Horticulture sector faces rising costs
By Chris Wright, Partner and ARA specialist
The horticulture industry is currently navigating a challenging period, with production costs soaring and returns remaining inadequate.
This situation, highlighted in a recent study, indicates a 39 per cent increase in production costs over the past two years.
The most significant hikes have been in energy (218 per cent), fertiliser (47 per cent), and labour (24 per cent). This trend, as noted by the National Farmers Union (NFU), suggests a potential for further consolidation in the fruit and vegetable sector.
Despite efforts to maintain the supply of home-grown produce in supermarkets, the industry faces a potential reduction in production and distribution if these pressures persist.
A recent Government consultation aims to address fairness in the horticulture supply chain, potentially leading to more reasonable contracts.
However, growers continue to face challenges with contract negotiations and planning, which are misaligned with production cycles.
This misalignment hinders long-term business planning.
The Government is urged to introduce a five-year rolling Seasonal Workers Scheme and ensure sustainable returns and longer-term contracts with key customers, particularly retailers.
The current state of self-sufficiency in vegetables (50 per cent) and fruit (15 per cent) in the UK shows the need for a more supportive environment for the horticulture sector.
Retailer pressure on supply chain margins is increasing, as evidenced by social media criticisms from farmers over supermarket pricing strategies during the Christmas period.
Recent price cuts announced by Morrisons, affecting over 500 products, including fresh produce, add to the sector’s challenges.
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