On Tuesday 9th January 2024, executive chair of BAPL, Ali Capper gave evidence to the EFRA (Environment, Food and Rural Affairs) Committee on Fairness in the Food Supply Chain.
Watch the EFRA Select Committee recording
Ali reminded the committee that over the last two years, growers have faced a 30% increase in the cost of production. At the same time, returns to farmers have averaged just 8%.
Fundamentally, there’s a big gap between the increases in costs facing growers and what they are receiving back from supermarkets.
Negotiating with supermarkets
Ali provided insights into the annual contract negotiations between top fruit growers and the major supermarkets. She explained it’s very difficult to go back into a retailer to negotiate for increases once a contract has been signed, yet top fruit growing faces short-term cost challenges and long-term investment decisions.
“Ordering apple and pear trees this year, they will arrive in two years, and they’ll be in full production in six years.” Ali Capper explained. “Given the current economic situation and the nature of supermarket contracts, you need a crystal ball to operate effectively in that kind of time frame.
“With supermarkets, you’re talking about an annual negotiation. Almost all supermarkets will want a fixed price for the season – the whole 12 months. Most of the retailers used to come to us in June or July, when we knew what we had on the trees and there would be a negotiation.
“Now, half of the retailers are trying to negotiate in February, when we’ve got no idea what we’ve got. And the other half are pushing the negotiations into August or September. In the case of the start of season 2023, one retailer even pushed negotiations into the middle of October. Most of the crop is harvested and in store by then.
“Can you imagine the emotional stress to the farmer who has harvested his crop and still hasn’t got a price agreed? You can see where the balance of power sits and it isn’t with the grower.”
Changing the cheap food policy
Ali clearly explained to the Committee: “We have a cheap food policy in this country and that policy is driving out British food producers. We have to start championing what we produce at home and accepting that it might not be the cheapest.
“We have to get real. We need to look at the climate change maps. The UK is in a good place to grow food going forward. Why are we not investing in that? Let’s aim to grow food production in the UK by 30%.”
Six recommendations for EFRA Select Committee
On behalf of BAPL, Ali Capper put six clear recommendations in front of the EFRA Select Committee:
- To immediately write to the CEO of every major retailer to call for recognition of farm input inflation and fair pricing. In addition, the committee should demand long-term multi-year contracts between retailers and growers that enable farmers to make a profit and reinvest in their orchards and pack houses.
- To impose the fair dealing clause from the Agricultural Act. The contract obligations around pricing mechanisms are particularly important. BAPL offered to help the government with a framework for each crop sector to ensure that the fair dealing clause works.
- To remove the cap on seasonal workers and to make the Seasonal Workers Scheme a 5-year scheme.
- To include commercial horticulture in the ETII (Energy and Trade Intensive Industries) scheme now to protect growers from future potential hikes in energy prices.
- To ensure that future carbon border adjustments are developed to include food. This would mean that British growers are not competing with cheap imports with a much higher carbon and water footprint, while being targeted to reduce their footprints here.
- To ensure that ELMs (Environmental Land Management) work with food production, not instead of it. For example, recognising the value to the environment of orchards and steps like planting wildflowers between rows of fruit trees.
You can hear more from Ali Capper at the EFRA Committee via this recording.
