Recent figures indicate that the profitability of major apple producers in the UK has seen a significant decline of 133% within the last year, as reported by British Apples & Pears.
All six of the leading growers in the industry have experienced a notable decrease in profits, with several facing major financial setbacks. This was evident from the data comparison of 2021 and 2022 financial statements from Companies House.
The representative organisation for these growers stated that this downturn was anticipated, given that the cost of production for growers surged by approximately 23% the previous year [NFU/Promar, November 2022]. However, supermarkets compensated growers merely 0.8% more than they did in 2022, as per a study by BAP released in January.
This is surprising, especially since the retail prices have been on the rise throughout the recent months.
Out of 75 apple varieties available in the primary four retailers, around 19 witnessed a price increase of over 10% annually [Assosia 52 w/e 26 September 2023]. This includes four varieties with a price hike of over 45% and one with a 65.6% increase.
This is a notable rise from the data shared by The Grocer in April, which highlighted that some product prices had surged by up to 46.3% over the year.
Ali Capper, the head of BAP, commented, “While retail prices for apples and pears have gone up, it seems the suppliers haven't benefitted from these hikes. Clearly, someone is profiting, but it's not the growers.”
Moreover, the pricing for the 2023 apple harvest is still under discussion by supermarkets, even though the harvesting season has already commenced.
The industry association also expressed concerns over remarks made by Andrew Opie, the head of food and sustainability at the British Retail Consortium, during a recent BBC Countryfile episode.
Opie mentioned, “Retailers are aware of the challenges faced by everyone in the supply chain over the past years. They aim to offer the best prices to their producers.” He further downplayed the adverse effects of supermarket practices on the supply chain, adding that they're doing their utmost to ensure a sustainable future for producers.
However, Capper refuted this, stating that consumers are already paying higher prices and that claims of retailers fully supporting UK fresh produce are misleading, especially considering the minimal increase in returns for growers.
Capper emphasised, “The current returns from supermarkets to apple growers are unjust. The future of UK apple cultivation is in jeopardy, and this needs to be addressed urgently.”
Recent BAP sales data highlighted that only Sainsbury’s and Aldi had a higher percentage of British apples in stock compared to their overall grocery market presence. In contrast, Tesco, Asda, and Morrisons had lesser stocks of British apples during the summer months.
Capper added, “If retailers genuinely aimed for a sustainable future, as claimed by Opie, we wouldn't witness farmers exiting the apple cultivation sector or reducing their future planting plans.”
Earlier in the year, BAP disclosed that about one-third of the anticipated 480,000 new tree plantations were called off by growers due to escalating expenses. Capper had previously cautioned that this could lead to a decline in orchards.