War in Ukraine: UK Farming and Food Production

Ben Lake Excerpts

Wednesday 20th July 2022 Westminster Hall

[Ben Lake (Ceredigion) (PC)]

It is a pleasure to serve under your chairmanship, Dame Angela. I congratulate the hon. Member for City of Chester (Christian Matheson) on securing this important debate. Having spoken in other debates with him recently, I know just how passionate he is about UK agriculture and food production, and I thought that he conveyed that, and his understanding of the sector, very well.

It is also a real pleasure to follow the hon. Member for Wirral West (Margaret Greenwood), who eloquently emphasised how much the cost of imports has increased, and the different impacts that is having across different sectors of the agriculture industry. That is presenting a challenge not only to farmers but further down the line, through food inflation, for household budgets, which is pertinent to this debate.

Today’s debate is very timely. Across the UK, over the decades, we have perhaps become a bit complacent when it comes to our food security and self-sufficiency. Members have already set out how the UK’s self-sufficiency has declined. It is worth repeating that, at the moment, UK agriculture produces some 60% of domestic food by value, and some 45% is exported. We import some 46% of the food that we consume. That compares unfavourably to the situation back in 1984, when we were 78% self-sufficient. The hon. Member for Wirral West detailed how that figure has declined over the ensuing decades.

I am willing to acknowledge that part of that reduction is a result of our changing dietary preferences and habits, and it is important to reflect that in the debate. We now enjoy a lot of foods that are not produced in the UK, or cannot easily be produced in the UK, and we want to consume them out of season. I may return to that at the end of my speech; it is a particular bugbear of mine.

It is worth pointing out that the self-sufficiency percentage is a general figure, which does not really tell us the story for different types of food produce. It would be remiss of me, as a Member of Parliament from Wales, not to point out that we produce more lamb in the UK than we consume. We also produce more milk than we consume, for that matter. Although we are still well below self-sufficiency in the fruit and veg sectors and the poultry sector, as has been mentioned, it is important to reflect that our self-sufficiency has increased somewhat in recent years even in those sectors.

Russia’s invasion of Ukraine has a massive impact on UK food production as well as global food production. We are interlinked: pressures on the global level are felt at the farm gate in Ceredigion, as well as in other parts of the UK. That is particularly challenging after two years of covid-19 and the disruption of the pandemic, not just for food producers but for the associated supply chains, and after a turbulent period before covid-19 for farm-gate prices in a whole range of sectors. We come to this debate at a time of unprecedented immediate pressures, having recently suffered another unprecedented shock to the global food system on the back of difficult and lean years before that. The UK food production industry is in a challenging and precarious situation.

I was struck by the definition of food security in the Government’s food security report, which reflects the fact that it is a complex concept. It states that food security

“encompasses the state of global agriculture and markets on which the UK is reliant; the sources of raw materials and foodstuffs in the UK and abroad; the manufacturing, wholesale, and retail industries that ultimately bring food to shelves and plates, and their complex supply chains of inputs and logistics; and the systems of inspection that allow consumers to be confident their food is safe, authentic, and of a high standard.”

I will not touch on all those aspects, although it is important to note them, but I will say that the shock that we are experiencing now, with the price of farm imports in particular, risks destabilising many of the other dimensions encompassed by food security.

The most pressing issues are import prices and the significant increase in the price of raw materials. We have already heard how the war in Ukraine has had a massive impact in that regard. That is reflected in the agricultural price index, which show that in the 12 months to April, the price for agricultural imports increased by 28.4%. A further assessment by the independent consultant Andersons suggests that the most recent estimate of inflation in agriculture is 25.3%.

We recently had a debate in this Chamber on some of those challenges, but it is worth repeating that the rate of general inflation is running slightly below that of agriculture inflation. Agflation is an acute problem and I am sure that other hon. Members share my concern not only that that is putting immense pressure on our farmers, but that it may well feed into further food inflation and pressures on household budgets down the line.

In my remaining time, I will focus on the way that price hikes in the immediate term pose a serious challenge to our production in the longer term. Having spoken to many farmers in Ceredigion, I fear that the true impact on the UK agricultural industry of Russia’s invasion of Ukraine will not be truly felt until next year. As has been mentioned, a lot of that has to do with farmers having to plan their future feed and import fertilisers at the moment, many of which are on onward prices. Farmers are having to make difficult decisions that will have an impact on their productive capacity in forthcoming years.

