely everything else so I think the first step is to get out of that cycle product development is more important than just applying the left over time so the options there I know it's very easy for me to sit here and pontificate but the options are perhaps to improve your productivity so as you release more time and you know just to think of one hypothetical solution it might be a case of finding more efficient machinery that will release some of your time and that poses two questions immediately I suppose what sort of machinery and from where and the other side of it how do you fund it now the good thing about big innovation is that we are blessed with running more than one type of government program some of them have a financial bent some of them have a productivity bent who has mentioned investor eddie that I'm leading on for big innovation John there mentioned the smart program which is about productivity what we can do is not just send an accountant in to worry about the funding or just send a production person in to worry about the productivity we can send a team in to worry about the entirety of the organization and yes we don't come with magic ones but you know we come with an awful lot of experience most of the team are old and great like like me and we've been there and done that so if anybody out there listening wishes to engage with a team of financial orientated people manufacturing orientated people marketing orientated people then please do give us a shout John I think the investor ready program one of the things that's demonstrated is is how it's helped us clients sort through some of those risks and look at the alternatives particularly around management information I mean I'm always amazed how many food and drink companies don't do as much forecasting particularly on the cash front as you think they would do I know in Pete I think I know that's something that's close to your heart is the the sort of simple strategies that people should be maybe be thinking about now for forecasting cash position how far ahead should they be thinking and just before I come to that John I hope we don't mind I just go back to Alison's question because I think I think it's a struggle that many many businesses have around balancing your customers and how to choose which customer the only advice I could give is if you've got a problem tell them early and pick up Rob's point what customers want is the certainty they want to know what's happening especially in the retail environment if you don't one thing you don't want is empty shelves and if someone can tell you I mean I had experience with it with a range of the retailers over years where you sometimes have to go down to them and not to tell them what you can do but share with them what you can't do and every single time I've done that early it's been appreciated because by admitting you can't do things you create trust and businesses very much about trust so for me that would be my answer to Alison's specific question in terms of how far you're forecasting to certainly be obviously the further you go the more confusing it gets and I think I think I would take you know you tend to work on a 13 week forecast horizon I tend to work on a one year sort of top line horizon if you like if it was me we've got this we've got December 20 I'd want to know what's happening between now and March if I was honest and as much detail as are possibly good I'd want to understand the the ranges of I mean obviously FDF our clients various different sizes have got various different capabilities to pick up Alan's point about what people can and can't do so what I would suggest to do is take a view the one thing that that concerns me at the moment is you know there's guys out there listen to this call they have got so many things rattling around their head it must be very difficult to sort of sit back and go right where do I draw the line here there's so many different lines to draw where do I draw the line here the only thing I could say is draw it somewhere draw it as you you could call it a base case or something where what's the base case that could happen you what's the minimum that could happen in terms of the scale of my business and then maybe what you can do is you can build on that you can build risks against that if you and the other reason why that's a useful way to do it is if you're going to a bank and you want to get money from a bank or money from the development bank of Wales who have been fantastic through this and the way they will look at it is they will look at your forecast base case and they will look at how strong that base case is and then they will risk assess all the items you add on to that so if you cash flow in that way and in two months time and economic resilience fund three comes along and instead of being about reductions in turnover it's actually about working capital because that's FDF's main concern is working capital as we build back build the businesses back you've got the type of model or the type of assessment that they will be able to connect with and it means you're more likely to be successful so one of the things that I know some companies are adopting is working with suppliers on packaging making sure that they've got that packaging and they've booked it even maybe sat in a warehouse somewhere they're not expected to pay for it now they are expected to draw it down over over the course of that period but of course you know it's budgeting for that and it's showing that you you get some sales in the meantime to fund for it isn't it yeah I mean packaging I agree with you, packaging is a really interesting environment you know the development of Amazon has transformed the board packaging demand across the whole of UK and all the world probably and it's put a huge strain on it but yes packaging you can buy three months out you can buy six months out it's interesting that from a cost perspective you know the longer runs they have and the longer scale that you can buy the better but it's it's it's not just packaging it's key ingredients it's equipment clearly people are your number one priority because without people eating their business and so from that point of view I think you just have to have a set of 10 or 15 10 assumptions whatever they are work them through and then then manage each of those individual assumptions and understand how solid they are and recognising that it's an extremely fluid situation so um funny enough because we've had a