The war in Ukraine and climate extremes have contributed to well-documented food shortages across British supermarkets. Consumers have been met with rationing and unavailability when trying to purchase fresh produce such as tomatoes, cucumbers, peppers and lettuce. Consumers’ struggles don’t end there since food inflation is at a 45-year high, with grocery prices 16.7% higher than last year.
Our team in Penta Group has in-depth subject matter expertise and campaigning experience across agri-food, sustainability and energy to advise clients during this increasingly volatile and uncertain time for food production.
Prices are rising fastest in markets such as milk, eggs and margarine. Since late last year, many of the country’s leading supermarkets have rationed sales of eggs blaming bird flu. Whereas producers attribute the shortages to the new era of costly energy and grains combined with labour shortages. They claim that the cost of production will continue to outstrip their incomes unless they are paid more.
Given the prevailing economic situation, British producers have delayed planting crops in the hope that energy and fertiliser costs decrease. This shut down in production had an immediate impact on crops such as tomatoes which are seasonal and require specific climatic conditions. Russia’s war in Ukraine and the subsequent sanctions have instantly cut off global markets from Russian and Ukrainian nitrogen and potash fertilisers. We are starting to see the easing of the great pressure which dominated energy markets the past 18 months. Wholesale energy prices are falling back to pre-invasion prices, and this will eventually be passed on to consumers since energy firms hedge by buying gas and electricity well in advance.
Penta Group is well positioned to support producer groups or retailers as they cope with the ongoing uncertainty in the energy markets and engage with key stakeholders.
Extreme weather in Spain and North Africa has severely disrupted supply chains. An unseasonably warm Spanish autumn reduced planting. On the other hand, production in Morocco and north Africa has been hit by a glut of rainfall and a virus called tomato brown rugose virus. These extraordinary environmental conditions are also replicated in the UK. The unnatural heatwave and drought of last summer has played into the hands of vineyards based in Kent but to the detriment of livestock and cereal farmers. While the UK can mimic atmospheric conditions to grow fruit and vegetables in greenhouses it is not immune from climate change on the pastures or in the furrows.
British producers will have to adapt their production methods by implementing technological solutions to cope with these extraordinary climatic conditions. The government will have to provide regulatory and fiscal support to enable this transition. Penta Group can advise producers as they navigate this evolving environment.
UK supermarkets often have a fixed price contract, while in other jurisdictions there can regularly be a tendency to have a variable price contract. This leaves UK retailers hamstrung when faced with product scarcity. While inconvenient for consumers and the hospitality sector, these shortages should cause concern for Britons. Their food system is heavily influenced by climate change and the energy markets. Such a realisation underscores the salience of food security to national security. Penta Group has the capability to support UK retailers monitoring this policy space, in influencing key stakeholders and raising awareness among the public of just how critical a threat these food shortages pose to Britain’s long-term food security.
If your business or industry body is affected by these issues, please reach out to us to learn more about how we can support your team.