Farmers are facing eye-watering price rises for their electricity as they renegotiate new contracts.

Farm businesses getting quotes this week are being told to expect to pay over 50p/kwh which is four or five times more than the tariff they are coming off. This is putting some mixed family farm’s bills up from £10,000 per year to £40,000 – the equivalent of an extra member of staff.

The Government's energy price cap only applies to domestic consumers and not businesses, which is allowing costs to double in a matter of weeks. The agricultural industry is warning that these costs will have to be passed on, with food inflation all but guaranteed if businesses are to survive.

Read more: One in eight think energy bills will fall this winter

John Young, who runs beef and a butchery business at Overton farm, near Carluke, said: “It is horrendous but I don’t see the government stepping in. It is going to have an impact on the price of things next year.

"We are on a contract with British Gas until November at 15p/kwh and a 25p standing charge. A new contract in July was priced at 37.5p/kwh and £5 standing charge. I tried to sign up with SSE at the start of last week for 47p/kwh but they pulled the prices when I tried to confirm," reported Mr Young.

"On Friday I was going with Smartest Energy at 52p/kwh but again when I tried to finalise the deal they pulled the price and I have not heard from them since. It looks like the companies are not even releasing prices at the moment.”

Speaking to farmers across the country, the price for electricity is edging towards 60p/kwh, with the highest reported 66p/kwh which represents a fivefold rise in price.

Read more: John Sleigh outlines what’s in the news sections of this week’s issue (20th August 2022)

One potato grower went through 25 different providers and found a best price of 58p/kwh. This will add £120,000 onto his business' costs, forcing him to renegotiate potato contracts or face switching off his cold stores this winter.

Despite these record rates for electricity, many farmers generating power through on-farm renewables are not getting a parallel price rise. Davie Smith, who is a previous chair of the NFU Scotland renewables group, said: “A lot of farmers with renewables are locked into fixed term contracts, with wind turbines getting around 5.5p/kwh plus a ROC payment from Ofgem of 5.5p/kwh.

"Most farmers borrow money for renewables which pushes them into fixed contracts as opposed to taking a variable rate," said Mr Smith. "Looking at the prices, there has to be profiteering going on down the line. We want a rise in price but not at the cost of people going cold and hungry. The sun and the wind have not increased their charges for production.”

Soft fruit grower Ross Mitchell of Castleton uses a lot of electricity on his farm and for staff accommodation. The business has already invested in renewables but they want to do more in the face of rocketing power prices.

Read more: Farmers over a barrel

He said: “We want to install more renewables in our business as we are a big user of energy. We want to put in renewable units generating 150kw and we would look to export 50kw back to the grid but we are not being given permission as the grid cannot handle the power.

"We are even willing to turn off the machine if the grid was at capacity, but we are still being refused. We are being told it will be 2026 or 2028 before they can guarantee connection to the grid. Currently we are paying between 15p/kwh to 30p/kwh for the energy we use in the business. Our next contract is up in November and I am expecting the price will be 50p/kwh.”

The Scottish Farmer contacted Scottish and Southern Energy and Scottish Power for comment.