How a crisis in British farming sent shopping bills spiralling

Producers faced with surging costs are forced to pass the inflation onto consumers, report Szu Ping Chan and Eir Nolsøe

It’s been a tough year for Sam Mitchell. From a trebling in energy bills to a series of bird flu outbreaks, his family farm near Great Yarmouth has faced a series of shocks.

The current bout of avian flu means the 32,000 birds that call the Cluckery in Norfolk their home are confined to their barns for the foreseeable future.

Birds used to roaming freely in 40 acres of green pastures have to be content with lucerne meal and hay bales to satisfy their pecking instincts. It’s a full-time job.

“They’d normally roam around eating worms,” Mitchell says. “Now they’re indoors, we even have baby xylophones so they can peck them and make a tune. Our job right now is to keep them alive, and keep them happy.”

His priority is ensuring the hens survive this winter. But he’s also juggling mounting costs.

Prices at the checkout are already soaring. Food prices rose by 16.5pc in the year to October in the biggest jump in grocery bills since 1977.

Many everyday essentials have become much more expensive. Two pints of semi-skimmed milk from Tesco now cost £1.30, up from £0.80 a year ago, an increase of 63pc. A 400g block of cheddar has gone up by 50pc from £2 to £3. Prices of milk, cheese, pasta, eggs and oils are among the biggest risers.

The “three Fs” – feed, fuel and fertiliser – have all contributed to the food price spiral as Russia’s war in Ukraine pushes up costs.

Mitchell keeps a running total close to hand. The pellets he buys when the hens are 16 weeks old now cost £1 per bird more. This, he says, translates to 3.7 pence in extra costs for every dozen eggs he sells. Feed has gone up by around £70 per tonne , which has added 14p to every box. Electricity costs have climbed from 1.5 pence per dozen to 7.5p. Supermarkets have not compensated him for this. Mitchell says economies of scale and the modern design of his barns meant he was able to absorb some of the costs better than smaller rivals, many of whom decided against keeping hens after supermarkets refused to spend more on British eggs.

“We warned supermarkets at the start of the year that there was going to be a shortage of eggs,” he says. “Electricity has gone up, feed has gone up. And you know it’s all providing a disincentive to restock our sheds.”

John Allen, founder of Kite Consulting, which specialises in the dairy sector, says milk prices have climbed more sharply as retailers realised that higher prices were needed in order to maintain supply.

“I’ve just been talking to a cheese maker that’s just lost a contract, but they’re not crying about it because retailers also recognise that there are other consumers around the world who are willing to pay,” he says.

Allen believes milk prices will stabilise at around £1.60 for four pints.

Mitchell says his ability to cut costs to protect margins is limited.

“I can’t cut the electricity,” he says. “I have to give them high-quality feed because if I change it the hens will notice and will stop laying eggs.”

Such challenges are being felt by all types of farmers, all across Britain.

Just under half of the food on our plates is produced in the UK, according to official data. This includes most grains, meat, dairy and eggs, and has been broadly unchanged for the past 20 years. But producers such as pig farmers and vegetable growers say their businesses are increasingly under threat, warning that the UK will soon be forced to rely on imported foods. In addition to soaring energy costs and input prices, many farms struggle with labour shortages.

Derek Wilkinson, who manages farms in Warwickshire, Worcestershire and Kent, said growing vegetables in the UK seems increasingly unviable. He cannot get enough people to pick his crops because of a lack of seasonal migrant workers. “We lost a quarter million pounds worth of spring onions and asparagus in May. It’s heartbreaking,” Wilkinson says. As there were no workers, the vegetables were chopped down and thrown away.

“The knock-on effects of that, combined with inflation, is making producing field vegetables look a lot less attractive.”

Wilkinson fears that there won’t be

‘Electricity has gone up, feed has gone up. And you know it’s all providing a disincentive to restock our sheds’

‘If you’re talking about flour milling, after grain, electricity is the next biggest cost’

enough hands to pick his crops next year either, unless the Government loosens immigration quotas and improves the system. The uncertainty has made investing in the business much less feasible, he says.

Pig farmers were also forced to cull animals from a lack of staff over the summer. Feeding them has become more expensive too. Cereals such as oats, barley and wheat all went up by 50pc in the year to August, UK government data show.

Andrea Tranter, of the British National Pig Association, says that farmers are losing £26 to £28 for every pig they sell and have been making losses for the past two years.

“We’re already seeing producers basically going out of business and have been for some time,” she says.

The rising costs of cereals also impacts households in other ways. Wheat is used in around a third of grocery items on supermarket shelves – ranging from bread and biscuits to sausages and sauces.

While 80-85pc of the wheat used in the UK is homegrown, this does not make it cheaper for consumers.

“If you’re talking about flour milling … after grain, electricity is the next biggest cost. Baking is obviously dependent on heat and electricity,” says Alex Waugh, director of UK Flour Millers. “On top of which you’ve got the rising wages and cost of transport oils. All these things have come together at one time. Even though we might be mostly using British wheat, it’s priced on a global basis.”

For now, consumers will have to continue to dig deeper into their pockets to afford eggs, cheese and bread.

Meanwhile, Mitchell and other farmers can only cling on and hope for the best.