With the entire UK state fraying at the seams, surging energy prices, war in Europe and heatwaves have exacerbated worries about the country’s long-term food security

  • BRC warns that the UK is facing its biggest challenge to the food supply chain since the financial crash
  • Grocers are “very nervous” but also believe the sector has the resilience to get through current challenges
  • Retailers and suppliers looking internationally to fill vacancies, such as recruiting butchers from Asia
  • National Farmers Union says food production and security should have the same legal footing as net-zero targets
  • Former grocery boss warns “the days of cheap food are over”, as food becomes less efficient and more expensive to produce

Figures from the Department for Environment, Food and Rural Affairs (Defra) show the UK imported 46% of the total food it consumed in 2021. The country’s food production is far from self-sufficient, leaving it exposed to current conditions. 

Grocery retailers are grappling to navigate the fallout from Russia’s invasion of Ukraine, the unfolding climate crisis and surging inflation leading to a collapse in living standards not seen since the 1950s – all at a time when a rudderless government is in danger of tearing itself apart in a leadership contest.

Such factors have combined to fuel concerns surrounding the long-term resilience of the UK’s food system – concerns that prompted Defra to launch a parliamentary committee inquiry into food security. 

“Our food producers are facing extremely challenging times – with rising energy and fertiliser prices as well as the war in Ukraine. These pressures are now also being felt by consumers,” says committee chair Sir Robert Goodwill.

“The government is not responsible for all the problems facing food supply chains but it is essential it does all it can to help manage these pressures as it implements its new food strategy.”

While the issues are manifold, they effectively boil down to four key areas: a shortage of labour; the reliance on the relatively small-scale production of key products such as CO²; being at the whim of global markets; and a government lacking imaginative long-term solutions.  

“We’re facing the biggest challenge to the food supply chain since 2008/09”

Andrew Opie, British Retail Consortium

“It’s not about suddenly running out of food. We’re a rich economy and we will always have some food,” insists the British Retail Consortium’s director of food and sustainability, Andrew Opie. “This is about the resilience of our food producers and supply chains in providing customers with the availability of food to the right standard at the right price.

“We can still do that but there are lots of problems at the moment. Many of those problems are global issues, rather than UK-specific, but it’s testing us. We’re facing the biggest challenge to the food supply chain since 2008/09.”

One senior grocer admits “everyone is very nervous” about the situation but remains bullish: “We got through Covid. As bleak as it seems now, we will get through this, too.”

But just how will the UK food industry cope, and what measures can be taken to help it do so?

Personnel pinch

The food retail sector has long known that post-Brexit restrictions on the free movement of EU labour would have a deleterious effect on UK food production. 

Figures from the Home Office showed more than 16,000 seasonal labourers from 37 different countries arrived in the UK last year, on the government’s seasonal workers’ visa scheme introduced in 2019.

Female strawberry picker

Many Europeans have chosen to return home, creating a shortage of seasonal fruit-pickers in the UK

But following the Covid crisis and war in Ukraine, many Europeans have chosen to return to their home countries, while those with settled status have moved into better-paid jobs in other industries.

Combined with the government’s goal of lowering EU immigration, retailers, farmers and manufacturers are being forced to look elsewhere for skilled workers – at a greater cost. 

The labour shortage has driven up the wages of staff across other areas, from distribution centres to manufacturing and frontline store staff

A source at one big-four grocer uses the example of butchers, positions that UK businesses have traditionally turned to countries like Portugal to fill. But the source says: “We’re having to be a bit more creative and looking further afield to make up the shortfall in the usual influx of European workers that have filled the gaps in the UK for a long time. For example, we’re being forced to look into Asia for skilled butchers, which is a little bit mad if you think about it.”

A shortage of HGV drivers in the UK was a key issue that surfaced last year. While that now appears to have settled, the shortage forced many retailers and logistics firms to increase wages and offer upfront payments and performance-related bonuses. 

The labour shortage has also driven up the wages of staff across other areas of retailers’ operations, from distribution centres to manufacturing and frontline store staff. While this might fit into the government’s stated goal of a higher-wage society, it leads to a permanently elevated cost base that retailers will have to grow accustomed to in the years to come.  

The CO2 crisis shows the bubble has burst

Despite the drawn-out Brexit process, the UK’s reliance on food imports, particularly from the EU, is unlikely to change anytime soon. The overall import rate fluctuates during the year, falling below 50% of total food consumed during the summer but rising to 80% of all the food eaten in Britain throughout winter. 

soft drinks

A shortage of CO2 could be looming large on the horizon

With war in Europe already pushing commodity prices to record highs, industrial action across the UK’s transport networks is threatening to exacerbate the inflationary pain for both retailers and consumers – any delays or snags across the supply chain will spark an increase in logistics costs. 

“You only need to look at what’s happening with the strikes at Felixstowe,” says one former grocery chief executive. “While the majority of issues are longer-term and more systemic when it comes to food security, something needs to be done right now to get food inflation down.”

The UK’s reliance on international markets also applies to key inputs such as CO2, a fertiliser byproduct used in everything from drink manufacturing to stunning animals for slaughter.

