The Bank of England governor has said that 'farmers were right' regarding food price inflation, as he went through the farming industry's pressing issues one by one at an NFU-hosted lecture.
Global food prices, energy costs and the link between the two was the main point made by Andrew Bailey when he addressed the Henry Plumb Memorial Lecture in London.
The governor, who was appointed to the position in 2020, noted the value he found from speaking with farmers across the UK and said: “We still have lots to learn from you.”
With Russia and Ukraine both being major producers of a number of agricultural commodities, he said the invasion had reduced global supply and increased uncertainty.
“Energy prices have had a large, indirect effect on food prices," Mr Bailey said at the annual lecture, hosted by the NFU on Monday (20 November).
"More than 1.5% of food price inflation can be attributed to higher energy costs in the food supply chain, significantly more than in other sectors of the economy.”
He spoke about how 'farmers were right' when being sceptical about food price inflation easing quickly, saying that they were continuing to face higher costs of production.
The Bank of England governor also noted that farmers have told him they’ve found it hard to find the labour they need.
On recent uncertainty within the global economy, Mr Bailey told the audience that poor weather was 'undoubtedly a factor'.
"Harvests have been poor in many of the world’s agricultural regions and strained supply chains affected the distribution of agricultural commodities and food products as well as other goods.
"In the UK a combination of heavy rainfall and droughts caused the wheat harvest to drop to the lowest level in 40 years in 2020.”
He also paid tribute to Lord Plumb who he quoted, saying for farmers to thrive they must have the “opportunity to earn a reasonable price to ensure food production in our countryside.”
Mr Bailey added that recent visit to a dairy farm in Devon was a “lightbulb moment” for him in terms of understanding the pressures farmers are facing.
He said there was “no substitute for [farmers] finding opportunities to tell your stories and give people a first-hand account”.
The governor ended by noting the value he found from speaking with farmers across the country and said: “We still have lots to learn from you.”
Responding to the lecture, NFU President Minette Batters said it remained an 'incredibly challenging time' for farmers, and the country as a whole, both economically and politically.
She said: "As the governor highlighted, inflation has been one of the biggest issues impacting the agriculture industry, with input costs increasing by 33% over the past four years.
"Energy and fertiliser have been the key drivers of these costs, which is why we’ve specifically called on the Chancellor ahead of the Autumn Statement to review long-term energy contracts and improve transparency in the market.
“Food inflation is also continuing to affect many UK households. High food inflation impacts the poorest people and it is vital that government continues to look at opportunities to reduce the causes of this inflation."
Mrs Batters noted that the majority of farmers have said that the phasing out of current farming support payments was negatively impacting their business confidence.
"To combat this and unlock a thriving food and farming industry, we need to leave behind the ‘embrace’ and ‘abandonment’ cycle of food production," she added.
"It is for all political parties now to decide whether they want to back British farmers and embrace our domestic food security with policies that value food production.”
The Lord Henry Plum lectures, who was a farmer from Warwickshire and a key NFU figure, bring together key players from the agriculture sector, to speak on and debate the latest thoughts on farming.
