Farmers call for action amid 'unprecedented' cost pressures
- Credit: Jamie Lockhart / Andrew Brackenbury / James Beamish
East Anglia's farmers are battling "unprecedented" cost pressures - prompting industry calls for greater collaboration and better prices in their supply chain.
Rising costs for fuel, fertiliser and animal feed were sent soaring after the war in Ukraine hit world commodity markets.
The latest AgInflation figures published last month by Norfolk-based buying co-operative AF Group showed a 23pc rise in the cost of farming during the previous six months.
Wheat prices for this summer's harvest have hit £330 per tonne, which translates into inflated costs for animal feeds.
Key East Anglian sectors including pig and free-range egg producers are among those lobbying retailers for better prices to keep farms in business.
And all of this comes against the backdrop of the phase-out of Basic Payment Scheme (BPS) subsidies after Brexit.
Last week, Defra announced it would bring forward half of this year’s BPS payment in advance from the end of July to help farm cash flows.
But Jamie Lockhart, chairman of the Norfolk branch of the National Farmers' Union (NFU), said that would not help pig and poultry producers, and much more needed to be done to help all sectors.
"The word 'unprecedented' gets bandied around too much, but it feels very much like that at the moment," he said. "There is a knot in my stomach most of the time and that is shared across the industry.
"We are seeing cereal prices we thought we would never see in our lifetime, but we cannot celebrate it because the risk factor seems to be multiplying on a daily basis.
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"It is no longer just about Ukraine. That was the catalyst, but now we are seeing estimates being downgraded in the US and India because of poor weather and other issues, and that has seen the wheat price continue to move northward.
"With cereals in isolation, the pricing of the finished product is significantly higher than the inflationary pressures, so at £330 per tonne the wheat growers will still be able to make a profit.
"But we cannot underestimate the impact of those inflationary pressures, particularly for the pig and poultry sectors.
"That is why we are feeling so uneasy, because the biggest proportion of wheat grown in our area is for animal feed, so our customer is suffering, and that is not sustainable. We need a viable economy across all sectors for this to work."
Mr Lockhart said the government must find ways to help farm businesses with crippling energy bills, and fast-track the planning process for solar panels or reservoirs that could help farmers safeguard essential but costly resources.
And he said there were also actions that farmers themselves should consider to reduce costs through new efficiencies or collaborations.
"Optimisation is key," he said. "Where we are looking at cultivation systems, do we need that second machine pass, can we lift the cultivator out of the ground to save fuel, how do we best use our fertiliser and application timings?
"Necessity is the mother of invention, as they say, and we have to work harder to get to where we need to be.
"We are also trying to get closer partnerships with our customers - wholesale and retail - to ask how we work together to make sure we are not always needing to say prices will need to go up in shops, because we know the general public is struggling as well."
Agri-business consultant, Charles Whitaker, managing partner at rural agents Brown and Co, said food buyers and retailers faced a "stark choice" of either increasing farmgate prices to a sustainable level or accepting "major disruption to UK food supply".
He said: "Brown and Co forecasts a 25-30pc increase in food prices across many sectors as a result of fuel and energy costs doubling and fertiliser costs increasing three-fold.
"The producer is not able to carry the cost increases across already pressurised margins in many sectors.
"In broadacre sectors such as cereals and oilseeds, the market works transparently, and a doubling of cereal and oilseed values will more than compensate for cost increases.
"In broiler poultry production too, the retailer and integrators seem to have their act together in moving farm prices upwards in lockstep with feed and energy cost increases.
"However, in other sectors where the market through to our retail food sector is dominated by four or five national supermarket buying systems and large-scale processors or integrators, the market does not work so transparently and there are serious threats to farm production capacity and ongoing supply.
"Action is needed by our food retail and processor industry now to maintain UK food production and supply through some of the most hard-hit sectors to avoid either empty shelves, or further food price increases to an already hard-hit consumer as a result of greater reliance on imported product."