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The Friday Digest: A gloomy outlook for UK food

Rain clouds – both literal and figurative – continue to gather over the UK food and farming sector. The Guardianreported this week that crops have been affected by record levels of rainfall which has delayed plantings and is likely to produce poor-quality crops on land that has been planted. “According to the Met Office, 1,695.9mm of rain fell from October 2022 to March 2024, the highest amount for any 18-month period in England in recorded history,” the paper wrote.

In March, the National Farmers Union (NFU) warned that yields of crops such as wheat, winter barley and oilseed rape are likely to be significantly reduced this year due to the persistent wet weather experienced by large parts of the UK. The Agriculture and Horticulture Development Board (AHDB) predicted this week that the UK’s requirement for imported wheat will be historically high in 2024/25. Given that key producing countries like Germany and France have been similarly impacted by persistent heavy rainfall, a hike in market prices is inevitable. Indeed, prices of goods such as bread and other foods made using grains are already rising and are likely to rise further, according to the AHDB.

The extent to which this will impact overall levels of food price inflation remains to be seen. Inflation has been on the retreat over recent months, however prices in the foodservice sector are taking longer to come down than those in retail. The latest data from the CGA Prestige Foodservice Price Index (FPI) shows that while inflation in retail as measured by the Consumer Price Index has eased to 5%, wholesale price inflation for hospitality operators as measured by the FPI has only fallen to 12%. This means inflation in hospitality is currently 2.4 times higher than in retail.

Supermarket food inflation typically falls faster than in the hospitality sector due to big retailers’ ability to swiftly pass on reductions in energy and commodity costs to consumers, CGA and Prestige noted. Farmers might also argue that supermarkets tend to be more aggressive in squeezing every last drop of margin out of producers. The low prices they receive for their produce, alongside planned government reforms to subsidy regimes, has been a key driver of farmer protests that have spread across Europe and the UK in recent months. This in turn has put pressure on lawmakers to try to ease farmers’ discontent, including by watering down policy commitments aimed at greening the food system.

Perhaps sensing weakness, other actors have moved to try to put the brakes on what they view as undesirable environmental policies. The latest to come under pressure is the landmark European Union Deforestation Regulation (EUDR), which is designed to ensure that products linked to global deforestation (both illegal and legal) – such as beef, soy, rubber, coffee, wood, palm oil and cocoa – cannot be sold in the EU. A coalition of NGOs has hit back at a recent attempt by industry associations, third countries and even some agriculture ministers from EU Member States to delay and weaken the EUDR. In an open letter to European Commission president Ursula von der Leyen, the group that includes WWF, Greenpeace and World Animal Protection urged the EU to stand firm in implementing the new law which is set to come into force at the end of this year. “Any delay to the EUDR would put global climate and nature goals out of reach and further imperil communities on the frontline of deforestation,” said Alex Wijeratna senior director at Mighty Earth, another signatory to the letter.

There are murmurings of discontent too over the unintended consequences of UK green claims rulesThe Timesreported this week that the British Retail Consortium (BRC) has expressed concern that the Competition and Markets Authority’s (CMA) hard line approach to greenwashing risks businesses reining in their sustainability efforts. BRC chief executive Helen Dickinson said that although she recognised the need for businesses to be more transparent about their processes, there was “a real risk they will pull back and not feel confident to shout about the things they are doing well”, the paper reported.

This week’s Footprint news also features a warning from campaigners over the threat posed by the presence of ‘forever chemicals’ in fruit and vegetables; the introduction of a new methane-supressing feed additive by M&S for its dairy herd; and new research suggesting that replacing red meat with anchovies, herrings and sardines in diets could reduce the risk of death from illnesses such as heart disease.