In the week that an Efra committee report claimed seasonal labour shortages represented an existential threat to UK food and farming, crippling energy price hikes may just prove the final straw, growers are warning, with these and other inflationary pressures driving them to plant fewer crops.
At least 50% of the Lea Valley Growers Association’s members had already decided not to plant in their greenhouses this year due to rising heating costs, it has emerged.
The LVGA grows 500 million cucumbers, peppers and aubergines each year across sites in England, and is responsible for three-quarters of the UK’s cucumber crop.
But according to secretary Lee Stiles, rocketing gas prices, alongside other inflationary pressures, left many growers unable to heat their glasshouses – a move that would mean much lower yields this year.
“As the retailer is not prepared to pay for the increased cost of production, it makes more financial sense to leave the glasshouse empty than to plant in it,” he said.
“The cucumber guys could plant within three weeks but half of them don’t have the confidence to do it at the moment, and the other half are simply gambling that the weather is going to turn and they are not going to have to put as much gas in,” he added.
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Heating costs have increased at least 20-fold since the war in Ukraine broke out. In January 2021, gas prices stood at 35p per therm according to the association. Now the price varies between £2 and £6 per therm, with some reaching as high as £8 per therm.
“They used to be able to fix the price for anything up to 12 months but they can’t fix the price for even a month at the moment so it is too much of a risk to take on,” said Stiles.
Some glasshouse growers, in a process called CHP, buy gas and convert it into electricity, which they sell back to the market and use the heat byproduct to heat their glasshouses.
“If you have got CHP, while the price of gas and the price of electricity sold back to the grid don’t always match up, you have a degree of protection,” said Ali Capper, chair of the NFU horticulture and potatoes board.
“You are mitigating the risk. But if you don’t have CHP and you are just buying gas to heat a glasshouse, the current pricing means you just can’t do it.”
Coupled with ongoing uncertainty around labour and soaring fertiliser costs, “a whole chunk of people” in the produce sector would soon stop growing produce due to financial difficulties resulting from soaring costs, said British Growers Association CEO Jack Ward. “Every week it gets more serious and more stressful.”
Fresh Produce Consortium CEO Nigel Jenney added growers were already reflecting “on what to do in the next 12 months. Unless the government is proactive in explaining what it is going to do [to help], the industry will make its decision in its own right – which will impact on food supply.”
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Greenhouses must be kept at 20 degrees celsius to stop crops from failing. Most growers use natural gas, and while renewable options are available, Stiles stated they were too expensive for the average grower to invest in. The government previously provided support for growers to switch to renewable sources, but that support had now been scrapped, he added.
The association, which is responsible for 400 acres of glasshouses across England, has asked government for state aid and a subsidy on the gas price so their growers can grow. Without this support, Stiles added there would be a “massive impact on British produce on the shelves this year”.
The warning comes as NFU president Minette Batters reiterated her calls for the government to act as a “matter of urgency” amid what she described as a contraction of British food production. In an interview with BBC Radio 4’s Today programme this week, she warned the threat was not just to British produce but to supply as a whole.
“We cannot afford to see a double-digit contraction by farmers just producing less. We’re really pleased Defra has pulled together a market management core group, but we need the full cost analysis from farm to fork on gas use and then government will have to decide how it supports that.
“The worry is not so much cheaper imports as availability. We’ve already got a situation where the Netherlands has said it won’t be exporting cucumbers. We know the protected crop sector is a very successful one but we also know those glasshouses are being mothballed.
“There is possibly an opportunity the government would have to intervene in the gas market to keep growers and farmers producing the same, and in some areas producing more. It’s about availability, and planning for 2023, so people have access to all the foods we want.”
Jenney added that support from customers was just as important as government help however. “Something needs to give and give urgently, as businesses are now making urgent decisions which will have a long-term impact in terms of food availability.
“I would hope that consumers understand we are actually talking in percentage terms and that sounds a great deal of money, but when you look at the great value fresh produce offers is a modest increase in individual costs of some items.”
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