Higher Costs ‘Will Have To Be Passed On’, Say Growers

British fresh produce growers are warning that the industry will have little choice but to pass some of their input cost increases through the supply chain as the ceasefire in Iran comes too late for this season.

The conflict has already driven up fuel and fertiliser costs at a critical time for planting fresh fruits and vegetables in the UK. 

Ali Capper, who heads up grower association British Apples and Pears (BAPL), said the impact will be felt this season even if the ceasefire holds, because the higher costs are effectively built into the cost of production already.

“Sadly, even if it all ends tomorrow, the costs are baked in now,” she lamented.

New figures from the Andersons Centre suggest farm running costs were more than 7% higher in March, compared with a year earlier. 

The independent consultancy, which provides analysis for the farming industry and has also undertaken work for Defra, said the sector is facing another round of cost inflation at a time when margins are already tight. 

Already, growers have told the NFU they cannot simply absorb the increases, raising the prospect of higher food prices for UK shoppers. 

Limited Capacity For Pressure

Capper said fertiliser costs on her Worcestershire farm are up 40%, while red diesel has doubled, and transport costs have risen about 20%. 

Those increases feed directly into food production costs. Capper also expects higher costs for crop protection products and packaging.

“We will have to pass this on,” she warned, adding that the extent to which that reaches consumers will depend on how supermarkets choose to respond. 

Capper noted that the topfruit sector had already absorbed a “brutal” 30% increase in production costs during 2022 and 2023 following Russia’s invasion of Ukraine. 

In her view, the latest surge underlines how exposed growers remain to geopolitical shocks. 

“We can’t go there again,” she said, stressing that businesses cannot sustain losses, adding that there is limited room for further pressure in the system. 

“We can't afford to make a loss, we can't afford to lose our businesses so it’s really important that the costs do go through supply chain,” Capper stated. 

Farming, she claims, demands resilience, but “it has got harder and harder”.

Costs Keep Climbing

Potato grower Ben Savidge said red diesel prices are adding approximately £5 a tonne to his planting costs if they remain at current levels. 

Fuel that cost 65p to 70p a litre in December had recently risen to between 96p and £1.05 a litre, according to the producer.

Savidge, who grows potatoes in Ross-on-Wye, Herefordshire, said he is currently absorbing the extra cost because contracts for this year’s crop were agreed earlier in the season. 

“Last year we had an awfully dry summer which impacted yields drastically so now with our energy prices being hit like they have, it just feels like one thing after another,” Savidge noted. 

The overall pattern, he says, is that expenses keep climbing and the uncertainty makes planning very difficult. 

Even so, he plans to keep planting and hopes the outcome “falls our way at the end”.

Difficult Times

The spike in costs has added fresh pressure to an already stretched UK farming and horticulture sector.

Patrick Crehan, who buys fuel for a 3,500-member consortium, said some farmers are questioning whether crops will still be profitable at all. 

He said some growers are considering not planting because the cost of establishing and managing crops is now so high. 

Crehan, whose firm AF Group purchases about 120 million litres of fuel a year, said the market remains supplied, but price volatility is creating severe strain across the sector. 

He described conditions as “busy, difficult, and testing,” and said the scale of recent increases is unlike anything he has seen before. 

Even if the conflict ends within the next fortnight, the Food and Drink Federation expects UK food inflation to reach at least 9% by the end of the year. 

The ceasefire also looks uncertain, and that has already pushed oil prices back up after an earlier fall following the announcement.

Source: BBC News