Struggling farms demand 'fairer' food prices as labour costs soar
- Credit: Sonya Duncan
East Anglian fruit and vegetable growers fear they could go out of business unless they are paid "fairer" food prices to compensate for soaring labour costs.
A report by farm business consultancy Andersons assesses the impact of a 34pc rise in the hourly rate for seasonal workers since the introduction of the National Living Wage in 2016.
The report, commissioned by the National Farmers' Union (NFU), says the increase has hit labour-intensive fresh fruit and vegetable operations, where "there is now a real threat to home-grown supply as a result of unprecedented wage cost inflation over the last five years".
It adds: "In many cases this issue can now only be addressed through changes to sale price."
The report concludes that farmers would need to be paid between 9pc and 19pc more for high-labour crops including leeks, asparagus, lettuce and strawberries in order to offset the rising wage costs.
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Norfolk grower Andy Allen, who produces up to 250 tonnes of asparagus a year at Portwood Farm in Attleborough, said labour accounted for 60pc of his production costs, so the increase was threatening the viability of a business which already worked on tight margins.
"The crop is becoming less and less viable," he said. "Do I think I will be doing it in five or 10 years' time? The answer is no.
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"It is very unlikely unless we can get some inflation into the value of what we are selling, and that does not seem imminent. The supermarkets are putting pressure on all the time to keep pushing the price down, which is not sustainable.
"Personally, I like the fact that the minimum wage keeps going up. My guys work really hard and I wish I could pay them more, but it means we need to get more money coming in at the top end, and we are not getting that.
"It sounds like a whingeing farmer, but the reality is unless the prices go up we reach a stage where we say: 'We're out'.
"I have got enough asparagus in the ground for the next eight to 10 years and It is unlikely that I will be able to plant any more because in 10 years it is completely unviable.
"The margins are so fine and there is no inflation at the retail end. That is just not sustainable."
Mr Allen said the financial issues came on top of existing problems with the availability of European seasonal workers which "stemmed from Brexit and were exacerbated by Covid-19".
Tim Papworth, who farms in north Norfolk and is chairman of the NFU's regional horticulture and potatoes board, said while new varieties and automation technologies have improved productivity for crops such as soft fruit, vining peas and potatoes, many horticultural crops rely on a manual workforce, and so are particularly exposed to high wage cost inflation.
"Ever-increasing costs mean some growers may no longer see their business as viable in the UK," he said.
"Particularly when coupled with ongoing recruitment challenges, larger businesses could consider opportunities to relocate abroad.
“If nothing is done, we may begin to lose a thriving domestic industry that is incredibly valuable to the nation. This would simply see more imports of fresh produce to replace that lost production.
"Brexit and Covid-19 have highlighted the importance of local, fresh, secure supply chains and we should support the expansion of British horticultural production.
“Growers recognise and support the importance of the National Living Wage for people, but fairer returns from the supply chain are needed to ensure businesses are sustainable and can manage these increased costs. As this report highlights, cost rises of this magnitude simply cannot be borne by growers alone.”
Andrew Opie, director of food and sustainability at the British Retail Consortium, said supermarkets are working with their supply chains to ensure they remained "sustainable and resilient".
"Retailers work closely with their suppliers and recognise the pressure they are under," he said.
"It is in their interest to maintain sustainable, resilient supply chains and this will be reflected in the prices they pay for the produce they sell."