Professor Lisa Jack was the lead researcher on the report for the food and farm charity Sustain.
UK farmers are often left with far less than 1p profit of the food they produce, a new report from food and farm charity Sustain has found.
Sustain looked at five everyday food stuffs - apples, cheese, beef burgers, carrots and bread - and found that, after intermediaries and retailers take their cut, farmers are sometimes left with far less than 1 per cent of the profit.
The report’s lead researcher, Professor Lisa Jack from the University of Portsmouth, said: “Our food systems have very high production and overhead costs, yet what profits there are, could be shared more fairly along the supply chain, supporting not just affordable food but better incomes for those working in the industry.”
The report Unpicking Food Prices: Where does your food pound go and why do farmers get so little? examines where the money spent on five everyday food products goes and why that matters. In the report, researchers detailed the typical costs and profits allocated to each part of the chain from farmer/grower, through intermediaries and processors to the retailers.
For example, for a loaf of bread, the cereal farmer spends 9.03p yet receives an almost negligible profit (0.09p) on a selling price of £1.14, but for a loaf sold in an independent bakery they make 0.5p profit. For four beef burgers, the processor gains ten times the profit of the beef farmer. A carrot grower spending 14p per bag and selling to the supermarket supply chain gets almost negligible returns, compared to 5p in a not-for-profit better food trader.
Despite battling extreme weather events like flooding and drought and facing soaring energy and production costs, this work suggests farmers received less than 1 per cent of profits if supplying a supermarket chain. Instead, profits are directed to intermediaries like processors, transport companies and retailers. By contrast, in shorter chains run by social enterprises like vegetable box schemes and co-ops, more value reached farmers and their workers.
The charity is calling on government to beef up regulations making them fairer for farmers, for regional structural funds to invest in more infrastructure like hubs and local processing that could shorten supply chains, getting more value to the farmers, and for retailers to publish more information about their supply chains. Debates on farm policy, which put environmental aims at the forefront of targets, largely ignore how the money is allocated in supply chains.
Vicki Hird, Head of Farming at Sustain, said: “It is astonishing how little of the money we pay for our food ends up in the hands of the farmers and growers. Farmers carry a lot of risk and work in difficult conditions to put food on our table. We also expect them to look after our landscape and our nature – and want them to do more of that in the future including protecting nature and helping to cut 30 per cent of food-based climate changing greenhouse gas emissions. If they are to do that, they need more money in their businesses. That money should not leach out of the system into the coffers of food industry intermediaries and supermarkets.
“If we’re to give our farmers the chance to change how we produce food, they need to keep more of the value so they can invest and try new approaches. We should not let intermediaries and food buyers hold all the bargaining chips. Crucially, our report shows that paying farmers more need not mean higher food prices so retailers cannot use that excuse - there would be little impact on many products’ retail prices if farmers were paid more. We make strong recommendations on investing in better routes to market, regulating supply chains, and building transparency.”
Farmers look after 70 per cent of UK land and so need to protect nature and tackle climate change whilst growing food, making a living and looking after workers. Yet they struggle to do so when the market fails to reward good practice, their costs are rising and as income support from government is ending and new support for delivering public goods is not yet fully in place. Sustain has detailed recommendations for Government including:
- Tougher regulation is needed to help redress the imbalance of power between farmers, processors and the supermarkets including maintaining the Groceries Code Adjudicator, introducing new, legally binding, sectoral supply chain codes of practice, better labelling to ensure transparency and planning rules to curb local retail dominance.
- Building new better routes to market for farmers - so they have more power and gain greater value from their produce - through an action plan to increase the market share of shorter and farmer-focused supply chains, public investment in localised agri-food infrastructure (such as sorting, drying, hubs) and enterprise and using dynamic public procurement models to source from a large range of farmers and growers.
- More transparency in supply chains, greater mandatory reporting and acknowledge the huge overheads in the current, complex system
Researcher Harriet Hammans from City, University of London added: “Three times more of your food pound goes to farmers with every purchase you make from your local Better Food Trader or not-for-profit food hub. Farmers make more money selling into this transparent, ecological supply chain to invest in their sustainable, organic businesses - which are the future of farming and our countryside.
“Your money also goes towards paying staff who work so hard in the supply chain more fairly, and supporting an innovative, socially conscious trader which has the potential to scale up in the future.”