Firms in the UK food sector are struggling to remain operational amid soaring prices.
Internal claims data from Atradius for late and failed payments shows that claims doubled in the first quarter of this year, as businesses battled with cash flow challenges.

As reports emerged today of an easing of food prices in the UK, Georgios Panzaris, senior underwriter at Atradius UK, said that, despite this good news for consumers, businesses are are still battling with the quadruple threat of rising prices, ongoing fallout from Brexit and the pandemic, and bad weather conditions.

"This is undoubtedly going to affect consumers who continue to see rising prices in supermarkets, so it will be welcome news that prices have come down slightly," Panzaris said. “But the reality is that many businesses are facing significant challenges to remain operational. Our data paints a bleak picture, with the number of claims we received in the food sector for late and failed payments doubling in the first quarter of this year compared to last year, indicating businesses are struggling with cash flow. This follows a relatively subdued period in 2021 when businesses could benefit from ongoing government support put in place during the pandemic. But with no such support in place this year, firms will be bracing themselves for the coming months."

Whilst companies that have traditionally operated on thin margins are particularly vulnerable to volatile market conditions, even the biggest players are being tested, Panzaris added.

"With insolvency a real risk, businesses need to do all they can to ensure they are protecting cash flow so they can mitigate the risk of a large customer failing unexpectedly. We – at Atradius – continue to underwrite agri-food firms on a case-by-case basis, but it’s crucial businesses have robust and updated financial insight and forecasts," he said.

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