Opinion: Farmers have been ‘heroes’ of consumer cost control
© Adobe Stock The advertising guru Rory Sutherland (if you don’t know who he is, you should look him up) recently posted a piece of work about property inflation versus food price inflation from 2013.
I asked AI to model it for today – and it seems that if food inflation had followed house price inflation, a loaf of bread would now cost £15.67, four pints of milk would be £5.55 and the weekly shop for a family of four £675.
See also: Opinion – farming’s mistake has always been believing it is different
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This means if inflation had been passed on to the consumer, people would be paying as much for their food as for their homes.
Now, if we apply the same inflation modelling to supermarket profits, with help from the data analysis tool Statistica and the Bank of England’s inflation tool, Tesco’s reported £500m profit in 2015 would be £700m today, but it’s actually £3bn – a rise of 328%.
Now, Tesco’s business is dynamic and evolving and has grown over that time, plus it may have made savings in costs. But over this time its revenue has increased by only 64%.
The major growth for the supermarkets was their gradual transition over this period from being a “grocer” – that is, a retail merchant who sells foodstuffs – to a “market” – a mediating agent for goods and services.
Huge areas of growth were data through loyalty schemes, financial services and ultra-processed foods, particularly their own-brand luxury lines.
Short-lived, highly marketed brands containing almost nothing produced on a farm is music to their ears – take, for example, the Grenade bar.
A TV programme fronted by Joe Wicks covered how bowls of white powders and foreign oils are mixed to create this popular food item which, even though it tastes terrible, peaked in 2023 with sales of £93m and a profit of £12m.
That’s a 13% pre-tax profit. It’s purely a marketing success story. Cheap ingredients, high turnover.
So where do farmed foods fit in? We know supermarkets haven’t taken us with them. They often use products we recognise to fight wars with each other to attract customers.
One-third of all farms report no profit at all – although figures on profits are hard to find as reports tend to focus on Total Income From Farming (Tiff) which bears no relevance to anything.
Farmers have been heroes of absorbing costs and increasing efficiency, keeping the cost of living under control for the nation over the past 20 years.
But without the government subsidising us, and with some of the highest costs of production in the world due to expensive inputs, regulation and labour, the music has stopped, and farming is left searching for a chair.
The drop in both milk and grain prices in recent months highlights how vulnerable we are now and how quickly we could come undone.
There is a chink of light in the murk. M&S recently expanded its “only ‘x’ ingredients” range, which includes some items such as beef burgers, meatballs and branflakes made from only three ingredients.
Compare that with burgers elsewhere, some of which can have 15 ingredients (many of which are unpronounceable too!).
Items were selling out fast, so fingers crossed the tide may be turning among grassroots customers.
But we also need direct contracts and co-operative marketing and processing to shorten our supply chains.
It’s time UK agriculture underwent a significant rebrand and restructure. We need to get these conversations going.