Wholesalers call for ‘sector-specific' emergency measures
Wholesalers should have access to the same Government support as the retail, hospitality and leisure businesses they supply, the Federation of Wholesale Distributors has told an influential committee of MPs.
Wholesalers say the government-backed loans currently available to them are insufficient to ensure they can supply restaurants, pubs and hotels as their customers return from lockdown, and they need the local authority grants and business rates relief their customers have received.
Giving evidence to the Environment, Food and Rural Affairs Select Committee, FWD chief executive James Bielby told MPs that while the government had offered sector-specific aid to other industries, including hospitality, dairy, and fisheries, the wholesale supply chain had been left to fend for itself.
Research carried out by FWD and Defra shows that a third of wholesaler businesses consider themselves to be at high risk of failure. "The lockdown measures have had a detrimental effect on members, who are continuing at operate at a loss in order to continue to supply their public sector and care home customers," Bielby said.
"They are having to use reserves, and while government support has been generally available, they haven't had access to any specific support.
"Hospitality, retail and leisure businesses have had their rates waived, and a grant from their local authority of up to £25,000. The businesses supplying into those outlets have had precisely nothing."
Bielby (pictured), said that while local authority discretionary grants may be available, the process was "opaque" and FWD members were struggling to access them.
He added that re-opening the hospitality sector would be very hard without government assistance to allow wholesalers to "support, restock, and give credit to their customers as they re-open."
"Without the sort of sector support we've seen for the dairy and fisheries industries, as well as hospitality and leisure, food supply into the hospitality sector will be extremely challenging, because of the cash flow difficulties our members will face as a result of the lockdown measures," he said.
Ian Wright of the Food and Drink Federation added manufacturers' backing to the call, saying that funding may need to be regional as well as sector-specific, and that a clear indication of support would give distributors confidence to invest knowing that they could survive the "second shock" of a return to lockdown.
Bielby welcomed the government's announcement that it would underwrite trade credit insurance. "This is critical because some of the customer businesses coming back will have no reliable record of trading in recent months, so it's a leap in the dark for wholesalers to offer credit," he said.
Wright said he hoped detail on the credit insurance announcement by the Treasury last week would come though quickly because "if you can't guarantee your customer will pay you, you won't sell to that customer."
He said the furloughing scheme needed to be flexible and continue to the end of the crisis for hospitality businesses and their suppliers.
FWD also called for a clear roadmap for re-opening hospitality and leisure businesses, alongside schools and other workplaces. "We need staging posts to indicate which parts of the market will be reopening and when. Some wholesalers will be able to open up and resupply within a week, but others, such as those who supply to schools, would need a longer lead time," Bielby added.