question coming from from Mark Pavia I would just go to the second part of it in the short term and maybe one for Hugh Hugh is this this business of of deflation or inflation or stagflation or whatever I mean we're expecting a degree of inflation are we not next year and we've already got baked in inflation because of some of the economic decisions and the and the nature of the markets um are you budgeting for inflation or are your customers budgeting for inflation some some is the answer to that I think you know we also are working really hard with with the retailers who are getting ready you know for a recession you know they the the big retailers are very aware that how much Audi and little pushed forward you know but Audi is one of our customers as well how much ground ground they gained during the last recession so you know the big retailers you know you've Tesco's have been put this in the public domain you know they're working hard to make sure that march doesn't happen again you know so there is a lot going on about so you may see deflation you know you may see specs change and these type of things within and see deflation within our category too to match the demands of a recession where people are becoming more price conscious so you but they were they were supply conscious when they couldn't get a hold of toilet rolls and and pasta and and rice earlier in the year do we should we assume that it's going to be about price or do we think that availability and service particularly if you don't fancy standing outside in a queue outside Audi in October in the persistent rain would would they pay a premium for their food at that point to be delivered the point is you know customers are price sensitive john you know yes it's how they feel you know the Tesco's has done very well over the last couple of months isn't it you know and that the smaller apart from the convenience stores the kind of smaller large supermarket stores haven't done so well people I think have felt a bit more cramped in those sort of things I think it'll be depend whether a second wave comes you know on on how each retailer performs you know I think if things quiet and down now and there isn't a second wave then we will see more of a move back to normality I think isn't it so it's again if there's a heap of unknowns you know I think one one of you know coming back to Alison's question as well is you know we try and be an open as transparent as we can with all our customers but this is what we've always said this is what you sold last year so this is what we can do on top of that you know we we try and treat everybody fairly and very be very open and transparent about what we've got and how we can work and again give that data almost nine ten months in advance so you know if there's they can change their retail strategy to match that you know yeah but some retailers I mean some retailers have have seen a big growth at Cardo and Amazon obviously with them Amazon rolling out Rob you you know that area probably better than most and the change in maybe the structure do we think that structure is changing permanently and we should plan accordingly or do we think that things will go back to what was normal before I think from our perspective it's again it's about risk isn't it mitigation and hedging your bets and you know we've got one big foot now very much in the the Amazon camp and I've seen the sales grow with the service they offer currently only really in the southeast in terms of prime for food but it's it's going to happen it's going to grow people have changed the habits and a proportion of people will stay with the convenience that Amazon and other online retailers offer so you look at it and say yeah for the next depending on what happens my personal view so please don't go out and make lots of decisions based on this but we'll be you know the online has definitely been accelerated in terms of its uptake by customers and changing habits to a point during the pandemic it's it's yeah we've seen the change we think that might be a permanent it's not that people will go back once they've had the convenience they'll continue to pay for it rob frozen he's frozen marlies can I just turn to you for a second because with the switch to online we've got a lot of people now who who didn't know about distance selling and the like most of it is is is pretty straightforward but there are some things that can be different if you're selling food and drink online now and trying to grow that part of your business yeah I mean it is online is is especially if you don't just sell in the UK but overseas as well and it's going to be even more complicated when you when you want to sell into the European Union after January so you need to make sure that you're compliant with data protection you need to be sure that you can actually sell into the markets that you want to sell you need to make sure that you've got all your paperwork sorted out so yes definitely that that that is sort of something I think you know you should really speak seek specialist advice whether the process is on your your website on your platform is compliant you know with I know with people selling through Amazon food and drink the pan European option is of course disappearing at the end of the year and of course that rules are different in different territories as well so it's it's not it's not as easy as everybody thinks I know we're going to be doing a webinar the first of second week of September we commencing the seventh to talk about e-commerce and some of the economics around that and and the sort of risks that associated with it but of course that changing landscape the fact that you have got a changing market I mean Pete what does the FDF advise people to do in terms of how they should anticipate what the market will look like next year and of course how you then put you put the the emphasis in efforts yeah I mean obviously what FDF is doing at the moment is clearly moving into COVID recovery and working with the government to try and make it smoother transitions we can possibly get where we've got a list of 90 outstanding questions in terms of the just the trading aspect of how the European Union and UK will trade together but the one area which in which I would I would like to call out to anyone on this call is if anyone has got any business in the island of Ireland please take a really close look at it there's going to be a lot potentially significant additional paperwork you