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Bank of England governor affirms farmers' views on food inflation

In a detailed address at the NFU's Henry Plumb Memorial Lecture, Andrew Bailey, the Governor of the Bank of England, delivered a crucial message affirming the concerns of the British agricultural community.

He emphasised the significant and indirect impact of soaring energy prices on the cost of food, citing that more than 1.5 percentage points of food inflation are directly attributable to heightened energy expenses within the food supply chain. This percentage is notably greater than in other economic sectors, underscoring the unique challenges faced by the agricultural sector.

Mr. Bailey acknowledged the valid apprehensions of farmers regarding the slow pace of food price inflation reduction. He recognised the mounting production costs and labour shortages that farmers continue to grapple with, validating their scepticism about a rapid easing of food inflation.

He also highlighted the broader context of global economic instability, pointing out that adverse weather conditions have played a significant role.

These climatic challenges have led to subpar harvests in key agricultural regions worldwide, exacerbating the strain on supply chains. This strain has affected the distribution of not only agricultural commodities and food products but also a range of other goods.

Specifically addressing the UK scenario, Mr. Bailey referred to the extreme weather patterns that have beleaguered the nation, including intense rainfall and droughts. These conditions have had a devastating effect on wheat production, culminating in a 40-year low for the wheat harvest in 2020.

In his homage to Lord Plumb, Mr. Bailey reiterated the necessity for farmers to have the opportunity to earn a fair price, which is essential for sustaining food production in the British countryside. This principle, he noted, is crucial for the thriving of the agricultural sector.

Concluding his speech, the Governor expressed his profound appreciation for the insights he has gained from engaging with farmers across the UK.

He emphasized the wealth of knowledge and experience within the farming community, which provides invaluable lessons and perspectives that are essential for understanding the complexities and challenges of the agricultural sector.


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