Let us look at fuel and energy. The hon. Member for City of Chester mentioned the impact of the price of red diesel on farmers. Indeed, if we compare the average price per litre from January this year with the most recent average price from the end of June, it has increased by 25p. We know that Russia is a major supplier of oil and gas to the European market, which has seen an almost fourfold price increase since the invasion. That in turn is having an impact on fuel costs and, more specifically, fertilisers.

Other hon. Members present today were here for a previous debate in this Chamber in which we discussed the real challenges that increased fertiliser costs pose for farmers. I will not repeat myself, other than by noting that the increased cost of fertilisers is forcing farmers to make difficult decisions about their business models and practices. I acknowledge that the impact might be felt quite differently in different sectors of the agriculture industry—it might be different for certain arable farmers and livestock farmers.

It is also worth pointing out that, at least at the outset of the invasion, many arable farmers may well have been covered for their fertiliser requirements for this year, and may not have had to expose themselves to the price hikes that we saw thereafter. As I mentioned, however, farmers have to plan ahead, and I know that many—even in the arable sector—are looking ahead and thinking, “Do we need to carry over some of our fertiliser for this year and therefore use less in the current season, so that we can buffer ourselves a little bit for what promise to be very expensive prices next year?” It is a real headache for other sectors—livestock and beef in particular—and many farmers have told me that their fertiliser bills have increased from £200 to £700 per tonne before VAT. Of course, if we add VAT on top of that, it is an eye-watering sum.

The tragedy of the situation is that these price hikes have come after a turbulent period, with covid-19 and a decade of rather difficult times for farm-gate prices. Although prices have increased for some produce in the last few months—it is fair to say that dairy prices have increased significantly, and I am told that the lamb price is holding up fairly well, as is the price for beef—certain farmers will not have the reserves to shoulder and absorb a lot of these costs in the long term. I am worried that farmers and growers are having to adapt to higher costs and anticipate the impact of a prolonged period of turbulence, which they have to assume will be the case, by taking very difficult decisions regarding their farming practices, which in turn will have an alarming impact on UK food production.

NFU Cymru recently conducted a survey of more than 700 farmers in Wales, and it found that 71% intend to reduce production in the next year. To break that down into different sectors, 54% of beef farmers said that they will reduce stock numbers in the next 12 months, which will result in an estimated 10% cut to the beef herd. Some 46% of sheep farmers also said that they will reduce their stock in the next 12 months, and 39% of arable farmers said that crop production levels will reduce over the next year. That is already happening, and those decisions will probably have been made in order to be implemented by next year. That is a significant drop in our productive capacity at a time when we already know that we are not self-sufficient at the levels that we would like to be.

As well as not having enough productive capacity to become more self-sufficient for our dietary needs, we will find ourselves even more vulnerable in the long term to the global agriculture market and any external shocks that happen there. The war in Ukraine has led to tonnes of grain, sunflower oil and other produce being blockaded at Black sea ports, which is already having an impact in the horn of Africa. It is said that Ukraine feeds approximately 400 million in the world. That pressure will not go away; indeed, there is a strong argument that the real impact will be felt next year, when the harvest has not been harvested and the grain cannot get out. This is a very serious issue, which will weigh heavily on import prices for our own farmers. If we are to become more exposed to and dependent on the global market for many of our staples, that will mean higher prices for the consumer.

Ultimately, this debate has brought to the fore the need for us to think again about how we increase our self-sufficiency in the UK for the food that we consume and, therefore, for our food security. A few things have been mentioned already, such as the establishment of a fertiliser price index in order to have greater transparency and to allow farmers to plan with greater confidence and avoid having to make difficult decisions about the use of fertiliser. I repeat the plea for us to look again at fertiliser plants, and at whether there is a need for the Government to intervene to acknowledge them as strategically important pieces of infrastructure.

Finally—this is a debate for another day, but it is one that we must have in the near future—we need to shift our food production to a more local and seasonal basis. That will not always be popular, but perhaps we have reached the point where we need to face up to the reality. Is it sensible that we can go into our local supermarket on Christmas eve and buy fresh strawberries? I think we have come to the point where we can no longer afford that illusion of sustainability. Perhaps the future is more local and more seasonal.