Blog: Poor UK harvest to hit food prices

Michelle Russell | 10 October 2012

A poor UK harvest and the rising global price of grain is likely to have an impact on food prices, farmers and manufacturers have warned.

Figures published by the National Farmers Union (NFU) today (10 September) show wheat yields in the UK are below seven tonnes per hectare; down by around 14.1% on the five-year average, it said, something not seen in the country since the late 1980s.

The NFU said an "abnormally high" rainfall across the UK since early summer this year has depressed wheat yield and that without "considerable investment" by farmers in recent years, the results could have been "much worse".

"The poor UK harvest compounds a series of challenging weather events for farmers around the world, most notably drought in North America," said NFU chief combinable crops adviser Guy Gagen. "The resulting tight supplies of many feed grains have driven up the prices of agricultural commodities around the world.

"These UK harvest results will do little to alleviate the global dynamics of commodity prices, with the prospect of relatively high commodity levels through to 2013. Cereals prices impact directly on other sectors, especially pig and poultry farmers who are already struggling with higher feed costs," he added.

The world price of grain has already been rising in recent months following a heatwave in Russia and the worst drought in 50 years in the US.

Richard Dodd of the British Retail Consortium (BRC) told just-food the UK retail industry has seen upward pressures on the shop price of food.

"A lot of those are coming from rising world commodity prices and that includes wheat, which is up about 29% compared to a year ago as a result of poor harvest in this country, but also in some of the bigger wheat producing countries of the world, Canada and Russia for example.

However, he added: "At the same time, our figures for shop price food inflation show that it's been at 3.1% for each of the last three months, so shop prices for food are in no sense rocketing. That inflation rate probably will go up a bit, but all the evidence is that retail competition is protecting customers from much of the impact of those global forces."

A spokesperson for the UK's Food & Drink Federation (FDF) told just-food that manufacturers are trying to hedge these risks through forward buying, looking for alternative sources of supply and "doing what they can through efficiency" to mitigate the effects of the poor harvest.

"But we are in a situation where there is a clear upward move," the spokesperson said, adding that it will be "a tight market" for the next several months.

"Margins will be under great pressure and at some point these price rises will have to work their way through, but everyone will do all they can to mitigate that both within the manufacturing process and through the operation of a very competitive market at retail level."


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