Soaring Prices Erode Profits From Harvests

Massive price hikes in food production are causing major headaches for farmers and threatening to eat into their harvest returns.

But if the current trend persists it will be shoppers who ultimately pay the price, say the National Farmers’ Union.

Landowners could decide to throw in the towel or decide to grow fewer crops.

Lincolnshire chairman Nick Wells said the subsidies which used to support low prices and encourage production have disappeared.

If today’s farmer does not get an acceptable amount of money for producing a particular good, he doesn’t have to grow it.

Mr Wells said that even the “stabilisation tool” of the EU buying foodstuffs at low prices in times of plenty, to release when foods are in short supply, has all but disappeared.

Last year, intervention stores were empty, so when the bad weather hit, prices shot up, he said. Although farmers can ‘sell’ some crops before they are even produced to ease their costs, Mr Wells said annual swings in prices are here to stay.

“This autumn we have had another problem, rising input costs. Nitrogen fertiliser, for the last three years has been around pounds150 a tonne. This autumn we are told that because of energy costs it is nearer pounds400 a tonne.

“Typically fertiliser has risen from pounds140 a tonne to a massive pounds580. Diesel has also increased by more than 30p a litre,” added Mr Wells.

Although how much of these products are used will vary, according to crops being grown. Mr Wells said his farm costs have already jumped by about pounds60 an acre.

“We need an additional pounds25 a tonne for cereals over historic price, just to stand still,” he said. But if UK farmers ultimately do not produce enough food, he warned that it is no use people relying on non-existent cheap imports.

“Put another way, if the consumer does not accept having to pay more for food production or the supermarkets do not pass on the increased prices consumers have to pay, we will produce less – what price would food be then?” he said.

Farmers’ group Labour Machinery Resources said more farmers than ever are calling on its help to meet today’s challenges. LMR Services spokesman Ian Dawson said: “More members are trying to get more work out of their machinery, by offering it for use by other members.”

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