UK poultry farmers facing rising costs, slimmer margins
Higher input costs and supermarket power put the farming industry at risk
UK poultry and other farmers are experiencing record rises in the cost of farm inputs while simultaneously dealing with downward pressure from supermarket price wars.
The National Farmers Union has called on the government to speed up the process of creating the Groceries Code Adjudicator, following the latest Defra Agricultural Prices Index figures that show a 13% rise in the cost of fuel, feed and fertilizer in the last year with prices now above the previous 2008 peak.
It comes as farmers and food manufacturers are pressured into sharing the pain of a major grocery price war, which could see lasting damage to the competitiveness of the supply chain should the current situation continue.
“These figures illustrate that variable and fixed costs for fuel, feed and fertilizer have all been on the rise over the last two years, with this sheer combination of factors pushing the index to its record high,” said Tom Hind, NFU director of corporate affairs. “It contrasts with the fall in the cost of food to consumers and bears out comments by some producers that they are being asked to ‘share the pain’ of the well-documented supermarket price wars.
“When you add this to reports in the Financial Times and other journals about the pressure being passed back by retailers, it calls into question the reliability of the British Retail Consortium’s message that supermarkets are cutting their already-thin margins.”
He continued that there are currently two big risks to UK producers.
“The first is that excessive bargaining power exerted for short-term pressures will undermine the already feeble state of investment on farms and in food manufacturing. In the long-run, this will affect our ability to compete and to offer consumers a choice of high quality, affordable British food. The second is the very real risk that some companies may resort to the underhand tactics of the past to recover lost margins, protecting shareholder dividends whilst undermining farming families.”