When I next sit down to write this column, we will know the outcome of the general election. If the polls are correct, we will be bracing ourselves for an industry arse-kicking under Labour. We may then be implementing the National Food Strategy as Labour’s off-the-peg route to a healthier, more sustainable food system.
While I’m a supporter of the NFS recommendations, I’m also tired of seeing the food industry wrongly blamed for inflation. The NFS, through a combination of food taxes, additional reporting, and capital expenditure, will undoubtedly drive up food prices, bringing more fire down on retailers and suppliers alike.
Although some financial support is being promised, lack of funds suggest the bulk of investment for change will be borne by the industry. Savings to the NHS via healthier diets will take time to materialise. By contrast, the investments and additional ongoing costs that are inherent in the recommendations will be immediate.
Almost all of the recommendations in the NFS will stoke inflationary pressure. In case you have not read it, the main ones are:
- Increased wages for food industry workers, and improved working conditions across the sector
- Sustainable agroecological farming methods that require more expensive inputs and will lower yields in the short term
- Reducing meat consumption and increasing the intake of fruits, vegetables, and plant-basedproteins. That means shifting dietary habits on a national scale, involving significant investment in new infrastructure, new technologies, training for farmers, and adjustments in supply chains.
The NFS also calls for measures to combat food waste, such as enhanced food storage, improved logistics, and more efficient distribution systems. Additionally, the strategy’s push for more local food production, to reduce dependence on imports, will lead to higher prices. Local farms don’t benefit from the same economies of scale as larger, international producers.
Like environmental issues, health concerns are abstract and secondary in the shopper’s mind during a cost of living crisis. So timing is the issue. The recommendations should not be rushed in: instead they must be broken down, prioritised and phased in over time.
While these recommendations are ethically and socially laudable, and crucial for long-term environmental sustainability, the transition period costs could ripple through the economy, leading to broader inflationary pressures.
Over the past two years, we have all seen the reports showing as food prices rise, disposable income for non-food items decreases. That will potentially lead to a demand-pull inflation, whereby higher food prices drive up the cost of living overall. Having just appeared to enter a settled time on pricing pressures, now is surely not the time to risk raising costs.
UK retailers and suppliers would undoubtedly make a success of implementing any government targets. They must be free, however, to price according to the costs upon them, allowing for competition to protect the consumer. Whichever colour government is in place, targeting the industry on NFS recommendations must be phased and funded – or consumers should expect another wave of inflation.
David Sables, CEO, Sentinel Management Consultants
Source: The Grocer
Image Editorial credit: CornelPutan / Shutterstock.com
