British farmers have a chance to benefit


Carmen Suarez NFU chief economist Sir; Setting the record straight and correcting some of the most common misconceptions about food prices is vital for a farming community that is feeling the effects of years of a cheap food culture. Farmers know all too well that, despite being part of the same supply chain, increases in retail prices and in wholesale prices do not necessarily result in a hike in the prices paid to farmers. In the past 20 years, food retail prices have increased by more than 50%, while farmgate prices have stagnated. Similarly, the impact of hikes in commodity or wholesale prices on farmgate prices is far from immediate or proportional. In the past 20 years, food has become 20% cheaper in real terms. Food is more affordable than ever. Sixty years ago, the average British family spent more than one third of its income on food. This has dropped to less than one tenth. As retail food prices have not kept up with the cost of living, and farmgate prices have failed to keep up with retail food prices, farmgate prices have continued to decline in real terms. In fact, if they had grown at the same rate as the general cost of living during the past 100 years, farmgate prices would, on average, be four times higher than current levels. Recent increases in commodity prices are a reflection of global demand and supply conditions, and represent an opportunity for British farmers to benefit from a long-awaited, and long overdue, recovery in farmgate prices. Commodity price increases do not represent the threat to consumers, to the economy or to developing countries that some have been all too keen to depict. And, to the extent that they translate to higher farmgate prices, they will be good news not only for British farmers but also for the rural economy.