Pembrokeshire is renowned for its potatoes, and Tessa Elliot is deeply passionate about cultivating them. However, she expressed that the past year has been "shocking" for farmers and consumers alike due to price hikes.
Elliot revealed that her family farm has faced almost daily increases in costs for essentials such as seed and fertilizers. Food prices in the UK have experienced the fastest rise in almost 45 years, with grocery prices surging by 19.1% in the year leading up to April.
"People are paying more for their bag of potatoes or bag of carrots, but it's not because we want more money," Tessa explained. "Our costs have risen significantly, and we are struggling to comprehend how we can even make a profit."
These cost increases have contributed to the price spiral that has burdened shoppers with exceedingly high food bills. For potato farmers, cash flow has always been a challenge, as they often have to wait over a year to receive payment for their harvested crops.
However, since the onset of the Covid-19 pandemic and Russia's invasion of Ukraine, food production costs have surged. Tessa shared that the price of fertilizer they used to pay around £290 for shot up to £900 for the same bag. Seed prices increased by £40 per tonne, and labor costs also soared.
While these cost hikes eroded farmers' profits, they also translated into higher expenses for consumers, with food prices escalating by nearly a fifth between April 2022 and April this year.
The Competitions and Markets Authority is currently investigating supermarkets over allegations of high food and fuel prices, with concerns that customers may be overpaying. Supermarkets, however, assert that they are working to keep prices as low as possible.
Matthew Hunt, who manages Filco, an independent supermarket chain in Wales, explained that the current situation is a perfect storm, with cost increases coming from multiple directions, including fuel, labor, and energy. He stated that his company is not passing on the full cost increases to customers but acknowledges the need to find ways to reduce operational costs.
While energy prices have declined significantly in recent months, it remains uncertain how much they will impact a substantial slowdown in food price rises. James Walton, the chief economist at the grocery industry organization the IGD, suggests that food price inflation has likely peaked but warns that major price reductions may not be imminent.
"We expect food prices to stabilize rather than witness significant reductions," Walton explained. "Many of the factors driving food prices remain largely unchanged. The conflict in Ukraine persists, Russia continues to face limitations in major food markets, shortages persist, and wage costs remain stubbornly high."
