British supermarkets have been accused by berry growers of profiting from increased soft fruit prices while failing to provide fair compensation to struggling producers.
Despite an 11 per cent rise in the average per kilo selling price of strawberries in 2022, retailers continued to pay the same price throughout the year. This trend has persisted into 2023.
As global fuel and raw material costs decrease, grocery prices continue to rise, raising concerns about supermarkets' profit margins. On the other hand, food producers are finding it challenging to break even due to high input costs and a tight labour market.
The viability of the British berry industry is at serious risk due to rising production costs and inadequate returns from supermarkets, as emphasized by Nick Marston, chair of the British Berry Growers (BBG).
To cope with the situation, growers have decided to reduce strawberry crops for the 2024 season by 8 per cent, potentially leading to 9 million fewer punnets available in supermarkets.
Consequently, many growers are turning to export markets where they can achieve better returns, planning to export four times as many berries in 2023 compared to 2022.
However, the current situation is not sustainable, as growers are struggling to make a profit, leading to potential discontinuation of berry production. The UK's competition watchdog has warned supermarkets against trying to rebuild profit margins, especially with record-high food inflation starting to slow due to falling costs.
While supermarkets refute allegations of "profiteering," they acknowledge facing their own cost pressures and low-profit margins.
Andrew Opie, director of food and sustainability at the British Retail Consortium, stated that retailers primarily source their food from the UK and are paying higher prices for British produce. He also pointed out their efforts to limit price increases for consumers during the ongoing cost of living crisis.
In addition to the challenging market conditions, the berry industry is grappling with higher labour costs following the UK's departure from the European Union and the introduction of strict immigration rules on low-skilled workers. Around 50 per cent of the cost of a punnet of berries is attributed to labour, and the current seasonal worker scheme has been criticised as "clunky and dysfunctional."
To address this, the BBG's Marston called for an extension of the six-month seasonal worker visa to nine months and direct recruitment by growers rather than relying on government-approved operators who charge fees.
Last year, the National Farmers' Union estimated that up to £60 million worth of produce was wasted due to a shortage of fruit and vegetable pickers.