I can’t be the only farmer who has been tempted to hurl something through the TV screen during the national news when the high level of food inflation is discussed and almost without fail, the cause seems to be laid at the door of producers.
But it’s become even worse recently when the supermarkets – who have been absolutely coining it in while millking the 'we’re having to pay more for our supplies' line – have the brass neck to claim the credit for the slight slowdown in the food inflation rate in recent weeks.
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It’s true that farmgate prices did rise as energy and other costs skyrocketed last year – but the term 'greedflation' was coined to describe the way in which the major retailers had been exploiting what was a short-term situation to bump their prices way beyond any level which could truly be justified – while, of course, pocketing the resulting higher margins rather than passing any additional share onto the farming world.
Of course, as we all know, farm commodity prices have been on the slide for quite some time now – with grain prices having fallen well back from the dizzying heights which they briefly peaked at last year.
Also, the fast developing situation in Russia might throw another round of uncertainty into the market – but the most recent 'agflation' index figures released by farm consultants, Andersons, show that the prices we receive for our products have actually been deflationary for quite some time. The data clearly confirmed that farmgate prices had been falling, even as food prices have continued to rise over the same period.
If you go as far as comparing the figures with those of 2021, prior to the invasion of Ukraine, the costs of what we buy to grow our crops are still a whopping 24% higher – while what we’re getting for what we sell is now only 15% higher than the figure of two years ago.
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Yet over the same two-year period, food prices had risen by just shy of 30%!
Surely it’s time someone used these figures to highlight just how badly consumers are being conned by conscienceless retailers, whose propaganda claims they have been shouldering the burden and that they have now single-handedly managed to turn the tide as they strive do the best for their customers…
Rant over – well almost.
It’s often been said, but the price squeeze in farming means that there’s real need to focus ever more closely on how we spend our money – and what we spend it on.
So, in this respect it might be a bit of a tough time for our levy gathering organisations to have to look at raising the rates we’re asked to pay for the services which they supply.
That’s the position in which the AHDB (as does QMS, but that’s a story for another time) currently finds itself, despite – or perhaps because of – the fact that the rate has actually been frozen at the same level for well more than 10 years now.
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While it’s only the dairy and the cereals and oilseed sectors which fork out to the AHDB in Scotland, the organisation has estimated that across the whole institution, its spending power has been eroded by 40% over the past decade – with an HMRC ruling which has prohibited it from reclaiming VAT adding to an already substantial reduction in spending power.
Claiming that the current changes and uncertainty both in the markets and in the farm support policy mean that the services which it provides will be needed more than ever, the organisation announced a couple of weeks ago that it is beginning a 'discussion' with the industry with a view to raising the rates.
Now, as far as I can gather, despite some of the AHDB board members wanting to recoup the full 40% in one step, it would be difficult to do this. That's because Government approval would be required to adjust the statutory cap which is currently placed on the amount which they can be increased in any one year.
Speaking to Paul Flanagan, AHDB’s Scottish director, at the Royal Highland, last week, he said that no firm figure had yet been settled for what was being sought in any of the sectors – confirming only that the board was tentatively sounding out industry bodies and producers’ groups to gauge what might be acceptable.
But despite this somewhat coy political answer, word on the street would indicate that a rise of somewhere in the region of 26% is being considered achievable – and that it has received a cautious, albeit somewhat reluctant, support from farming bodies.
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For cereal growers, that would see the current rate of 46p per tonne effectively climbing by 12p to 58p a tonne, with, if my calculations are correct, oilseed rape rising from 75p a tonne to somewhere in the region of 94.5p.
Commenting on the timing of things, AHDB divisional director of engagement, Will Jackson, said: "There is never a right time to be recommending a levy increase, but we believe the current economic climate makes the case more urgent with clear, tangible benefits.”
He said that through last year’s ‘Shape the future’ exercise, which sought the views of producers on which areas the levy should be used to investigate, the sector councils had used this feedback to develop the sector plans.
"This was the first time that AHDB had received direct feedback from levy payers on the work we do for them and these results gave us a good indication of where we would need to invest further levy income,” he said, adding that the research, promotion and market intelligence services which the board supplied were more important than ever for producers in the current difficult times.
Bluntly, he pointed out: "Without a levy increase, we will lose the expertise and impact that the sectors need."
I would guess that taking a close look at how and where the aforementioned mentioned retailers and manufacturers who buy our products carve up their expenditure would show that far more is regularly spent on advertising, promotion and marketing of a product than it ever is on their actual production costs.
It would certainly make what we would be spending, even under a new higher rate, certainly look like peanuts.
But, if a considerable rise is to be swallowed by levy payers, the board and its representatives will have to convince the industry that it would be used to deliver a keen, lean organisation which is focused on the specific areas which are most crucial for the industry.
If it can also manage get someone on the TV news occasionally to highlight the hypocrisy of the supermarkets that might just win over our hearts and minds …
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