Why food should be more expensive

He wants food prices doubled, because currently farmers are “working seven days a week with their arm up a cow’s bottom for nothing”.

If you are a consumer, with food inflation at 14.6% per annum, you doubtless wish that Jeremy Clarkson would shut up. If you are a farmer, with input inflation running at anything up to 400%, in the case of electricity, you applaud him for articulating a truth usually only whispered behind closed barn doors. Food is too cheap.

In the Fifties, about a third of an average household’s budget went on food; now, it’s about a tenth. What’s the cost of this cheapening? Well, aside from the ruin of the farmed environment by relentless exploitation, food has been devalued: we now throw a third of it away. Moreover, farmers now “work for nothing” — or thereabouts. A report last December revealed that cereal farmers receive, on average, 9p from an 800g loaf with a retail price of £1.14. When the cost of growing and harvest is calculated, the cereal farmer is making a 0.09p profit.

The report analysed other everyday foods, including apples, cheese, beef burgers and carrots. In every case, the farmers or growers received less than 1% of the profit after the deductions of intermediaries and retailers. In some sectors of farming there is merely pure loss. For much of 2022, pig farmers were losing £60 for every animal they offered up to consumers. By Christmas, free-range egg producers were losing nearly 30p on every dozen they supplied.

Welcome, then, to the mad world of British farm economics, where cost of production is skyrocketing but the amount a farmer gets paid for his or her goods is risible. A mad world, where farmers subsist on subsidy — which, over the past few decades, has made up over half of the average farm income — and diversification. Alas, most farmers do not have an Amazon Prime contract, so the usual diversification is a farmhouse B&B — at best a modest and seasonal income stream. When all the numbers were run through Defra’s calculator, it found that the agricultural part of the average British farm business made £5,600 profit in 2022.

For this £5,600, the British farmer works an average of 65 hours a week. Many in livestock farming work in excess of 100 hours a week, every week, whatever the weather. You can’t take a break or even be ill: the livestock depend on you like kids do. So you end up forking hay to Margot the 550kg heifer, despite your broken ribs. The same Margot accidentally gave you those broken ribs.

Unsurprisingly, given the long, hard hours for the short money, farmers are flocking out of the industry, or cutting back on production. One third of members of the British Free Range Egg Producers Association say they have either reduced their number of hens, paused production, or left poultry farming completely. As for dairy farmers, the nation is running dry. Between 2020 and 2022, the number of dairy farms dropped from 11,900 to 7,880. In 1950, there were 196,000 dairy farms in the UK.

So now you know why so many in British farming think Clarkson is doing more for the industry than three decades of Countryfile ever did. He has told the truth that none of us dared speak, in the middle of this cost-of-living crisis: food prices need to go up. And if you listen very closely at the barn door, you might hear some pertinent rhetorical questions. Why can’t the great British public perhaps spend a bit less on their iPhone or their foreign holiday, and a bit more on their daily bread? But Clarkson is correct: you can’t say things like this to the media. Even if you are a farmer with an Alcatel 1B, who hasn’t had a foreign holiday for years and works for less than the National Minimum Wage. You’d be trolled to death.

Where Clarksonian economics are unfortunately reminiscent of Trussian economics is in the optimistic assumption that any mark-up in the shop price will trickle back to the farmer. Grocery retail in the UK is dominated by supermarkets, which take over 95% of consumer spending on food. That retail is in turn dominated by the “big four” of Tesco, Sainsbury’s, Asda and Morrisons (although discounter Aldi is now perhaps pipping Morrisons to fourth place). These super supermarkets are making super profits, despite inflation and the cost-of-living crisis: Sainsbury’s is expecting £690 million this financial year, while Tesco expects retail-adjusted operating profit in its 2022-23 financial year to be £2.4-2.5 billion.

