Growers in the horticultural sector are shelving plans to expand their businesses due to a third year of soaring costs of production, a report has warned.
High costs over the past few years has meant that some of the UK’s leading horticulture businesses are thinking about cutting production.
Commissioned by the NFU, the report by Promar International, released today (3 January), found that production costs have risen by 39%.
Key inputs including energy costs rising by 218%, fertiliser by 47% and labour costs by 24% are shown to be behind the hike.
Crops impacted most by these increases include much of the UK’s favourite fruit and vegetables such as strawberries, tomatoes, apples and lettuce.
The report also warned these production costs, along with the impacts of the ongoing global volatility, are seen as the ‘new normal’ and businesses aren’t expecting the situation to change any time soon.
It follows a recent House of Lords report which said the future of the sector 'looks bleak' without urgent steps to safeguard its future.
NFU horticulture and potatoes board chair, Martin Emmett said he was 'seriously concerned' to hear from growers that they were thinking about cutting production.
He warned: "They continue to face uncertainty with costs, uncertainty around a long-term plan for where their workforce will come from and increasingly challenging relationships within their supply chain.
“We are now facing the third year of unprecedented and highly volatile costs of production, coupled with ongoing uncertainty about the availability of permanent and seasonal workforce and supply chains that return little value back to growers.
“As highlighted in the report, there is likely to be further consolidation in production and distribution. If pressures continue as they are, it will be unsustainable for some businesses."
As the NFU set out in the sector's growth strategy in March last year, there are ten key points which the union said would help underpin the success of UK horticulture.
These include sustainable energy supplies, access to skilled labour, productivity investment, supply chain fairness and a range of other critical support necessary to create growth in the sector.
Mr Emmett warned that many businesses were continuing to face difficult customer relationships with prolonged contract negotiations.
"Contract planning cycles are out of sync with production cycles, making it tough for growers to plan long-term for their businesses," he said, "This needs to change".
“To ensure we have a thriving UK horticulture sector, we need to see the government back our fruit and vegetable growers with action and ambition as it set out in its own Food Strategy and match our ambition for growth.
"It is crazy to think that, at a time when we want people to eat more healthily, we are only 50% self-sufficient in vegetables and 15% self-sufficient in fruit."
