My three point plan for tackling the supply chain crisis

Chris Solt
Chris Solt, partner for Lovewell Blake

Farming has to attract more British residents to work in the sector, work together to drive up prices and watch the cashflow to survive the supply chain crisis

Chris Solt, partner for Lovewell Blake

While the queues at petrol stations may have died down, the supply chain crisis which is currently gripping the nation shows no signs of abating, and in the agriculture sector it is hitting hard.  

Whilst stories of pigs being slaughtered on the farm because there are no abattoir workers to process them and of fruit rotting on the plants because there are no pickers to harvest it may be the extreme, it does demonstrate a very real shortage of workers in specific sectors. 

On top of all of this, non-employment input prices are soaring, much of which is also down to the supply crisis.  Nitrogen fertiliser prices have more than doubled, which means farmers are facing the unenviable choice of growing crops at a potential loss, or leaving fields fallow and foregoing income next year. 

Commodity prices have also increased, which helps a little but, ultimately, farmers’ profitability is dependent on people being prepared to pay more for their food, especially as the restriction of direct payments begins to bite.  If wages in general rise, then inflation is likely to follow suit, leaving consumers no better off and certainly in no position to shell out more in the supermarket.  

It appears to be a pretty grim situation.  It is one which the general public is at last starting to understand, thanks in no small measure to Jeremy Clarkson, who has become an unlikely farming champion.  As the author and farmer James Rebanks suggested; “He has done more for farming in seven hours of TV than Countryfile has done in decades”. 

Public sympathy is all very well but, it doesn’t solve the problem. So what exactly can farmers do to meet the huge challenges presented by the supply chain crisis?

There are no easy answers.  Clearly, with thousands of Europeans no longer available as part of the rural workforce, priority number one has to be to attract more Britons to work in agriculture.  This isn’t just about the money (in fact, piece-work harvesting can be very lucrative); it’s more about educating people about the potential and creating attractive conditions and career prospects.  

Farming has to remember that there are plenty of other sectors out there competing for the same people. 

Secondly, agriculture has to work together to drive up the prices paid for what we produce.  Currently, retailers have huge buying clout but, the prospect of empty shelves may have shifted the balance.  No one farmer can hope to make a difference but, if the sector starts to negotiate collectively, it could find itself in a strong position.  Bodies like the NFU are making noises but, could we see the re-emergence of cooperatives?  Increasing prices is one way to return profitability to farming, because it does not seem that costs are going to fall anytime soon. 

Thirdly, cashflow has never been more important for farmers.  Those looking at increased input prices and opting to leave land fallow have a short-term cashflow opportunity: they won’t face costs right now.  It may be better not to operate at all than to operate at a loss. 

Of course, they also won’t get the income from those non-planted crops next year but, they do have a potential window to use the cash they have not spent on fertiliser and other inputs to bring forward diversification plans such as renovating that farm cottage as a holiday let or converting that barn into business units.  

There are no simple solutions to the supply chain crisis.  But agriculture can’t just sit back and let the situation become overwhelming.  There are measures we can take – and we need to be considering them now.

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