It might seem that food is seriously overpriced at the moment but grocery bills start to make more sense if you look at the array of hidden cost increases growers are facing from seed to shelf.
If you’ve found yourself doing double takes at supermarket prices in recent months, you are not alone. Fresh foods including fruit, vegetables and dairy in particular, have been subject to sharp rises.
The UK’s inflation rate reached double digits again in September, hitting 10.1 per cent, after a slight drop in August, according to the latest Office for National Statistics figures.
Yet where our supermarket shop is concerned, the increases have been even more dramatic: in the 12 months to September, food and non-alcoholic drink prices jumped 14.6 per cent in what is believed to be the largest increase since 1980.
Take one of the most basic of grocery items there is: the humble tomato.
Until recently, the price of tomatoes remained stable year after year, rising roughly in line with inflation. Then in 2021 it zoomed up 8.4 per cent, from £2.14 per kilo to £2.32. It didn’t stop there.
In the 12 months to September 2022, the price jumped almost 22 per cent, from £2.30 to £2.80, the ONS figures show.
It might appear that retailers, or suppliers, are seriously overcharging at a time when shoppers are more squeezed than ever.
But if we look closer at the vast array of hidden cost increases growers are facing from seed to shelf our grocery bills start to make more sense.
You might think we’d begin in the greenhouse, but many commercial British growers will have spent hundreds of thousands of pounds well before we reach that stage.
British growers will buy tomato seeds in their tens of thousands, often from the Netherlands or France. Depending on the variety of plant demanded by the growers’ customers (i.e. supermarkets), seed producers can command high prices – in the region of £1 per seed, according to Philip Morley, technical executive officer British Tomato Growers’ Association.
“The price of seeds has gone up 10 to 20 per cent in the past year depending on the variety and the agreement,” says Dr Morley, who previously served as group director of agronomy at APS Salads, the UK’s largest supplier of British tomatoes to the high street.
“Per hectare you’d probably buy around 70,000 [seeds].”
Next, growers will transport their seeds to plant-breeding companies to propagate them.
There are only a handful of these companies in the UK, so most growers will send the seeds to firms in countries such as the Netherlands or Belgium. The propagators are grappling with their own increased cost, heating and lighting being key concerns, and have passed these on to the growers.
Earlier this month, Plantise, one of the Netherlands’ largest plant-breeding firms announced it would close down because of unaffordable energy costs. The diminished market means those still in business are experiencing greater demand and can charge higher prices as a result.
Transportation, administrative costs and health checks
Next, the tomato plants are transported to the UK. The energy price crisis has somewhat eclipsed the large increase in petrol and diesel prices motorists have faced but this represents another rising cost for growers. Added to that, the weak pound and strong US dollar has put British firms at a bigger disadvantage here as fuel is priced in dollars.
Brexit-related administrative checks and costs add to the overall bill, as do plant health and seed inspectorate testing to prevent deadly plant viruses from entering the UK. “Those costs are also passed on to the grower,” says Dr Morley.
Finally the tomato plants reach their destination and British growers plant the heat-loving crop in their greenhouses. Growers have been hit by a host of cost increases here too, from the price of the substrates typically used for tomato planting to fertiliser – not forgetting energy, of course.
Two of the most popular substrates – rock wool and coir – have become substantially more expensive, doubling or even trebling in price, Dr Morley explains.
The cost of fertiliser, used to stimulate growth, has also shot up – the UK has imposed a 35 per cent tariff on Russian fertiliser in addition to existing import taxes, while high gas prices have significantly pushed up costs (natural gas is used as both a raw material and a fuel for fertiliser production). Carbon dioxide, used to accelerate growth, has also rocketed in price.
Rising energy prices have hit businesses hard, as well as households. Tomato growers heat their greenhouses to ensure their plants thrive, and their bills have ballooned accordingly.
Growers also typically install additional lighting to encourage growth on short winter days and during overcast weather. This year, however, with utility bills so inflated, many growers are doing away with this lighting altogether, and have chosen to push back the timings of crop production from January and February to March and April.
Pest control “predators” – the insects and entomopathogenic fungi introduced to the environment to eat the bugs that can destroy plants, and which are used instead of pesticides – have become more expensive too: “They’re all imported and the heating and lighting used to produce them have gone up [in price],” Dr Morley notes.
Yet another hidden expense, and one affecting a variety of food producers and industries, is labour costs.
Labour shortages at UK nurseries and farms brought on by Brexit and exacerbated by the Covid-19 pandemic means producers are having to offer better financial incentives to attract workers.
It has been a long journey from seed to successful crop but before you’ll find tomatoes stacked in pallets at your local supermarket those that are not sold loose will need packaging – and that has become pricier too. This is down to a combination of factors including energy costs, production disruptions and shortages of raw materials.
“At every stage you have these huge increase in prices. It goes right back through the supply chain,” says Dr Morley.
“Whether you’re buying an iPhone or a tomato, costs will continue to increase as long as there is global, and particularly national, instability in the economy and as long as we have a weak pound which in a proxy way increases production costs and prices in shops.”
He adds: “Growers are not making a fortune – a lot are losing money.”