Originally published in The Scotsman on 28 May
The Scottish Government’s reported proposals to introduce a cap on the price of “essential” food items deserves serious consideration and scrutiny.
The political logic behind the proposal is understandable - if food prices are rising and people are struggling, then intervening to hold prices down may appear to offer a compassionate answer, straightforward even. But food systems are rarely simple.
And if the Scottish Government gets this wrong, the consequences for Scottish agriculture, food production, rural economies, and ultimately consumers themselves, could be severe.
NFU Scotland supports the principle that everyone should have access to affordable, nutritious food. That commitment is not in question. However, we cannot support any policy that risks undermining Scotland’s domestic food production capacity or forcing farmers and crofters to absorb the costs of political intervention.
Let us be unequivocal from the outset: Scottish farmers and crofters are not driving food price inflation. This matters because public debate often gives the misleading impression that higher supermarket prices translate into higher farm profits. The reality is very different.
Over the past several years, producers have faced alarming increases in input costs. Fuel, fertiliser, feed, energy, machinery and labour costs have all risen sharply, while farmers receive only a small proportion of the final retail price paid by consumers.
Primary producers remain the foundation of the supply chain, but they are often in the weakest commercial position within it. That is important when governments begin discussing retail price intervention, because limiting the price of certain products means the financial pressure is shifted somewhere else in the chain.
And history tells us that burden often travels upstream.
Retailers and processors may seek to recover lost margin through lower farmgate prices, tougher contract conditions, delayed payments or sourcing cheaper imports. That is the central concern for Scottish agriculture. If poorly designed, a food price cap could end up squeezing the very producers who are already carrying substantial economic pressure.
The irony is that such an outcome would directly undermine the Scottish Government’s wider ambitions around food security, climate resilience, rural sustainability and public health. You cannot build long-term food security while simultaneously weakening the domestic production base that delivers it.
Food affordability and food security are not competing priorities. They are fundamentally connected. If Scotland wants reliable access to high-quality food produced to world-leading standards, then Scotland must also ensure that domestic producers remain financially viable.
Once production capacity is lost, rebuilding it becomes extremely difficult.
A reduction in livestock numbers, delayed investment, reduced confidence and declining production volumes all have long-term consequences. Rural economies depend heavily upon agriculture - particularly in remote and island communities where farming and crofting underpin employment, local supply chains and wider economic activity.
A policy designed to support consumers today cannot come at the cost of creating greater insecurity tomorrow.
This risk becomes even more serious when viewed in the context of imports.
If retailers are operating under price cap restrictions, there will be strong commercial pressure to source lower-cost products. That may increasingly mean imports produced under standards very different from those expected of Scottish farmers and crofters.
Scottish agriculture already competes within an intensely competitive UK and global market. Producers here face higher regulatory standards, climate obligations, animal welfare requirements and environmental expectations than many overseas competitors. Those standards matter to consumers and they matter to farmers. They are part of the identity and reputation of Scottish produce. But standards come with costs.
If government intervention artificially disconnects retail prices from the true cost of sustainable production, then cheaper imports become more commercially attractive. The consequence could be the gradual displacement of Scottish produce from Scottish shelves. And that would be a profound policy failure.
It would export food production overseas while importing greater environmental and supply chain risk back into Scotland. It would weaken resilience at precisely the time governments everywhere are talking about the importance of national food security. And it would leave consumers more exposed to global market shocks.
There are also major practical and legal questions that remain unanswered. Scotland operates within a highly integrated UK food market which means there are serious legal and practical barriers to introducing Scotland-only price controls in a UK-wide market.[CR1.1] Those issues cannot simply be brushed aside because a policy sounds politically attractive.
NFU Scotland’s position is therefore straightforward.
We recognise concerns around food affordability. We support efforts to reduce food insecurity. We are ready to engage with government on practical solutions.
But we will firmly oppose any intervention that undermines sustainable domestic food production or treats farmers and crofters as the financial shock absorbers for wider political objectives.
If ministers do introduce some form of price intervention, then several safeguards are essential.
First, there must be effective protection against cost transfer onto primary producers.
Second, there must be recognition of sustainable cost of production.
Third, there must be full independent economic assessment before implementation. Government cannot act on political instinct alone.
Fourth, any intervention must be temporary, proportionate and subject to regular parliamentary review.
Finally, there must be clear protections for Scottish sourcing. Retailers must not respond to price caps by switching towards cheaper imports.
It is also important to recognise that there are alternative approaches available to government.
If the genuine objective is improving access to affordable food, there are more targeted -and potentially less damaging - ways to achieve that goal. Support for lower-income households, expanded healthy food voucher schemes, improved school meal provision and greater transparency around supermarket margins all deserve consideration.
There must also be a drive to strengthen domestic food production itself. A resilient, profitable and productive agricultural sector is the best long-term defence against food insecurity. Policies that reduce production costs, support investment, improve infrastructure and strengthen supply chain resilience can help maintain both affordability and availability over time.
In other words, the route to food affordability is not weakening production. It is strengthening it.