Since the opening of the first supermarket in Britain — a Co-op in Manor Park in 1948 — the supermarket business model of pile high, sell cheap has involved squeezing supplier price until it starts to hurt. That is where the eye-watering profits come from. It is as simple as that. Someone pays for the supermarket “price war”, and it’s almost always the farmer. That benevolent two-for-one offer on punnets of strawberries? Behind the label are thousands of farmers who signed a contract to deliver strawberries without a price being set.

Supermarkets are failing farmers in ways not limited to the paltry remittance. Everybody in farming who has dealt with one — or worse, with the intermediary, the producer organisation — has stories about orders being cancelled without justification or notice, about a cheaper foreign source being found, about the arbitrary rejection of fruit and veg for lacking the correct aesthetic. One arable farmer responding to a Feedback survey on the role supermarkets play in crop waste estimated that 1,750 tonnes of his annual carrot crop are refused by the packhouse, because the carrots are too small, too big, too crooked. Another endless irritation is the supermarket’s restrictive contractual stipulation that packaging is done by companies nominated by them, at twice the cost of the same service on the open market.

Yet another beef is the supermarket’s habit of foisting all risk onto the farmer. If a supermarket over-orders, guess who picks up the bill? When a cauliflower glut occurred in 2017, Geoff Philpott’s buyer dramatically reduced their order, leaving him with 100,000 vegetables to plough back into the Kentish ground. Something like this happens every day in British agriculture. According to a 2017 survey by the Groceries Code Adjudicator — the ombudsman created by Parliament to bring some fairness to the supermarket-supplier relationship — in 20% of cancellations, the farmer receives no compensation from the supermarket.

Large farm enterprises may be able to weather the vicissitudes of supplying supermarkets, but smaller enterprises fare less well. The Council for the protection of Rural England cites the “inequality of power” between supermarkets and suppliers is blamed for driving small and medium-scale agricultural holdings out of business; the number of farm holdings in England alone fell from 132,400 in 2005 to 104,200 in 2015, according to Defra data, a loss of over a fifth of all farms in just ten years. Cheap food, Prince Charles warned in a Radio 4 essay last year, threatens the survival of the country’s smaller farms — and if they go, it will “break the backbone of Britain’s rural communities”. Small farms preserve the identity of regions, and offer employment in places with few job opportunities. They are part of their community in a way that mega agri-industrial enterprises are not, and never will be. And they also tend to be associated with biodiversity and landscape protection.

Yet the supermarkets insist they are the friends of farmers. Aldi and Lidl are currently love-bombing us, with the chief executive of the latter’s GB branch, Ryan McDonnell, saying last week that the company would be spending £2 billion more than planned on “buying British” in the coming year. Aldi has pledged to spend an extra £3.5 billion a year with UK suppliers by the end of 2025. Alas, British farmers have heard such wooing noises before — in 2022, Asda pledged to buy only British beef for its fresh meat counters, only to drop the commitment last month. And Lidl are encumbered by their record: last year they ranked the worst of any major retailer in the 2022 Groceries Code Adjudicator survey, with less than a third of suppliers saying the company consistently complied with the Groceries Supply Code of Practice — the legislation introduced in 2010 precisely to protect food and suppliers to the 14 major supermarkets.

Farmers tend not to complain to their supermarket or the dreaded middle man, for fear of retribution. Tesco has nearly 30% of the UK pork market, so if you piss them off, finding another outlet is far from easy. “What I’m concerned about is that most farmers and growers are incredibly nervous about speaking up,” Minette Batters, president of the National Farmers’ Union, told the Telegraph last week, when asked about the supermarkets’ hardball practices. “They know that the dangers of having their products delisted are enormous.”

Farmers may not wish to speak up in public, but in the privacy of their own homes, 500 of them filled in a survey for Sustain’s Beyond the Farmgate report. Just 5% preferred to sell to supermarkets. Overwhelmingly, farmers wanted localised selling, via independent retailers, box schemes, and the farm gate. This would put more in their pocket, as well as supporting climate change and nature objectives. For farmers as for consumers, every little helps.