The conflict in Ukraine is causing disruption to food output, supply chains, availability and affordability and could last for many years. The NFU has said that while the Govt is rightly focused on attempts to resolve the crisis, they must draw attention to dealing with the consequences for the UK.

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Many other countries will be facing similar issues, which include economy-wide disruption that could last for many years, including to our food output, our food supply chains and the availability and affordability of food to consumers.

NFU President Minette Batters will be chairing a Ukraine crisis virtual event for members on 16 March at 4:00pm that will look at what the impacts of the war in Ukraine are and how they can be mitigated.

She said, “The Russian invasion of Ukraine has been devastating to the people who live there and we have offered assistance to Ukrainian farmers in any way possible. 

“The war has also focused attention on the importance and fragility of food security, both at home and abroad.  British farmers continue to stand ready to do all we can to ensure the public continues to have access to high-quality, affordable, climate-friendly food.

“There are some clear short and long-term actions that government can take to maintain confidence and stability across the UK’s food producing businesses.  We have shared these with government and we want to stress that we stand ready to take these forward together, in order to navigate the extreme volatility we see today and expect to grow in the coming months.”

Food Security risks

Multiple compounding factors have profound implications and risks for our food security, which we believe require urgent actions outlined below.

It cannot be overstated that we risk a crisis of confidence that could lead to a minimum double-digit drop-in production by 2023 across all sectors.

Maintaining confidence and stability so that UK farm businesses maintain their capacity to produce food in the months and years ahead must be a priority for the government.

This confidence was already threatened by inflationary pressures as we exited Covid-19 control measures. It is now being further undermined by dramatic inflationary pressure and market volatility arising from the conflict that are orders of magnitude out-of-scope of commercial risk management. These directly impacting factors include:

• energy (specifically gas), which plays a critical role in UK food infrastructure at various stages;
• fertiliser, heavily linked to gas, a key input related to crop yields where a severe tightening of supply will lead to a reduction in output of commodities;
• grain and oilseeds, where given Ukraine and Russia accounting for 30% of world wheat and 50% of sunflower oil, seeds and meal exports, alongside other major commodity crops, sky-rocketing prices will impact both consumer food prices and the costs of livestock production; and
• labour, given Ukrainian workers have made up around 60% of the seasonal workers’ scheme since the UK left the EU.

In addition to these main areas, there are a broad number of supply risks that may cause bottlenecks in food supply chains, such as machinery components, organic feed grains, animal feed micro-nutrients and plant protection products.

No food-producing sector is immune to the pressing cost inflation and physical availability issues of key inputs.

Whilst crop markets are trying to stimulate production via high prices, farmers’ supply response is constrained due to both price uncertainty and access to inputs owing to normal market mechanics and regulatory drivers. 

Effects on business confidence

In addition to these acute impacts that will have a profound effect on business confidence and costs of production, there are additional structural policy factors that run a serious risk of exacerbating the situation. These include:

• reducing farm incomes through phasing out direct payments
• the long-term impact of our trade policy on domestic production
• immigration policy tightening the supply and increasing the cost of labour
• and various domestic policies that restrict farmers from producing food in a sustainable and cost-effective way.

Urgent action required by Govt

The NFU is calling on the government to take urgent action to address both the acute, immediate risks identified above, as well as the additional, more structural policy blockages that accentuate the risk to our food security.

The NFU want to be clear that while some of these proposals represent pausing or re-positioning existing policies, the focus should be on prioritising resources and effort at a time of international crisis.