Government support for food wholesalers

 

By Tim Wilkinson

We have previously outlined some of the challenges faced by wholesalers as a consequence of the pandemic. Although wholesale businesses were not legally forced to close, they have been adversely affected. The closure of the food service industry dramatically reduced some wholesaler’s customer supply needs. However, with customers like hospitals, care homes and schools many wholesalers could not close entirely, without letting down these important services. Where wholesaler businesses have remained open but worked at reduced capacity, this has depleted cash reserves. While wholesale businesses were, like all businesses, eligible for the furlough scheme, this did not account for overheads such as warehousing or distribution costs. In addition to this, the closure of schools at short notice in January 2021 had costs for wholesalers, who were left with excess stock, additional storage costs and wastage. In February 2021 the Federation of Wholesale Distributors launched a petition [1] requesting the government provide bespoke financial support for the sector.

But targeted support was not granted in the government’s budget on 3rd March. Unlike other businesses in the food system whose financial support was extended in the budget, wholesalers were not given sector specific funding. Business rates relief was extended for eligible businesses in retail, hospitality and leisure – but having been excluded from previous support, wholesalers were not able to access the scheme extended by the budget. Neither were wholesalers eligible for the Restart Fund (which supports hospitals, hotels, gyms and personal care businesses). In early March, it was unclear whether wholesalers would be eligible to apply for local authority grants. These are non-sector specific funds available for all businesses to apply for and allocated on a discretionary basis by the local authority. The Federation of Wholesale Distributors pledged to help its members access this funding.

In mid-March there was news that wholesalers were accessing local authority funding. For instance, a London-based food wholesaler successfully secured half a million pounds of local authority grant funding. However, Fairway Foodservice CEO Chris Binge, quoted in The Grocer said, ‘The general amount a member in England has received is under £10k. There is no consistency in any of it. Different local authorities apply different criteria; some say “no”, one member was awarded £70 per day’. So similar businesses in different local authorities may end up with different fates. While providing much needed support, this discretionary funding did not give targeted sectoral support.

In late March, things changed dramatically. A new £1.5bn business rates relief fund was announced, and a ‘food wholesaler’ was referenced as an example of a potential applicant. This new package is available for all businesses outside retail, hospitality and leisure sectors who have been affected by Covid. But the use of food wholesalers as an example of a business who could receive support is promising for the wholesale sector. The pot will be distributed to ‘sectors that suffered the most economically, rather than on the basis of falls in property values, ensuring the support is provided to businesses in England in the fastest and fairest way possible’ (Gov.UK source). The Federation of Wholesale Distributors has welcomed this news. In the March budget it looked as if wholesalers might remain part of the ‘hidden middle’ of the food supply chain, but the new business rates relief appears to acknowledge the ways the impacts of the pandemic have reverberated down the supply chain.

 

For more information on the wholesale experience over the last year and the sector’s outlook, I found this analysis by The Grocer interesting.

 

[1] I’m signposting this petition for information; it is not an endorsement of it.

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