Food summit: Cut prices on basics now

26 May 2023

EMBARGO: 00:01 Wednesday 16th May

Ahead of the government-proposed food summit, the Liberal Democrats are calling for supermarkets to pass on the drop in wholesale prices of certain essential food products to consumers immediately.

The Liberal Democrats have led calls for the Competition and Markets Authority to investigate the big supermarket chains and multinational food manufacturers, to increase pressure for lower food prices. Ahead of any investigation, the party is also now calling for supermarkets to pass on wholesale price drops into lower food prices on essential foods for consumers immediately. 

Analysis by the Liberal Democrats has found that even though the wholesale prices on basic products such as bread-making wheat, fruit and veg have tumbled in recent months, prices for consumers in supermarkets have continued to soar.

This has prompted concerns that shoppers could be exposed to “rocket and feather” tactics, where prices shoot up quickly but fall slowly - a pattern already seen with petrol prices. In a recent study of the road fuel market, the CMA said it found evidence of petrol retail prices shooting up quickly but falling very slowly.  

Analysis by the party also revealed that the cost of a typical weekly shop has soared by £604 a year. Food inflation in the UK is now 20%, the second highest in the G7.

Meanwhile, the big supermarkets have made billions of pounds in profits in the past year. Tesco and Sainsbury’s, who account for nearly half the UK’s grocery market, saw their combined profits rise to £1.5bn in 2022 – more than 50% higher than the year before.

The Party has a five-point plan to tackle food inflation including a raise to the farming budget, energy bill relief and a plan to tackle workforce shortages. 

Commenting Liberal Democrat Leader Ed Davey MP said: 

“No ifs, no buts, supermarkets must cut these basic prices now. 

“Rishi Sunak needs to grow a spine and stand up for struggling families and pensioners by demanding supermarkets slash prices. They have no excuses, wholesale prices are down, yet food prices are up, with their profits soaring. 

“This Conservative Government time and again has shown itself totally out of touch with people. Unless it produces a credible plan today for reducing the prices of basic foods for millions of people, today’s summit will have been a waste of time.

“Rishi Sunak and his Government have so far provided nothing more than cold comfort on food prices. Liberal Democrats want to see the government cracking down on any profiteering by food multinationals and the big supermarkets, so customers get the fair deal they deserve.” 

ENDS 

Notes to Editors: 

UK Food inflation currently stands at 19.6% according to the ONS.

Liberal Democrat analysis of a family grocery shop based on ONS statistics can be found here.

The number of farmers in the UK has dropped from 137,800 in 2019 to 92,100 in 2022.

In 2022 the CMA launched an urgent review into petrol prices. The watchdog said it was deepening its probe after it found evidence of “rocket and feather” tactics, where retailers raised road fuel prices very rapidly, but brought them down very slowly.

Tesco and Sainsbury’s account for around 43% of the UK grocery market according to Assosia.

Supermarket profit figures compiled by the House of Commons Library can be found here.

Farming output price change vs retail food price change, June 2022 to February 2023

Farming produce

Wholesale price change

Food product

Retail price change

Cooking apples

-44.7%

Cooking apples

0.0%

Wheat - breadmaking

-14.4%

Loaf of bread (wholemeal)

26.1%

Loaf of bread (white)

16.5%

Tomatoes

-7.1%

Tomatoes

12.9%

Potatoes

0.0%

Potatoes (old white)

12.7%

Eggs

11.0%

Eggs

22.8%

Liberal Democrat analysis used official agricultural output prices from DEFRA [Table 1: Agricultural Price Index of agricultural outputs in the United Kingdom] and average retail price figures from the ONS [Table 55, Average retail prices of selected items] to compare the wholesale and retail prices of essential foods. The latest available agricultural price data goes up to February 2023. The above comparison is for changes in agricultural and retail prices between June 2022 and February 2023.

Liberal Democrat 5-point plan to bring down food prices: 

1. Raise the farming budget by £1bn:

An immediate injection of £1 billion into agricultural and horticultural budgets, taking them from £2.4bn to £3.4bn, to further support sustainable domestic food production, initially targeted at shortage areas. The funds would go towards productivity improvements, training and technology to bring down prices for the long-term and make the UK more resilient against import shocks, and would support farmers committed to a more sustainable environmentally-friendly direction for farming.

2. Reinstate energy bill support for businesses and class farms as energy-intensive: Reinstating the more generous ‘Energy Bill Relief Scheme’ which ended on April 1st, and offered 85% more support than the current ‘discount scheme’. This would cut input costs for farms and retailers. In the meantime, energy-intensive farms should be included in the current Energy and Trade Intensive Industries scheme, to ensure they qualify for extra support.

3. Fix workforce shortages for farmers, fishers and food processing: Let farmers, fishers and the food processing sector recruit the workers they need to boost our food supply by scrapping arbitrary visa salary thresholds. According to the NFU, a shortage of workers caused £60m worth of fruit and veg to go to waste in the first half of 2022. The union also said they need an additional 70,000 workers, when the Government’s ‘Seasonal Worker Visa’ only offers 45,000 positions. Meanwhile those working on fishing boats must apply for a skilled worker visa.

4. Launch a CMA investigation into multinational food manufacturers and supermarkets: The Government should ask the CMA to investigate reports that food conglomerates and big supermarket chains could be unfairly using their market power to inflate their markups and raise prices even further. A similar CMA investigation was launched about petrol prices. The Government should also strengthen the Groceries Code Adjudicator, set up by Liberal Democrats in Government, to improve the power of farmers and food producers against supermarkets, manufacturers and intermediaries, keeping consumer prices lower.

5. Expand Free School Meals to all children in poverty: The Government has excluded 800,000 children in poverty from receiving Free School Meals by introducing an arbitrary £7,400 household income threshold in 2018. In addition, more than 200,000 eligible children are missing out on Free School Meals because they are not registered. The Government should expand Free School Meals to all children in families receiving Universal Credit by scrapping the income threshold, and automatically enrolling all eligible children. That would mean approximately 200 million more Free School Meals each year.

 


 

 

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