Chancellor Meets Supermarket Leaders For Price Discussions As Concerns Grow

Chancellor Rachel Reeves has met leaders from Britain’s biggest supermarkets to discuss the pressure on household budgets and the risk of higher food prices and shortages while energy, fuel, and fertiliser costs continue to climb. 

As concerns grow, the talks held yesterday (Wednesday, 1 April) were expected to focus on possible supply bottlenecks and the potential extent of the impact of the Middle East conflict on the cost of living.

Executives from Sainsbury’s, Tesco and Morrisons were due to attend, while Asda’s executive chair Allan Leighton was not expected to be present. 

Treasury sources described the session as a “fact-finding” discussion, aimed at understanding whether supermarkets are facing immediate shortages or price shocks.

“It’s very much a fact-finding, open discussion,” they said.

Supermarket chiefs have warned that costs are already rising higher, but some say the worst effects may not show up until later in the year. 

Last week Asda’s Leighton urged the government to “stand up and start doing stuff” to help farmers and lower fuel costs, warning that the conflict will inevitably push food prices higher.

Sainsbury’s chief executive Simon Roberts has suggested that major price rises are unlikely before summer, partly because existing energy and fertiliser contracts are still softening the blow.

Growing Seasons Could Be Cut Short

Farmers and growers, meanwhile, say the squeeze is already being felt. 

If costs keep rising, some UK growers of tomatoes, cucumbers, peppers, and aubergines have warned they may have to pull crops early, which could eventually leave shelves empty. 

Industry leaders have urged retailers to work with suppliers on contract terms, while also calling on government to provide support to protect domestic production and keep food prices in check.

The broader concern is that higher standing charges and other input costs will make production less viable for some growers.

Such is the case for indoor fresh produce growers in the UK, who are dependent on energy to provide light, heat and carbon dioxide at certain times of year. 

Lee Stiles, secretary of the Lea Valley Growers’ Association (LVGA), has called on the government to classify glasshouse food producers as “energy-intensive users”, alongside sectors such as steel, chemicals, cement and glass, so they can receive help with rising energy costs. 

Stiles is also calling on retailers to renegotiate contracts with growers to reflect the sharp increase in costs since the conflict in the Middle East began. 

On top of that, an increase in standing charges from 1 April – the fixed daily fee for accessing the UK’s gas and electricity network – is expected to push energy bills further upwards. 

“Growers have already bought plants and use labour to bring them up for three to four months so far,” pointed out Stiles. “When you do the maths, they don’t add up.

“They would lose less money by sending workers home, pulling the plants out and turning off the boiler. They would still lose money but less. It’s not much of a choice.”

Some UK producers are reportedly waiting a few more weeks before deciding whether to end the growing season early. 

If they stop harvesting fresh produce, LVGA’s Stiles says European glasshouses, which usually supply much of the UK’s salad imports at this time of year, would not be able to make up the shortfall, raising the risk of shortages similar to those seen in early 2023. 

Source: The Guardian