IN its recent “Project Reset” report, Kite Consulting gave a stark warning that without upward movement in consumer prices for food, we risk the collapse of UK food supply chains. Focusing primarily on the dairy sector, the report identifies that cost price inflation is a major factor across the supply chain. Over the past year there have been sharp increases in the cost of feed, fuel, energy, labour and fertiliser at farm level whilst processors are seeing increased costs on energy, transport, labour, packaging, warehousing and distribution. Kite points out that this is not unique to dairy - other sectors are seeing similar pressures too. However, consumer facing food retail and food service businesses appear reluctant to want to pass on the additional costs to consumers. What this report makes clear, is that position is not sustainable in the short-term let alone the long term and attitudes need to change.

It is widely acknowledged that the UK market in food is characterised by relatively low consumer prices backed, until recently, by efficient supply chains. Down the years, there have been warnings about the sustainability of the “cheap food culture” to which we have become accustomed and it seems now, almost all of a sudden, we are seeing the fulfilment of those past prophecies of doom. However, retailers and food service providers have the means to avoid a catastrophe by allowing their prices to increase. If ever there was a time for supply chains to operate collegiately, it is now.

For years, the farming industry has bemoaned the extent to which processors and retailers have been able to maintain their margins by forcing farmers to accept reduced prices. Whilst the Groceries Code Adjudicator has achieved some success in reforming relationships in the context of direct supply contracts, the one area that it is not entrusted to look at is price. In 2020, the UK Parliament enacted new supply chain measures as part of the Agriculture Act, but as yet, there has been next to no use made of those provisions to correct for the market failures clearly existing within supply chains.

Retailers and food service should see it as their duty to act responsibly in the long-term interest of their consumers. Over a million signed a petition supporting British agriculture and the standards to which it operates. Farmers, processors, retailers and food service must see the collective priority to maintain the sustainability of the UK food supply system and at this time, it is retailers and food service that need to move.

The Food and Drink Federation has recently stated that the days when UK shoppers could expect to pick up nearly whatever they want whenever they want from supermarket shelves are over. That is a clear warning that things need to change and change on a permanent basis. Kite refers to the need to find a “new normal” which is a great way of describing what needs to happen. Like never before, food needs to be valued for what it is. The private benefit it derives in terms of taste, calories, nutrition coupled with the wider public benefits of high standards of animal welfare, environmental management and carbon efficiency need to be properly and adequately reflected in the price we pay at the tills for the food that we eat.