Fixing the food chain
Andrew Shirley
Specialising in rural and environmental issues, wealth management and luxury investments, I create compelling content that helps my clients engage with their customers and readers
Opinion
One of my readers took me to task for not including retailers in the list of culprits to blame for the shortage of certain vegetables on supermarket shelves in my opinion piece last week. He was also disappointed that I felt it was too late to get consumers to adopt a more seasonal mindset when it came to food. A fair cop on both counts. The NFU’s new growth strategy for the UK’s horticultural sector (see below) is the latest in a long line of reports (I’ve been writing about them for over 20 years) to call for a more equitable food chain; but delivering that hasn’t proved easy. Governments like cheap food because it holds back inflation – hence the current furore about food prices discussed below – and increasing farmgate prices here, without some kind of import controls, could pull in cheaper, less welfare and environmentally friendly food from overseas. Price hikes, as I write about below in the milk sector, also tend to encourage over production, which ultimately leads to downward price pressure. My correspondent’s suggestion was a more dynamic pricing model where the retail price of out-of-season food would rise based on the extra production costs involved. Whether shoppers used to relatively flat prices throughout the year would be prepared to pay more for UK-produced tomatoes in winter than summer I’m not sure, but it feels like our food chain is a bit more creaky than the government or retailers would like to admit and innovative solutions that fairly reward farmers are needed. We’d love to hear your suggestions.
Do?get in touch ?if we can help you navigate through these interesting times. You can sign up to receive this weekly update direct to your email?here
Andrew Shirley ?Head of Rural Research,?Mark Topliff , Rural Research Associate
In this week’s update:
? Commodity markets – Food prices rise, but farm-gate returns slip
? Northern Ireland – Windsor deal helps seed spud growers
? Horticulture – NFU publishes growth strategy
? Farm incomes – Defra figures paint mixed picture
? Planning – Knight Frank guide released
? Permitted development rights – More camping, solar and films
? Protected landscapes – Farm funding extended
? The Wealth Report – 2023 edition out now
? Farmland Index – Agri-land 2022’s top-performing asset
? Staff Salaries Report – Rural wages benchmarked
? On the market – Kiwi orchard up for grabs
Commodity markets
Food prices rise, but farm-gate returns slip
Fresh food price inflation hit another high last month, surging to over 16%, according to analyst NielsenIQ.
This was the highest level since the firm’s index was created in 2006. Prices were lifted by a weaker pound, which made produce imports, especially vegetables from Europe, more expensive. Kantar, another analyst, says milk and egg prices have risen by around 35% in the past three months, while butter and margarine are up 25% and 30%, respectively. However, wholesale and farmgate dairy prices are heading the other way. Dairy farmers could see cuts of up to 10p/litre in their March milk cheques compared with the beginning of the year, while Farmers Weekly reports that Cheddar prices have dropped by ￡1,000/t from their market peak. Flushed with last year’s higher prices, producers supplied 4% more milk this February compared with the same month last year.
Talking Points
Northern Ireland – Windsor deal helps seed spud growers
The Windsor Framework, agreed between PM Rishi Sunak and EU President Ursula von der Leyen last week, looks set to help Scotland’s seed potato industry if it clears the various political hurdles in front of it. The deal, designed to solve some of the unfinished Brexit issues around the border between Northern Ireland and the Republic, will make it easier to import food, vet medicine and agricultural equipment between Northern Ireland and the rest of the UK. Scottish seed potato growers had been particularly hard hit by the ban on plants and seeds.
Horticulture – NFU publishes growth strategy
Last week I touched on some of the issues facing the indoor horticultural sector that have, in part, contributed to the ongoing shortage of some foods on supermarket shelves. With impeccable timing, the NFU has just launched its own?10-point growth strategy ?to help boost the UK’s wider horticultural industry. The points include better access to labour, affordable energy, water and environmental funding, and a more equitable supply chain.
Farm incomes – Defra figures paint mixed picture
Defra’s latest forecast for farm business incomes for the year ending February 2023 make for interesting reading. Higher commodity prices have outweighed more expensive input costs for arable and dairy farms, but livestock-based businesses have seen incomes tumble. Tellingly, no forecasts have been made for the pig, poultry and horticultural sectors due to extreme price volatility and market uncertainties.
