Farmers, Supermarkets and Food Supply Chains

Debate between Gordon Henderson and Robin Millar

Tuesday 16th May 2023 Westminster Hall

[Robin Millar (Aberconwy) (Con)]

My hon. Friend has just said something very helpful: British farmers stand ready. My farmers in Aberconwy have made the point that they are ready to step forward. However, does he agree that supermarkets have a duty to support farmers, and that they should not put undue cost pressures on farmers? Farmers need to be there tomorrow in order to deliver tomorrow, and there is a role for supermarkets in promoting farming, not just for their own interests but so that it is there tomorrow.

[Gordon Henderson]

I can only assume that my hon. Friend has been reading my speech, because if he is patient he will find that I will come on to that point.

British growers want to deliver on the Government’s vision for climate-friendly and sustainable land management, but there is a significant risk to our shared endeavour if we do not address market risks in parallel. Only profitable businesses can be sustainable and continue to invest in productivity and environmental outcomes. It is critical that retailers support British farmers and growers to be sustainable, achieve meaningful environmental gains, and invest in innovation and new technology. Food producers should have an equal stake in the value chain, with food processors and retailers sharing risk, data on performance and value gain.

Farm costs are a significant driver of food price inflation. According to the results of the 2022-23 NFU farmer confidence survey, farmers’ primary concern over the next 12 months is input prices, with 88% expecting negative effects. Data released by DEFRA in March shows that agricultural inputs have risen almost 42% since 2019. Inputs closely related to energy have seen the biggest inflation: energy and lubricants are up 58%. Although wholesale energy prices are falling, they remain one and a half times higher than normal. Fertilisers and soil improvers are up 161%, and animal feeds are up 50%. That is directly linked to the disruption caused by the war in Ukraine.

In recent months, the pressures in the horticulture supply chain have led to supermarkets rationing fresh fruit and vegetables. Soaring energy costs and the continued lack of people to pick crops pose a serious threat to the future of the UK’s fruit and vegetables industry. As a result, the industry is not able to mitigate the current supply chain shortages.

A report by Promar International in 2022 found that growers’ production costs increased by as much as 27% in the preceding 12 months, and that products such as tomatoes, broccoli, apples and root vegetables were most affected. The main drivers are energy, fertiliser and workforce costs. Farmers and growers across many sectors are doing what they can to mitigate rising costs, but they cannot be expected to absorb the additional pressure and risk in the supply chain alone.