The Impact of Rising Food Prices on Farmers

Food prices in the UK have soared at their fastest rate for almost 45 years, with grocery prices rising by 19.1% in the year to April.

“I know people are paying more for their bag of potatoes or bag of carrots, but it’s not because we want more money,” said Pembrokeshire potatoe farmer Tessa Elliot .

“Our costs have gone up drastically and we are still trying to understand where we can even make a profit.”

Cash flow is always a challenge for potato farmers, who can wait more than a year to be paid for their crops after harvesting.

But since the Covid-19 pandemic and Russia’s invasion of Ukraine, food production costs have jumped.

“For fertiliser we were paying £290-odd and it shot up to £900 for that same bag,” said Tessa, whose family has run Cresswell Barn Farm for more than 40 years.

“Seeds were up £40 a tonne. Labour costs went up. There was nothing that didn’t go up double, if not more.”

While those costs undermined farmers’ profits, they also translated into higher costs for consumers, with food prices increasing by nearly a fifth between April 2022 and April this year.

The Competitions and Markets Authority is currently investigating all supermarkets over high food and fuel prices amid allegations that customers are overpaying.

But supermarkets insist they are working to keep prices “as low as possible.”

Matthew Hunt runs Filco, an independent chain of supermarkets in Wales, said: “It’s very much a perfect storm at the moment, you’re seeing cost increases coming from all directions – the three major ones are fuel, labour and energy.”

He said his company was not passing on the full cost increases to customers: “It’s squeezing how we operate and we have to look at ourselves and see where we can take costs out of our operations.”

The UK government has floated the idea of a voluntary cap on basic food prices, but that’s had a cold reception from the industry.

“It’s a nice soundbite,” said Matthew. “How it would work in stores is confusing to me.”