At first glance, pigs, eggs and fresh produce (and fresh vegetables in particular) might not have a lot in common. However, over the year the number of producers of all three has reduced in the UK, and for the same reasons – the failure of retailers to pay a price which allows farmers and growers to make a (modest) profit. For years, the industry has been saying that it cannot continue to work below the costs of production, and now, more than ever, many producers are seeing easier or more profitable alternatives, whether that be retirement, diversification or growing arable crops.
As a result, just two years after the country struggled to maintain imports of food during the Covid crisis, more and more products that we can easily produce in this country are being imported by supermarkets, sometimes produced to standards which are below those set out in UK law.
Labour availability has also had an impact, particularly in the pork and vegetable sectors, but it is the financial viability of certain farming systems that is real problem. For decades producers, packers, processors and even retailers have focused on removing costs from the supply chain to keep prices artificially low, even when inputs have increased significantly over the same period. Now, with inflation running above 11%, there is simply nothing left to cut back, and the whole supply chain – including the retailers – are feeling the pressure as consumers find themselves with less cash in their pockets in real terms.
And this is the big problem that our industry needs to overcome. Some retailers have increased the prices paid for some vegetable lines, and even those who haven’t done so recognise the difficulties that growers are facing. Retailers too face cost increases and competition remains fierce. The business models of the traditional retailers have greater costs and require greater shareholder margins than the discounters. Whether this will be the case going forward, as the discounters become more mainstream (after all, Aldi is now the fourth largest UK supermarket chain ahead of Morrisons) remains to be seen. What any changes in these dynamics will mean for growers and suppliers is also uncertain.
Another problem is that recent sales data shows that consumers are actually very price sensitive when it comes to fresh vegetables – more so than with many other food products. Consequently, as in-store prices rise, sales decline. Each increase reduces the volume of vegetables sold and, as Jack Ward told the recent Pea & Bean Conference, overall fresh vegetable sales in the UK are now below the pre-pandemic levels of 2019. Many growers cannot afford to produce at the price they are currently being paid, but as a whole the industry can’t afford for the price to rise.
There are no simple answers, but these trends do indicate a broken relationship between consumers and producers. Healthy fresh produce is undervalued socially, politically and financially. The UK spends less on food as a percentage of income than any other European country but spends more on housing. Poverty is an increasing issue in the UK, as is poor nutrition, but at the same time we can’t finance production of natural solutions in terms of healthy food.
There are no quick fixes, but in the longer term the whole industry needs to rebuild value into fresh produce. Doing so, after decades of discounting and commoditisation will not be easy, but unless we do, not only will our agricultural and horticultural industries suffer, but also our nation’s health and wellbeing.
The December issue also contains articles on
- Disease resistance is focus for new research
- Syngenta, Sakata and Hazera open days
- Labour efficiencies demonstrated at LAMMA
To read these and more from “The Vegetable Farmer” subscribe today – find out more here.