Scotland’s Farmers and Crofters In Need of Support to Deliver High Quality, Sustainable Produce - Andrew Connon Blog

Rising input costs and the labour crisis continue to threaten Scottish agriculture at a time when consumer demand for locally produced food and drink is at a high, writes NFU Scotland Vice President Andrew Connon.

At present there are extremely mixed fortunes in agricultural output prices across the sectors.

In recent months some sectors have seen stronger prices - in particular beef, sheep, and combinable crops – while milk prices have firmed slightly. It is about time that such commodities have seen price inflation after a long period of depressed values.

However, the pig industry is in a state of crisis, horticulture growers continue to suffer from a lack of labour, freezing, and distribution capacity, whilst our seed potato industry is continually mis footed.

One area of commonality across all sectors is the rise in input costs and the crisis in labour availability. Sales and output values are one thing, but gross margin and profit are the main factors we should be focusing on.

Regarding input prices, fertiliser inflation is now at crisis point. This is not only being felt in the UK, but throughout Europe. In June the World Bank’s Fertiliser Price Index reached 119.8 points, putting it at its highest figure since May 2013 (in June 2020 it was at 66.8 points!).  

In recent weeks fertiliser prices have gone into orbit - some products have more than trebled since June 2020. Nitrogen is currently being quoted in excess of £680/tonne. In addition to price, issues of availability and delivery in time for critical application also exist.

Milk producers speak of 1p/litre extra costs due to fertiliser rates, and a 2-3p/litre growth on feed costs - that is without taking increased labour prices in the sector into account.

A beef and grain farmer recently called me to say that his seven artic loads of fertiliser will cost him an additional £40,000 - where does that money come from? This is whilst a local grain farmer shared with me that he needs £170/tonne on a three-tonne barley crop to break even with increased input costs.
The substantial rise in input costs will add pressure to cash flows within farm businesses. Such cost inflation can potentially impact food supplies, animal welfare standards and business survival. Now add in rising machinery and fuel costs and the gross margin analysis looks grim.

This situation is causing massive concerns across the agricultural industry which has a vital role to play in helping drive economic recovery, while also addressing the climate crisis and increasing biodiversity.

Farmers cannot be expected to shoulder the burden of these costs, and neither can the processors. Food prices will have to rise if supply chains are to remain viable.

NFU Scotland held meetings with the other UK Farming Unions and CF Fertilisers as soon as news of the intentions of CF broke. In addition, we have lobbied senior UK Government officials, most recently at the Tory Party Conference, and the Secretary of State for Scotland Alister Jack was left in no doubt of the industry’s massive concerns when we met in Dumfries two weeks ago. We continue to lobby at every opportunity on this subject.  

The labour crisis continues to damage our industry. At a time when consumer demand for locally produced farm goods is at a high, a lack of skilled permanent labour across all sectors is posing huge problems. Vegetables are getting disced in, fruit and flowers have had to rot unpicked, and the pig industry is in a perilous state.

At the time of writing, I took a phone call from someone working in the hospitality sector who stated that they have been unable to source pork to serve at their functions.

The UK Government is in complete denial to this situation. We have made governments clear that twelve-month Covid recovery visas need to be made available instead of the three-month Christmas visas scheme. In addition, we have pushed for the shortage occupation list to include workers in the field to fork equation. The Seasonal Workers Pilot failed our industry – it was rolled out too late and relied on a domestically available workforce that does not want the work. British agriculture relies on hard working, skilled labour.  

We will also continue to press the UK Government to provide temporary support to the likes of CF to help cover gas price hikes to ensure continuity of fertiliser supplies (and CO2) at reasonable rather than damaging prices.

Scotland’s farmers and crofters are desperate to feed a nation that in the last 18 months has demonstrated a demand for locally produced, sustainable, quality food.

The unprecedented input costs and labour crisis require immediate government intervention in order to ensure we have a viable agricultural sector going forward.

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