Warning to market comes ahead of the introduction of new measures announced in October’s Budget
UK growers have called on the market to fund the additional costs resulting from the increases in the National Living Wage and employers’ National Insurance contributions.
The call for increased returns came from trade body British Growers, which pointed out that in recent years the industry has done a remarkable job in managing production costs and improving efficiency, which it said “has delivered fantastic value for consumers”.
However, it warned that managing costs and improving efficiency can only go so far in the face of rising production costs. In 2022 and 2023, it noted, growers absorbed significant increases in the cost of production due to rising energy and other input costs.
The increase in employment costs announced in the October Budget is expected to push up production costs by a further 10-12 per cent.
“Employment costs in fresh produce businesses represent a disproportionately high percentage of overall production costs,” said British Growers chief executive John Walgate. “For some crops, it can be as much as 60 per cent of the total cost of production.
“Growers are concerned about a disconnect in the messaging from the marketplace and a failure to understand the material effect of the increased labour costs on the primary production sector, despite a recognition that their own internal costs are rising for a similar reason.”
Many businesses have pulled out of planned investment because of low returns, Walgate added. “The expectations on growers are changing all the time with ever-higher requirements to meet consumer demands.
“Meeting these demands requires investment which for too long has been on hold due to low returns. The market has to recognise that all parts of the supply chain need to see a return on investment to ensure the UK has a viable and well-invested fresh produce industry for the future.”
