Soaring energy costs continue to threaten farming businesses, the NFU has warned.
The farming union said the cost of energy and standing charges on non-domestic electricity bills had added “huge inflationary pressures in the supply chain”, putting the viability of farming businesses at risk.
The ongoing volatility in energy markets, increased labour costs and climate change, have increased costs to farmers in recent years and show no signs of slowing down.
The NFU’s statement followed a letter sent by its president, Tom Bradshaw, to Ofgem on 20 October calling for a “fairer” approach to energy costs as the current system bases standing charges on a business’ peak energy use.
According to the NFU, seasonal users, such as farms running grain dryers or growers using refrigeration for only part of the year, end up paying high charges all year round.
“We’re hearing from many concerned farmers and growers that this is threatening their businesses,” said Bradshaw. “And in some cases, pushing them to the brink of closure.”
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“Production costs are high across the economy and have been for some time,” he added. ”But there’s a fairer way to approach the current standing charge model, one that would allow businesses to reinvest, improving efficiency and resilience.”
The NFU has called for Ofgem to introduce a High Capacity Usage, Low Utilisation scheme that would “reduce capacity charges for occasional high power users”.
Bradshaw added: “Ofgem has already recognised that ‘a more enduring and strategic approach to standing charges and affordability’ is needed. We agree.”
Ofgem has been approached for comment.
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