Agriculture: Costs

Department for Environment, Food and Rural Affairs written question – answered on 17th June 2022.

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Photo of Daniel Zeichner Daniel Zeichner Shadow Minister (Environment, Food and Rural Affairs)

To ask the Secretary of State for Environment, Food and Rural Affairs, what assessment his Department has made of the potential impact of increases in the cost of (a) animal feed, (b) fertilisers and (c) fuel on (i) the agricultural sector and (ii) food prices.

Photo of Victoria Prentis Victoria Prentis The Minister of State, Department for Environment, Food and Rural Affairs

The turbulence of the market in light of the invasion of Ukraine, and the global spike in oil and gas prices, has brought into focus again the importance of a resilient global supply chain and the importance to our national resilience of having strong domestic food production. In the UK, we have a high degree of food security. We are largely self-sufficient in cereal production, growing 88% of all the cereals that we need. We are 86% self-sufficient in beef and fully self-sufficient in liquid milk, and we produce more lamb than we consume. We are also close to 100% self-sufficient in poultry. Sectors such as soft fruit have seen a trend towards greater self-sufficiency in recent years because of the extended UK season.

Farmers are however facing increased input costs including for fertiliser, feed and fuel. I have already set out measures to support farmers and growers in England ahead of the coming growing season. Those measures are not a silver bullet, but they will help farmers to manage some of their input costs from fertilisers. We continue to keep the market situation under review through the UK Agriculture Market Monitoring Group, which monitors UK agricultural markets including price, supply, inputs, trade and recent developments. We have also increased our engagement with industry to supplement our analysis with real time intelligence.

As a result of those rising input costs, there are of course also some pressures on households, predominantly as a result of energy costs. There have also been some rises in food prices in recent months, although the ferocity of retail competition means that price pressures have been contained on certain product lines.

In March, overall food prices rose by 0.2%; the price of fruit actually fell in March by 1.2%. In April, however, food prices rose by 1.5%, which is a faster rise than we have seen in some years. If we look at the price of specific categories of food, in April, bread and cereals rose by 2.2%; sugar, jams and syrups rose by 2%; fish rose by 2%; meat rose by 1.9%; vegetables, including potatoes, rose at a lower level of 1.3%; fruit remained broadly stable; and oils and fats decreased slightly by 1.1%.

The single most important measure of household food security and the affordability of food remains the household food survey that the Department for Environment, Food and Rural Affairs has run for many decades. That shows that, among the poorest 20% of households, the amount spent on food consumption was relatively stable at around 16% of household income between 2008 and 2016. It then fell slightly to 14.5%, but with the recent price pressures, we can expect it to return to those higher levels of around 16% in the year ahead.

We are monitoring the situation. The Government have put in place an unprecedented package of support to help those who need it. That includes targeted cost of living support for households most in need through the household support fund, where the Government are providing an additional £500 million to help households with the cost of essentials.

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