know there's going to be people saying like you know Northern Ireland and the Republic of Ireland are going to be very different animals in terms of how GB and NI so I would just shout out to that the the other areas that the FDF is trying to work with is trying to work constructively with the clusters I mean Alan's mentioned what big innovation do but we are very fortunate in Wales that we've got a cluster group across a range of different areas and again I would imagine a lot of people on this call are parts of clusters but what FDF will be doing as long as the clusters can do as well is reach out to other people you're not on your own there are many challenges yes you've got your own business there are lots of support networks in Wales that are there to help you you know as you mentioned the industry board as well who are very open to different types of things and so from that point of view FDF or you know I've recently joined from April and what I've been trying to do is just can't work with the team work with the officials try and do what we can we're all we're all on a similar boat we all want the food and drink industry to succeed in Wales it's been a huge success over the last few years um and we just want to play our part to do that and try and help in any way we can it's interesting what you said about Ireland though um because because of course a lot of our meat our dairy butter cheese and the like that's fairly integrated with Ireland um you know I don't know what what sort of implications should be people be looking at from in terms of supply and availability well specifically what the UK government have already announced is is clearly the first thing you think of is what happens at Holyhead uh and the UK government has announced that they're going to back and they're going to invest in an additional 50 million and now there's another 34 million to help Welsh infrastructure obviously that would potentially be also down Fishguard way as well potentially um and I think the issues for Welsh business might be about the amount of paperwork the scale of the import paperwork the scale of the export paperwork and critically you're talking about supply chains if you've got an integrated supply chain very much in produce for example then one day's the lay at the port can make the difference between between that product being viable or not so it's a real significant sense yeah so for a Welsh food and drink manufacturer who's not quite sure where all the ingredients are coming from because they're using a whole sailor to deliver in it's probably worthwhile going back and having a look and asking the questions and back to Mali's point about checking what the teas and seeds are for that supply in case you are left in a difficult position what what should people Mali's be looking at particularly from a supply side and in terms of either critical deadline critical dates and or planning you know how how far ahead I mean there's a number of things if you if you trade cross border um you have to look whether you've got um a strict delivery deadlines in there and whether you can meet them or not you have to look at who's responsible for example for compliance with laws because going forward the laws in the EU and the UK could actually differ in terms of food regulation um you ought to check um on um what what happens if if there are delays in delivery um whether that's actually a termination ground for the contract or not you ought to look at your jurisdiction clauses um you know what what which which law applies and um which which courts can actually um rule on a case and ideally at the moment I would say if you can't change it put an arbitration clause in because arbitration is something that is mutually enforceable between the UK and the EU even after hard Brexit because both the EU and the UK are part of the New York Convention so arbitration is actually a pretty good way forward um again um if you then look at sort of like the regulations um you ought to make sure that your labeling is correct both importing and exporting because that will change and there's some quite good sort of information on the on the government helpline I'm not a massive fan of the art the government has put out last week with all the regional accents that's a bit too spinny but if you actually go on the website there are some um quite uh you know easy to read and practical guidelines on there so where Rob and Hugh where we've got integrated supply chains um we're dealing with currency like euro for some of the inputs or in maybe even exporting is it worth holding euros is it worth buying forward what what do you do from a budgeting and finance point of view on the you know on the run up to a potentially volatile period Hugh do you want to I mean do you muck around with euro as much um you know most of our machinery comes from Europe so that's you know when we have kind of bought euros ahead it's been for big capital investments um you know so we don't buy a lot of stuff on a day-to-day basis apart from spheres and expertise you know our IT and these type of things are all from Belgium but uh you know we haven't mitigated any of that risk you know but uh you know it's an interesting one when if you took more of the broader supply John it's interesting that the the retailers have already started looking at the problems that might occur this winter you know they are trying to get more stuff more product grown in the UK to mitigate their risks you know and pass us a message for the people on the call as well is make sure you look at different ranges of sourcing option you know if there is problem with products coming from the continent you know if you're you're going to use a imported Spanish cauliflower for as an ingredient in January or you're going to try and look for a UK grown one you know I suppose it's a look at a look at the different channels where there's options available and that comes back nicely to what Pete was talking about planned maintenance and or making sure that you've you've you've got all that programmed in well in advance for the critical bit and Pete did you want to just come back on that point yeah I just I just wanted to to pick up on Hugh's point because we we um did something that was because effectively we're food companies we're not foreign exchange experts and what we did is we put in place an exchange regime which was basically it looked forward for the four quarters and you bought 80 percent of your demand the