Preparing for Brexit
Within months of the 2016 referendum on leaving the European Union, Arla Foods had positioned itself as one of the major authorities on the likely impact of Brexit on the food industry in the UK. It did so via an initiative that cost the company less than £15,000 to roll out.
Its report on the economic impact of Brexit on dairy farmers gained headlines across the country and was covered by more than 400 newspapers, radio stations and online channels, including Radio 4 Today and Farming Today; the Guardian, Financial Times and Daily Mail; as well as numerous local media outlets both within the UK and outside, reaching a theoretical audience of more than 700 million worldwide.
The report also granted Arla, a pan-European cooperative of dairy farmers better known for household brands such as Anchor butter and Lurpak, a voice within the highest levels of Whitehall. Before this, the dairy industry and agriculture in general had barely received a mention in relation to Brexit.
Lisa Attenborough, communications director at Arla Foods, had identified well before the Brexit vote that few in the UK were well-versed in the challenges that dairy farmers might face in the event of the UK leaving the European Union.
Therefore, the year before the Brexit referendum even took place, Arla had already commissioned its first economic assessment report from the Centre for Economics and Business Research, an independent economics consultancy, to assess the possible eventuality of the UK leaving the EU.
‘It meant we were out of the traps the day after the referendum result,’ says Attenborough. Arla is the UK’s largest dairy company, with an annual turnover of EU2.6 billion. The group supplies supermarket chains including Sainsbury’s, Asda and Morrisons with both branded and own-label dairy products. It is owned by 11,200 dairy farmers across 11 European countries, including 2,400 in the UK. As a pan-European farmers’ cooperative, it is not hard to see why Arla is particularly well placed to be a leading voice for dairy farmers when it comes to the Brexit debate.
‘We knew that Brexit would impact us significantly as a pan-European business. So, we saw this as a call to action and an opportunity for the outside world to benefit from the knowledge we had to offer,’ says Attenborough. She had also been working hard to harness the unique structure of the Arla business as a cooperative across Europe.
The group has 175 boards of representatives across Europe, including 20 in the UK. These boards interact closely with farmers to represent and vote on issues on their behalf. Since 2013, when Attenborough joined Arla, she has also overseen the creation of a farmer ambassador programme which includes 25 dairies.
One in 19 jobs in the rural economy is linked to ARLA, and dairy contributes 0.3 per cent of Britain’s GDP
‘These are all very successful businesses which are also very good at telling their story,’ she says. Arla can draw on these farmers to help with campaigns and initiatives. The group also regularly surveys its farmers for their opinions on many issues, including labour and EU workers.
‘Arla has a very inclusive governance structure,’ says Attenborough. ‘The dairy owners also own the company and so they are very astute about how it is run and about the implications of something like Brexit. They have a stake in the organisation, but are still running their own businesses.’
As a result of having this communications structure in place, Attenborough was able to oversee a Brexit initiative on a remarkably low budget – just £15,000. The main aim was to gather hard, empirical evidence about how leaving the EU might affect farmers, suppliers, and consumers, and to deliver it in a way that made key decision-makers sit up and take notice.
As the Government had made much of achieving a deal with the EU which would grant ‘frictionless’ trade, Arla decided to commission a report from the London School of Economics to highlight the challenges, in particular the ‘friction’ points within supply chains for dairy producers between Europe and the UK. This was published in July 2018.
‘We employ a lot of people, but we didn’t feel we had the credibility we needed until people understood the impact our industry has on gross domestic product,’ says Attenborough.
In fact, Arla is one of the biggest logistics operators in the country. One in 19 jobs in the rural economy is linked to the business, and dairy contributes 0.3 per cent of Britain’s GDP. The result of highlighting this and funding a credible economic impact report, which Arla promoted via conferences, speaker platforms and ministerial meetings, was that Government took notice.
Increasing the UK’s milk pool and building the infrastructure for us to be self-sufficient in dairy will take years
The group also joined forces with industry organisations including the Food and Drink Federation (FDF), Dairy UK, the Agriculture and Horticulture Development Board (AHDB) and the National Farmers’ Union (NFU) to coordinate media relations for the initiative.
‘As we developed credibility in this area, we got our voice heard. [Europe’s chief negotiator] Michel Barnier quoted our LSE report when speaking about the impact of Brexit and Michael Gove visited our centre in Denmark to hear what we had to say,’ she adds.
Crucially, Arla did not take a stance on the rights and wrongs of Brexit. The message was solely framed around the need to understand the challenges to be better prepared for Brexit.
Ash Amirahmadi, UK managing director of Arla Foods, said it was important to be clear that Brexit might also bring opportunities to expand the dairy industry in the UK, particularly when it comes to improving declining food security levels. However, he warned that this would take time.
‘Brexit might bring opportunities to expand the UK industry in the long-term, but in the short- and medium-term we cannot just switch milk production on and off. Increasing the UK’s milk pool and building the infrastructure for us to be self-sufficient in dairy will take years,’ he explains.
Furthermore, despite the LSE report gaining headlines for some of its more alarming findings – the Guardian proclaimed Dairy products may become luxuries after UK leaves EU – Arla chose to present its report in a more sanguine way.
‘We could easily have sensationalised the findings of our report,’ says Attenborough. ‘But we didn’t want to do that.’ Instead, Arla’s more balanced approach meant ministers were more likely to listen, she adds. In fact, Britain does not produce enough milk to meet demand in the UK and is, therefore, dependent on other countries in the EU.
If it defaults to World Trade Organisation rules, dairy products will attract higher tariffs which means prices will rise for consumers as the dairy industry already operates on very tight margins. This information speaks for itself and, because of Arla’s no-nonsense approach to communicating the facts, it seems people are listening.