Last year, CF Industries, a US-owned company with two fertiliser factories in the UK, suddenly stopped production due to surging gas prices. That, in turn, immediately threw the UK’s carbon dioxide reserves into crisis. 

While the government eventually reached a deal with CF Industries, one senior grocery source warns the episode perfectly encapsulated how fragile the system is.

“Sure, there’s a global CO2 market and individual retailers can try and box clever to ensure their supply. But we’re talking about a byproduct that is involved in everything from carbonating drinks to meat production.

“The demand for that product is always going to be stable, it’s never really going to change. It’s crazy that we came so close to running out.”

Despite effectively being bailed out last year by the government, CF Industries remains the UK’s largest single provider of CO2. With gas prices set to continue to rise heading into the winter, a repeat crisis could be looming on the horizon.

Inequality inquiry shows how much there is to do

Defra has launched a number of initiatives designed to either address – or at least understand – the implications of these issues. 

Alongside its food security inquiry, Defra is also looking at the seasonal worker visa programme in concert with the Home Office and recently produced its national food strategy. 

bills worry

Millions of people are already being faced with  choosing between paying bills or putting dinner on the table

However, the strategy has received mixed reviews from stakeholders. While National Farmers Union deputy president Tom Bradshaw welcomes many of the announcements, he believes the strategy does not go far enough to shore up the UK’s food supply. 

”The government’s environmental targets are all legislated into law but currently there are no statutory requirements around maintaining food production. That means food production will always be the poor relation to environmental targets,” he says. 

“We’re not asking for a reduction in the environmental targets but we do want food production and security to be put on the same level as green targets – in order to succeed the two need to be hand in glove.”

One former grocery boss agrees with that assessment. “It wasn’t radical enough,” he states. “It doesn’t go back to the fundamentals of saying food security and production is as critical as energy or defence security and is a fundamental role of government.” 

He suggests that as part of its plan, the government should have incentivised emerging technologies like vertical farming to lower the UK’s reliance on food imports, particularly outside of growing seasons. He also believes Westminster should have opened the floor to a proper debate on genetically modified food. 

“Food production will always be the poor relation to environmental targets”

Tom Bradshaw, National Farmers Union

“GM is a perfect example of a topic where the government could be taking advantage of Brexit,” he argues. “It’s an example of where we could find our own solutions to problems and I’m not sure they’ve really engaged on that.”

One big-four source says the UK should look to invest and scale up production in certain foodstuffs to compete in a global food market increasingly dominated by large producers.

“We still import huge amounts of Danish bacon across the food industry in the UK. Why is bacon slightly cheaper to produce in Denmark and then import into the UK? Is the weather any better for pigs in Denmark? No. Is there more land for pigs? Not really. Are the breeding and housing energy costs similar? Yes, they are. So why do we still import? 

“It’s about scale. It’s a really developed and high-scale industry. You could argue that’s where productivity savings come, through scale, so you will increasingly see the food industry gravitate towards huge scale industries serving the rest of Europe.”

rashers of bacon

The UK still imports huge amounts of Danish bacon

Grocery retailers have, however, been independently leading on investing more in British farming – a strategy that has shown no signs of easing up despite the pandemic and cost-of-living crisis. Last year, Aldi pledged to increase the amount it spends on food and drink from British suppliers by £3.5bn a year over the next five years. 

Morrisons, already one of the largest customers of British farming, became the first UK supermarket to commit to being 100% supplied by net-zero carbon British farms by 2030. 

Although it is encouraging that UK grocers are taking the bull by the horns, most strategies are still in their infancy. The government will need to show a willingness to both listen and learn if they are to better prioritise food production and make the positive, long-term difference that is required to shore up food security.

Is food inflation the new normal? 

Food inflation is currently running at 9.1%, according to the Office for National Statistics – a 40-year high

food bank

Food poverty in the UK is running at record highs

As a result, food poverty in the UK is also running at record highs. Millions of people are already being faced with the stark choice between paying for their energy costs or putting dinner on the table.

But the former grocery chief executive warns that such food price inflation does not represent a temporary spike, but the new normal. 

“Higher prices are inevitable, for a bunch of reasons,” he says. “Since the 1960s, the price of food in the UK, as a proportion of GDP,  has halved. It’s been a golden period for the consumer in terms of food. 

“I think the days of cheap food are over, and it’s going to go into reverse if the government retains its net-zero targets and wants shorter supply lines for food security purposes. Food will be less efficient and more expensive to produce – that’s an inevitability.”

The big-four grocery source agrees. “One thing we know UK consumers won’t compromise on anymore is the quality of the food they eat. So yes, I think producing more food in the UK would lead to groceries being marginally more expensive. Once consumers get used to a particular standard of quality, they won’t take a step back on that, even at the expense of higher prices.” 

The UK food sector faces an uncomfortable catch-22 situation in the coming years: shore up food security and drive up prices, or rely more heavily on increasingly unstable global markets?

The beginning of a long, hard recession may not be the time to have that conversation with the British public – but that time is coming.