next quarter 60 percent of your demand following quarter 40 percent of your demand the next quarter and 20 percent of demand the next quarter you did that on a rolling basis and what it basically meant was instead of trying to to beat the market from an exchange perspective yes the market will move anyway but what it meant was that you were less impacted by the positives and the negatives so it meant that you were mitigating the risk of currency you can't change the market you know and I'll be honest with you that personal experience came because in one day I think if I go back to I think it was about 2014 maybe when the the euro went from 125 to 102 on the day of my year end and it cost about the profitability a million quid then we needed to make sure that we had some some certainty so I just wanted to give a practical no I think that that is a good point and I mean when I was involved in dairy we used to do that you I mean the trick there was to break big contracts up into smaller ones change the time span of them so that at least I mean you can't get it you can't get it all wrong you know you can get lots of small mistakes rather than one whopper uh you know in a way and and and create a cliff edge at the same time Rob the other way of doing that of course is going open book with your something some of the major multiples are very keen on that so are you a fan of open book I've seen it both sides um yeah I'm not sure in terms of open book personally it depends how open the book is really doesn't it who's opening it so yeah I you know I've seen cost plus open book I think what we've done which works for us is we've identified our major cost um drivers and have hedged those effectively in our contracts so we have uh chicken feed would be our big driver so we have a tracker which tracks feed so effectively the cereals market um and rather than arguing about it we've agreed that 35 percent of our costs are chicken feed um and therefore every six months we'll sit down and discuss um chicken feed based on an index effectively so it's actually not really a negotiation at all it's we've all seen what the market's done we're I think giving them something back or they're giving us a bit more but you're effective you're sharing the risk with your with your with your customer I mean back to Mali's point about bargaining power that's not so easy for smaller people to do but it's not something that's impossible either is it I mean if you can point to an index or a basket prices that you then rely on as being the way of arriving at a price yeah I think there are there are arguments you can put forward you can say just part of good governance it's part of good business practices or best business practices and as you mentioned earlier this sort of like eases of transparency it all goes into that um so I think if you can find a mechanism that is actually an objective mechanism you know as you said like index for example um then uh it is sort of something that the parties both realize they share the risk and it is it is sort of like not one party trying to pull a fast one on the other which can work quite well and that actually creates sort of like also an element of trust in a dialogue which I personally I don't like litigation I'm not a litigator I always think you should try and avoid it like the plague um so if you can have a dialogue open that will actually then also help you if you do need to change your terms of your contract for example because the circumstances of delivery are just very very different you have a better platform to start that that that negotiation or the discussion rather than sort of like having this adversarial approach yeah I mean Rob I mean obviously there's never an adversarial approach with the with the major multiples obviously but I mean where where where it can get slightly spikier courses when they're you know you've got the combination of big price fluctuations and or availability and we've had a question from Chile about trying to get ingredients from from Italy but surely the key the trick here is to demonstrate maybe not just with open book who your suppliers are what the risks are associated with it and maybe helping your customer come to the decision they need to pay a bit more to ensure they've got a secure supply yeah I think they're definitely value availability and security of supply and and that changes over time and depending on the circumstances one thing I would mention though which people sort of missing in some of this is um is the value of things like BRC um and actually we talked a lot about understanding your supply base we're actually you know making sure that you we've mapped our supply base we've managed their competencies we've done internal audits on our suppliers and in doing that you've got a process that you can also demonstrate to your customers um so the safety element of it the food safety element of it the food safety but you know actually food safety is essentially risk management as well isn't it so going doing that due diligence and that process to present it to your ultimate customers I think if you're going to just go to a customer a major retailer and say yeah we buy something here we buy something there we might see a bit of risk um it's there's not really going to wash you know the the complexity of the supply chains and the supplier approval processes they use you really have to start to think about whether you mirror it within your own business um actually with IT it's not very expensive now um so one of the things you know we've got is a supplier approval process for Cape Town where we see all of our suppliers um in in a sort of tree uh a triage so we can actually see who where the interconnections are um now at Cape Town in this sense the tiny business and I've done that in a retail business and I've been able to go back eight or nine maybe ten um steps down the supply chain um to see the whole supply chain in front of us um so I just yeah we're sort of talking about risk I just think we've not mentioned the auditing and the interface that actually from a BRC and others we expect yes because when it goes wrong it costs money so you know it's a it's a really good point actually because you know having that secure supply base which is um foods not just safe but quality avoids mistakes and avoids variances that end up costing money I think we're getting we're getting close to the point at which we'll have to sum up so um what I'm going to do is go around