The impact of Covid on the Welsh food industry: a view from Castell Howell

Castell Howell has come a long way since its beginnings on a Carmarthenshire farm in the 1970s, and is now one of Wales’ biggest independent wholesalers, with depots in Merthyr, Blaenau, Chirk and Avonmouth as well as its headquarters in Cross Hands, Carmarthenshire. But when Covid struck, the foodservice business lost 60% of its business almost overnight. Their main customers are catering outlets such as universities, sports stadia, venues and school kitchens, and is not clear when many of these will start serving food again. The company has had to put 400 staff on furlough and doesn’t see sales returning to normal until 2021 or even 2022.

“It’s been challenging, disastrous,” says Ed Morgan, their Corporate Social Responsibility and Training Manager, “but that is shared by our customers, who are in a precarious position, and our suppliers. We’re not alone.”

The company has had to adapt fast and find new markets.  One step has been to open its wholesale business to the public, using ‘click and collect’ to maintain social distancing, and changing its purchasing to source food in smaller quantities for the retail market. They have also been supplying food banks and free school meals schemes.

A significant boost to their business has come from local authorities looking for ingredients for their emergency food boxes. At first the Welsh Government was supplying these directly, but Ceredigion County Council negotiated a cash payment instead and chose to give their business to Castell Howell as a local supplier. Other councils followed suit.

Ed sees this political decision as a significant step forward. “I’d like to think there’s more of an awareness across local authorities about where food comes from,” he says, referring to the way that staff have been taken away from their regular duties in order to meet the councils’ obligation to feed vulnerable members of society, by packing and distributing the food boxes. “Instead of being involved in transport or town planning, they’ve been hands on with food”. He hopes that food procurement will now receive a cross-departmental focus, reflecting its significance for the local economy and communities.

Public procurement – buying food for care homes, the NHS, school meals and so on – is one of the constants that Castell Howell sees as crucial to its future. “We have a team of three dedicated to this market, but recently they’ve been introduced to different suppliers and different ways of doing things and we’d like to maintain the momentum. And push it upstream of the Welsh supply chain,” he adds, citing the government’s support for the foundational economy, including a public procurement project in Carmarthenshire.

Castell Howell depends of course on a strong supply base. As Ed Morgan lists some of the products they source from Welsh companies – roast chicken, bottled water, desserts – it’s clear we aren’t talking farm to fork, although Daioni’s UHT milk is a recent success story. Even the iconic Welsh cake is made from global ingredients. This may disappoint those who would like to see Wales growing more of its own food, and particularly vegetables, but nevertheless, there are important benefits from having a strong food industry. “There are opportunities to add value here in Wales and that in itself brings economic and social benefits,” he explains. “If big factories close that can rip the heart out of a community.”

He points to the crucial role of Welsh food policy in creating the conditions for food businesses to benefit the people of Wales. Having taken part in the government’s consultation on sustainable brand values, he thinks that companies should be encouraged to do better. “I do feel environmental impacts need to be pretty much at the top of the list,” he says, suggesting that businesses might be incentivized to measure their carbon footprints and say how they intend to reduce them, and be audited on their green credentials. Good employee care and social benefits to local communities are also important, he thinks.

The government can do much to help food businesses by supporting public procurement, and this is one way that environmental criteria can be imposed. But there is a balance to be struck. “If it’s too stringent, it frightens companies off. They’ll say they’re better off supplying the pub down the road, or Tesco’s or Morrisons.” This is especially true as long as the margins on public sector food are tight, compared with the tourist trade. Understanding the environmental impacts of food can also be complicated and controversial, which is another reason for a pragmatic approach.

Another cause of hope that he sees is the Well-being of Future Generations Act, although it “probably needs to accelerate slightly”. Linking as it does economic prosperity with environmental sustainability and community cohesion, as well as promoting collaboration between government, business and communities, the Act is a foundation for a better Wales. Food is an obvious way of joining up all the dots and drawing people into its vision – an opportunity, therefore, for food businesses to build on recent public concern about food supplies.

“When Covid started, food and health care shot to prominence. Now we want to harness this. Where can we take this economic benefit of dealing with Welsh manufacturers and Welsh suppliers?”

This article was first published on the Wales Food Manifesto website.

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