Strawberry grower Annabelle Makin-Jones has seen her business hit by rising costs. Photo: Annabelle Makin-Jones
Yet Makin-Jones's experience shows why local farmers can't save us from the ongoing food inflation crisis.
With costs still sky-high, many are trying to push for even bigger increases prices. If successful, this will prolong the agony of rising costs.
However, if supermarkets refuse to accept higher prices, resentful farmers may simply hang up their shovels. Shrinking producer pools will increase upward pressure on prices as fewer products enter the market.
Official data this week is expected to show another jump in food prices in March after the biggest jump in 45 years in February .
Supermarkets are hoping that skyrocketing fruit and vegetable prices will start to come to an end as Britain enters its growing season. Earlier this year, the British Retail Consortium said food price increases «are likely to ease in the coming months, especially as we enter the UK farming season.»
There was even some speculation that the price cuts may be on the horizon as Tesco cut milk prices for the first time last week and said bread could be the next cut.
Not everyone is convinced, however. .
“I find it very optimistic that prices could come down,” says Ged Futter, a former Asda buyer and grocery consultant. “To think that manufacturers and producers in the UK are not seeing any inflation is simply not true.”
Inflation problems
Across the board, cost growth has been staggeringly steep. By far the biggest increase has been in energy prices, which rose by about 165% for farmers between late 2021 and 2022, according to Promar International. Fertilizer costs are up about 40% and labor costs are up 13%.
Farmers warn that despite record food inflation, these increased costs have not yet been properly reflected in box office prices .
«There is a delay effect,» explains Jack Ward of the British Manufacturers Association.
At Annabel’s Delicious British, the strawberries now on sale have been grown on plants purchased last year at 2022 prices. Prices have only risen since then.
Some fresh produce, such as cheddar cheese, has a natural lag in price given the time it takes to produce them. While wholesale milk prices have fallen, cheese prices will not be reflected in this fall for several months.
In fact, the prices of some items may not fall at all, even if wholesale prices start to decline. Many farmers struggled to raise prices at least close to real cost growth.
Producer costs increased by 34% in the 12 months to September 2022. Retail prices rose by just 14% over the same period.
«Many of these manufacturers have not recovered their costs for 2022,» says Ward. “Last year they were not paid the necessary increase in costs, and now they are being told that everything is fine because inflation is falling.
Farmers' expenses have not yet been transferred
“The expectation is that they will just swallow it and move on to 2023, but that just won't happen.”
Some supermarkets may also be reluctant to cut costs.
Gabriella Dickens of Pantheon Economics says: “We think what's happening is that supermarkets may be keeping their prices higher than they need to be. The numbers show that supermarkets are increasing their margins.”
This is not something that can last. «Competition will come into play sooner or later,» says Dickens.
Discounters that can lower their prices will do so to attract more shoppers through their doors. Customers, meanwhile, will continue to buy less expensive options.
Meanwhile, in the fields, many farmers have simply decided to reduce their cultivation. This, in turn, will put further upward pressure on prices.
At the Lea Valley Growers Association, a group whose members typically produce about three-quarters of Britain's cucumber and sweet pepper crop, half of its members have refused to plant this year.
Imports will have to make up the difference.
“When it comes to imports, supermarkets will have to go where they can buy something,” says Ward. “And in some cases, buyers don't get to choose. If it's short, they'll have to pay.»
Dependence on imports
It should be said that economists are more optimistic than farmers.
Pantheon Dickens says food price inflation should start decline in early summer.
“It’s hard to say exactly when this tipping point will come, but I’m guessing that towards the middle of the year, maybe June or July, that’s when we should start seeing prices rise,” she says.
“ The conventional wisdom seems to be that inflation will come down during the summer months.”
In Yorkshire, on the Makin-Jones family farm, she says she sees the crisis coming with strawberries. Growers who typically use greenhouses to grow strawberries «don't plant that many» for fear they won't be able to get a good enough price in supermarkets to offset higher energy and carbon costs.
However however, she doesn't worry about last-minute new customers coming in and snatching up the extra strawberries she has.
«They're trying to scare you by saying they're cutting back or not charging you the same amount.» «. But in fact, it just doesn't make sense for her to cut prices.
«Supermarkets didn't pay a fair price in the beginning, and now they want to lower? This is an absolute joke.»
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