you all and say can I have um one prediction I know that's not fair but one prediction for for how we're going to get through the rest of this year um one top tip um Alan can I start with you please so what what do you think's going to happen and what's your top tip well I'm going to confound you and say I haven't got the slightest idea John and go on from that to say what I would always advise people to do is build up a business model and coming back to what I think Pete was implying uh once you've got your business model you can start playing what if with it uh and when you are doing the impossible which is forecasting it is impossible to forecast uh but when you are putting down into your business model the structure of your business you can then start playing what if with it and make sure that there is if at all possible enough of a buffer that come what may you will survive so it's basically things like if customers don't pay on time how much free cash have we got to see us through that period or what work additional working requirements what might we need or you know where price is absolutely John and again I do know how easy it is for me to sit here and come out with these pearls of wisdom but play what if what what does happen if you lose your main uh your main supply uh main supply or your main customer uh there are certain circumstances where no business would survive obviously uh but the more mitigation you can put in there to address loss of clients or whatever uh the the more likely you are to survive even the pandemic that we are going through at the moment and it's worth mentioning at this point on the Welsh food and drink website there's a lot of guidance notes both in terms of operational financial and legal and the like so it's well worth people taking some time to go and have have a look at that Mali's could one prediction and one top tip please yeah my prediction I mean lawyers are usually extremely pessimistic so I'm going to back the trend I'm not going to be quite so pessimistic I actually have great hopes in maybe not so much a vaccine but in treatments for for Covid there is sort of like quite a new quite a lot of development going on so I think that we may sort of like not see this massive second and third wave that some people are worried about but more sort of like smaller localized ones which is going to be good for business and with Brexit I think even though at the moment it does look like very very hard I think this is going to be more like Switzerland and we will see before the end of the year a kind of agreement even though it may be just a very woolly loose one but I think it will be a start of an ongoing negotiation and again I think that would be good for the food and thinking thank you Mali's I'm going to write that one down and hold you to that one I probably be totally wrong I have been totally wrong before but it would be nice if it if I were right and in terms of top tips I think yeah get your get your labeling sorted out sooner rather than later because that will you know be something that you have to do anyway and if you are importing just Europe at the moment and you don't have one get an URI number okay okay pate prediction and top tip interestingly the prediction from me I share Mali's conditional excitement let's put it that way about the fact that we might actually get some form of a deal I don't think it's going to be a cliff edge in the 31st of December I think they're going to be able to wrap something up and say look at this deal that we've got right let's talk about it some more so that's that's what I would anticipate the other thing I would anticipate is this China situation is not going away and whether that affects there's a lot of food supplies that come from China obviously there's a lot of other supplies that come from China and that's that is going to be a feature of the next six months what it actually looks like I don't know and the one tip I would give well I'll give you two tips but the first tip I would give is try and look at your business from your customer's viewpoint start from your customers and what do they need from you and then start to work from there and the final thing just because there's sources of information anywhere but please feel free to contact me or I'll go to the FTF website we've got lots of guidance lots of information across all these various different topics because it's not just Brexit that's coming obesity is coming as well as the office of the green recovery yeah no that's great Rob can I prediction and top tip prediction without any particular timescale on it one of the major multiples to disappear either to be absorbed or changed potentially due to the rise of online and then in terms of top tip it would really be about communication with stakeholders whether it's customers suppliers banks but if you're not talking to them and keeping them informed about what's going on the surprise elements of dealing with things just get so much harder so just manage your communication with your stakeholders management by no surprises Hugh prediction and top tip I suppose the prediction is there's going to be a heap of churn in the next 12 months and there's a heap of threats you know COVID Brexit these things but with threats come opportunities with people wanting to realign their supply chains etc so the businesses that are on their toes and you know take those opportunities you know we'll be able to grow over the next year as well you know there's going to be winners and losers I think and top tip is you know as you say honesty transparency forecasting exactly what Rob just said you know it's communication with all your stakeholders your suppliers your customers giving them and do it on your own do it in conjunction with your suppliers any customers you know they you can help solve their problems as well you know you all solve your problems together yeah yeah Hugh that's great thank you can I thank all our panelists very much indeed for getting up this time and giving your time so generously it's really appreciated thank you thank you to all the people who've been online and your Q&As and and what have you thank you very much indeed just to remind you fifth of August we have another one of these and we're talking about managing cash and accessing short-term debt so I think that's probably going to be very topical once again thank you for joining us at this time in the morning and hopefully see you at the next one thank you all