Need to know
Planning – Knight Frank guide released
The consultation on the latest proposed changes to the National Planning Policy Framework (NPPF) closed last week. Whether meaningful change to a system in desperate need of an overhaul materialises remains to be seen. In the meantime, however, our rural planning guru?Roland Brass ?has put together this?handy guide ?to the proposed changes. “Taken as a whole, the proposed changes clearly seek to simplify the plan-making process and provide LPAs with more power to set their own growth strategies. Our concern is that the current pressures might shift but they will remain in some shape or form a prominent feature of the process,” says Roland.
Permitted development rights – More camping, solar and films
A new consultation into permitted development rights for temporary campsites has just been launched. The proposals include setting a limit of 30 pitches per enterprise, but making permanent the 60-day cap for how long sites on farms or estates can open each year. Ablution and waste management services will also need to be provided.
The consultation is also proposing measures that would make it easier to install larger rooftop solar schemes on non-domestic buildings, including relaxation of some regulations in designated areas. Another proposal would allow larger blocks of land to be used with out planning permission for filming. Rules on the duration of filming and construction of temporary buildings needed for productions would also be relaxed.
Protected landscapes – Farm funding extended
Farms and estates in 10 National Parks and 34 Areas of Outstanding Natural Beauty will be able to continue to utilise the?Farming in Protected Landscapes scheme ?until March 2025, following an extension announced last week. The funding can be used to support projects that support farm profitability as well delivering for nature and local communities. Commoners or groups of commoners can also apply. For advice on grant funding please contact my colleague?Henry Clemons .
Knight Frank Research
The Wealth Report – 2023 edition is out now
Knight Frank’s leading piece of thought leadership on property and wealth trends was launched last week and includes an interview by me with one of Scotland’s pioneering rewilders, as well as some thoughts on why farmland could be one of this year’s most in-demand property investments.?Download your copy ?to find out more.
Farmland Index – Agricultural land top-performing asset in 2022
As predicted, the latest results of the?Knight Frank Farmland Index ?show that agricultural land as an investment beat inflation in 2022 and outperformed other asset classes, including mainstream house prices, luxury London house prices, the FTSE 100 share index and even gold. According to our index the average value of farmland rose by 13% over the year to hit over ￡21,000/ha, a record high. A shortage of supply and continued strong demand from a wide range of buyers underpinned the market.?Download the full report ?for more facts and figures.
You can also hear some thoughts from my colleagues and me on the outlook for property markets in 2023 in the latest edition of?Intelligence Talks , our research podcast.?
Estate Staff Salaries Survey – Rural wages benchmarked
Just a reminder that the latest edition of the?Knight Frank Estate Staff Salary Survey ?has recently been published. The report reveals the average salaries paid for a wide range of rural estate and farming roles and level of wage increases being offered by rural businesses. Also highlighted are the key employment issues facing the rural economy. Download your copy?here ?or get in touch with?Chris Terrett ?for more details.
On the market
Kiwi orchard up for grabs
The impact of Cyclone Gabrielle, which ripped through North Island , is set to make a severe dent in the food-producing capacity of New Zealand, according to our man on the ground Nick Hawken, who heads up the rural team at Knight Frank associate Bayley’s. The Hawkes Bay area was particularly hard hit, reports Nick. However, his team has still managed to launch?a fantastic 31-hectare kiwi-farming opportunity ?near ōpōtiki in the eastern Bay of Plenty. Guide price is NZ$21 million reflecting the profitability of kiwi production.
Owner at Agri-Matters Food & Farming Consultancy
1 年My sense is there's a good chunk of people (but very much the minority) who do care and have both the motivation and the financial means to access sustainably produced food. There are a growing number who are aware or are becoming aware who understand the importance and do care, but simply can't afford the higher cost of better food 100% of the time and wrestle with their conscience every time they go to the supermarket (I put myself in this bracket). Then there's a large number of people who I don't believe have really properly thought about it. I suspect they might care if they allowed themselves to think about it, but subconsciously or consciously they know that the cost of better food is prohibitive, so it's more comfortable not to think about it. Personally I think food has been grossly devalued and as a result, de-prioritised. In many ways it can be viewed as progress that food costs are no longer such a large proportion of our income as they were in the past, but with that has come a sense that it food is also less important. You only have to look at how much food is wasted to understand how people value it.
Owner at Agri-Matters Food & Farming Consultancy
1 年Thank you for hearing me Andrew. I appreciate it. I can't remember if I mentioned it in my previous response but the Sustainable Food Trust 's Global Farm Metric will go a long way to helping consumers understand both where and how their food is produced, and give them the information on which to make informed buying decisions. I feel the current system of labelling is at best, 'smoke and mirrors' and at worst, deception. Best wishes Matt