Stats confirm food chain cost-price squeeze

Lasting damage to the supply chain could result from the squeeze caused by high input prices and retailer price wars, warns the NFU.

The latest DEFRA Agricultural Prices Index reached a record level in the year to the end of September, with prices now above the previous 2008 peak. It shows a 13% rise in the cost of fuel, feed and fertiliser.

DEFRA figures for all agricultural inputs tie in with Anglia Farmers’ Agflation report and have led to renewed calls for the government to speed up the process of creating a Groceries Code Adjudicator with meaningful powers.

The record input costs contrasted with the fall in the cost of food to consumers and bore out comments by some producers that they were being asked to “share the pain” of the well-documented supermarket price wars, said NFU director of corporate affairs, Tom Hind.

“Fair competition to ensure consumers get the best deal is all well and good. But there are two big risks. 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 while undermining farming families.”