West Country-based cheesemaker Wyke Farms has warned the UK is heading for an “absolute disaster” for food supplies due to likely grain shortages this autumn.
A combination of factors including commodity price inflation, the war in Ukraine and the energy crisis had put UK grain supplies on a “knife edge” according to Wyke MD Rich Clothier. He added there was a “real danger” they could run out in the autumn – when demand traditionally grows and livestock farmers switch away from pasture to grain-based feeding systems.
Clothier claimed the food sector was now reliant on a good summer harvest of the commodity in the UK, with availability of global supplies, particularly from key producer Ukraine remaining uncertain.
But he warned that even if the UK saw a strong harvest “it might not be enough” to save hard-up businesses facing a cost of production crisis, and further expected increases in feed costs over the coming months.
As The Grocer reported earlier this week, farm input costs have risen by 46% over the past 18 months, according to feed supplier AF, with animal feed prices rising by an average of 27% over the past six months alone. And Wyke had not been immune to these challenges, with the company’s operating costs having increased by £2m per month compared with this time last year.
Without grain, many farmers would be unable to feed their livestock over the winter months, Clothier said. This could ultimately exacerbate the growing sense of crisis seen in the food sector, leading to the limited availability of many foods and increased prices of meat and dairy products, he warned.
The situation was further affected by the lack of “intervention stores” in the UK and Europe, designed to be used if staple food or grain supplies ran out, he suggested.
Clothier has called on the government to review the grain supply situation at harvest and reimplement an intervention scheme to stockpile grain for use in the event of a food shortage.
“We have taken it for granted that it won’t happen, but we don’t have those reserves in place that were there all the way from the war until the early 1990s,” he said. “There are no stocks of anything, anywhere and it makes us very vulnerable to any food shortages.”
Wyke’s increased production costs were likely just “the tip of the iceberg”, with more to come in the autumn “if the Ukraine situation is not resolved and the government doesn’t do something to act on this before it gets out of control”, Clothier added.
Wyke’s customers would ultimately have to keep paying more to cover these rising costs, but he said retailers were also struggling with the “scale of the increases” which are as high as 30% and “unheard of and unprecedented in all of our working lives”.
Clothier’s comments come following the publication of Wyke Farms’ accounts for 2021 last month.
The company saw its turnover increase from £107m to £115m for the 2021 financial year, a growth of 7.5%. Operation profit also grew by 19.8% from £4.2m to £5.1m. The key drivers for growth, according to Clothier, were exports boosted by an increased global demand for “strong cheddars coming from where they should come from, which is Somerset”, and its production of renewable energy, which it sells back to the grid.
He said it was still seeing good growth in the most recent financial year, with new product launches into new markets. However, inflation and increasing costs were a challenge for the whole industry, he added.
“The numbers look ok but at the same time there are clouds ahead,” Clothier said, referring to the challenges outlined above.
He claimed he had never seen farmers so worried about access to essential goods, a worry he shared as “farmers generally are going to run out of feed and fertiliser, and we are almost certainly heading to an energy crisis this winter”.
“We are worried about the increases we have got now but it could look like a picnic compared to what’s coming in autumn,” Clothier said.
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